The US Department of Justice (DoJ) and the US Commodity Futures Trading Commission (CFTC), have both filed charges against a prominent crypto exchange, BitMEX. According to the charges, the exchange has been accused of evading the anti-money laundering laws that are applicable in the United States. Registered in Seychelles, BitMEX is one of the top cryptocurrency exchanges in the market. As a matter of fact, it is considered the second biggest crypto exchange in the world in terms of crypto trading volume. However, one important thing to note about BitMEX is that it is not based in the United States and doesn’t offer its services within the country’s borders.
But, in the eye of US authorities, this is nothing more than a minor setback, and the complaint highlights that failure to comply with the ‘Know Your Customer’ laws in the US is the reason behind the charges against BitMEX. Since the exchange has opted out of the legislation of a country where it doesn’t operate, the US government states that it is aiding in money laundering. Via its legal action, the CFTC has named some specific individuals. The list of these named individuals includes the owner of the exchange, Ben Delo and Samuel Reed, along with the CEO of BitMEX, Arthur Hayes.
Apart from that, some corporate entities have also been cited, which include HDR Global Services (Bermuda) Ltd, ABS Global Trading Ltd, Shine Effort Inc. Ltd, HDR Global Trading Limited, and 100x Holding Ltd. As per the complaint, the charges against Hayes, Delo and Reed are concerned with the breach of the Bank Secrecy Act. As a matter of fact, these charges have also been filed against Gregory Dwyer, who was the first employee at BitMEX. In addition, these people have also been accused of conspiracy of violating this act and Reed has also been arrested on the basis of these charges.
While BitMEX doesn’t operate in the country and is not registered there either, the CFTC maintains that the fact that this entity is operating legally from a foreign country doesn’t bode well for the United States. It claimed that since they are global leaders, it is their responsibility to root out any illegal activities, as mentioned in this case. The CFTC then continued to cite how market integrity is crucial if we want new and innovative financial products to flourish. Therefore, the CFTC said that it cannot allow bad actors to break the law, even if it is outside of its jurisdiction.
The CFTC further said that this would give a competitive edge to the exchange and it will not do the ‘right thing’, which would involve complying with US regulation. A lot of things can be right or wrong about any country’s regulations. As far as BitMEX’s case is concerned, it is quite obvious that the US is trying to use its political weight for shutting the exchange down. Watching how this play out would undoubtedly be interesting and as long as BitMEX is not making an illegal push into the US markets, it shouldn’t get into too much trouble.