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US CFTC Charges Crypto Derivatives Giant BitMEX for Rules Violation

The United States Commodity Futures Trading Commission (CFTC) has announced that it has filed civil enforcement charges against popular crypto derivatives platform, BitMEX, in a Southern District Court of New York.

Evading U.S. rules

According to an official statement on the CFTC website today, the development stems from BitMEX violation of the commission’s regulations, including operating an unregulated exchange and failure to implement anti-money laundering (AML) and know-your-customer (KYC) requirements. 

The registration of a platform and the implementation of KYC and AML procedures are the key ways the CFTC adopts to protect U.S. citizens from falling prey to malefactors, the regulator note. 

The commission also filed charges against the owners of BitMEX, including Arthur Hayes, Ben Delo, and Samuel Reed, for their role in setting up different firms that operate the platform. 

Before now, the trio has been indicted in a district court in New York for violating the Bank Secrecy Act. 

As per the report, the parent company of BitMEX, HDR Global Trading Limited, and 100x Holdings Limited, ABS Global Trading Limited, among others, are listed as defendants in the complaint.

Since BitMEX launched its operations, the exchange has gotten over $11 billion worth of Bitcoin (BTC) deposits and made over $1 billion in fees for transactions on the platform, with most of these transactions coming from U.S.-based customers, the regulators said. 

The CFTC stated that it is focussed on eliminating illegal activities in its derivatives market, to boost the sector’s integrity and create an avenue for more products to be launched.  

Heath P. Tarbert, Chairman of the CFTC, commented on the development saying:

Digital assets hold great promise for our derivatives markets and economy. For the United States to be a global leader in this space, it is imperative that we root out illegal activities like that alleged in this case. 

Too late?

The CFTC seeks civil monetary penalties, as well as ancillary remedial relief from BitMEX. The commission also demanded that the exchange’s activities, such as trading and registration of new users within the U.S., be banned.  

BitMEX announced in August that it would commence a compulsory KYC process for its users, a move that was widely kicked against by members of the crypto community. 

At the time, BitMEX stated that the move would further create a safer trading environment for its users. 

See Also: Derivatives Exchange BitMEX to Restrict Ontario Users from its Platform Starting Sept 1st

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