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BitMEX’s CFTC, and FinCEN Cases End with $100M Fine; Second-Largest for a Crypto Exchange

  • Distraught cryptocurrency exchange BitMEX has settled its cases with CFTC and FinCEN which resulted in a $100 million fine.
  • BitMEX was accused of breaching AML and KYC regulations, operating as a futures commission merchant without CFTC registration.
  • The $100 million fine will be split evenly between CFTC and FinCEN.
  • BitMEX has also announced a surveillance partnership with CFTC as the exchange hopes to become more compliant with regulations.

Screening of the crypto industry has gotten more intense, with regulatory agencies trying to put together a framework that enables the smooth running of crypto projects and their exchanges.

On the receiving end of this instance of regulatory wrath is BitMEX, one of the world’s largest cryptocurrency trading platforms. BitMEX was accused of breaching AML and KYC regulations, operating as a futures commission merchant without CFTC registration.

BitMEX Pays $100M Fine

On Tuesday, 10th of August, the U.S. The District Court for the Southern District of New York entered a Consent Order, which the CFTC agreed to along with the five companies charged with operating BitMEX.

According to the Consent Order, BitMEX will pay a fine of $100 million to settle its lingering cases with the Commodity Futures Trading Commission (CFTC) and the Financial Crimes Enforcement Network (FinCEN).

The post noted that the $100 million fee will be split equally between the CFTC and FinCEN. This settlement becomes the second-largest fine to be levied against a cryptocurrency exchange.

The Violations

According to the Order, BitMEX was violating the US Commodity Exchange Act between November 2014 to October 2020. The order stated that, during the period, BitMEX operated as a futures commission merchant without CFTC registration.

According to the CFTC, the exchange made its listings available in the U.S. to both retail and institutional customers through its website, while knowing that American customers were restricted. To trade, American customers used virtual private networks to get around barriers that were set up to screen out U.S. traders.

FinCEN

According to the Financial Crimes Enforcement Network (FinCEN), from 2014 through 2020, BitMEX did not meet its AML policies. Over the period, BitMEX collected only an email address from users and did not verify trader identities.

As a result, BitMEX dealt with money launderers, terrorist financiers, and ransomware attackers. FinCEN has stated that over $209 million of the transactions were conducted on the exchange with known darknet markets.

On The Flipside

  • Moving past its cases with CFTC and FinCEN, BitMEX seems to be returning to business in fashion.
  • The exchange has signed a new partnership agreement with Italian soccer club, A.C. Milan, to become their first-ever sleeve sponsor
  • The partnership will see BitMEX featured on the sleeves of both the men’s and women’s teams playing kits in all competitions

What’s Next for BitMEX?

While BitMEX did not admit to, or deny, any allegations, the exchange is no longer permitted to maintain any operation or business functions in the U.S., except for limited personnel performing limited non-marketing services.

In the wake of the settlement, BitMEX has noted that it will focus on becoming more regulation compliant. BitMEX will be including new verification systems, systemic processes, and making new hires. 

The exchange has also announced a surveillance partnership with the CFTC. The partnership will see the exchange expand its ability to monitor trades and “screen out bad actors,” as well as boosting its AML capacity.

Why You Should Care?

As the grip of regulatory agencies tightens around the crypto industry, exchanges and other crypto projects may be forced to adapt to new policies which affect their current operations.

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    This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed to be financial legal or tax advice. Trading Forex, cryptocurrencies, and CFDs poses a considerable risk of loss

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    Author

    Milko Trajcevski has been in the crypto world for years, and as such has gathered both a skill for writing as well as a native prowess when it comes to understanding everything that occurs within that world. Through skilled writing and determination, he covers articles about cryptocurrency, tokens, blockchain, crypto-asset regulations, crypto wallets, exchanges, liquidity, DApps, forks, mining, security, and blockchain technologies. He is a professional with a track record of proven expertise within the crypto space.