US Fines Crypto Exchange BitMex $100M For Unlawful Operation

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BitMex, an infamous cryptocurrency exchange that’s battling the US legal system, has been fined a significant sum to settle one of its regulatory headaches. It’s agreed to pay a $100mn civil penalty as part of a settlement with the US Commodity Futures Trading Commission (CFTC) and the Financial Crimes Enforcement Network (FinCEN).

  • BitMex is accused by US authorities of violating the Bank Secrecy Act, which requires financial institutions to assist US government agencies in tackling money laundering, and enabling illegal trades on its exchange.
  • That US authorities went after BitMex with charges is sort of a slippery slope, as the company itself is actually based in another country – Seychelles. But, BitMex has many customers in the US where it’s accused of violating anti-money laundering laws. Two of the exchange’s founders are also US citizens.
  • Founded in 2014, BitMex made a name for itself as a peer-to-peer exchange where traders around the globe bought and sold complex derivatives based on Bitcoin, with little customer verification to open trading accounts. Thus, BitMex was alleged to be a magnet for illicit and illegal trades due to its lax identity verification standards.
  • Beginning in 2020, US authorities brought the full weight of the law against BitMex for its alleged violations, including launching criminal charges against the exchange’s three founders, two of whom are US citizens and the third a UK citizen. The company toughened its identity verification laws in the wake of its legal headaches, which still proceeded regardless.
  • Now, BitMex has agreed to pay $100mn to settle one of its major legal headaches. But, it’s not over, as the criminal charges against its founders — Arthur Hayes, Samuel Reed, and Ben Delo — will still proceed to trial. The three of them have been detained by authorities at one point but signed big bail bonds to secure their release – Reed ($5m), Delo ($20m), and Hayes ($10m).
  • Like in many white-collar cases with big settlements, BitMex with its payment neither admits nor denies the allegations against it. But, the exchange has agreed to make changes including hiring an independent consultant to analyze its transactions and also refrain from offering Bitcoin futures to US customers without following the due process.
  • “Today marks an important day in our company’s history, and we are very glad to put this behind us,” BitMex CEO Alexander Höptner said in a statement.

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