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The Commodity Futures Trading Commission filed money-laundering and other civil charges against BitMEX, for improperly operating in the U.S. today.
In an indictment unsealed today, the U.S. Attorney for the District of New York also filed criminal actions against the exchange’s owners, Arthur Hayes, Ben Delo, and Samuel Reed, for violating the Bank Secrecy Act and conspiracy to violate the Bank Secrecy Act.
The civil action
The civil court action, filed in the U.S. District Court for the Southern District of New York charged the owners with operating an unregistered trading platform, and failing to impose anti-money laundering procedures, and other violations. Hayes, Delo, and Reed, were named as the owners and cited as operating “BitMEX’s platform through a maze of corporate entities.”
“Digital assets hold great promise for our derivatives markets and for our economy,” said Chairman Heath P. Tarbert. “For the United States to be a global leader in this space, it is imperative that we root out illegal activity like that alleged in this case."
BitMEX was not immediately available for comment.
The civil case was brought by the Division of Enforcement’s Digital Asset and Bank Secrecy Act Task Forces.
Also named on the suit were HDR Global Trading Limited, 100x Holding Limited, ABS Global Trading Limited, Shine Effort Inc Limited, and HDR Global Services (Bermuda) Limited (BitMEX).
The CFTC claimed that BitMEX “received more than $11 billion in bitcoin deposits and made more than $1 billion in fees, while conducting significant aspects of its business from the U.S. and accepting orders and funds from U.S. customers."
The CFTC said that BitMEX describes itself as the biggest derivatives-trading platform in the world and handles billions of dollars worth of transactions daily. "Much of this volume, and related transaction fees, derives from the operation of the platform from the U.S. and its extensive solicitation of and access to U.S. customers, the complaint alleges," the agency claimed. "Nevertheless, BitMEX has failed to register with the CFTC, and has failed to implement key safeguards required by the CEA and CFTC’s regulations designed to protect the U.S. derivatives markets and market participants."
The complaint:
"charges BitMEX with operating a facility for the trading or processing of swaps without having CFTC approval as a designated contract market or swap execution facility, and operating as a futures commission merchant by soliciting orders for and accepting bitcoin to margin digital asset derivatives transactions, and by acting as a counterparty to leveraged retail commodity transactions. The complaint further charges BitMEX with violating CFTC rules by failing to implement know-your-customer procedures, a customer information program, and anti-money laundering procedures."
"As alleged in the complaint, BitMEX touts itself as the world’s largest cryptocurrency derivatives platform, with billions of dollars’ of trading volume each day. Much of this volume, and related transaction fees, derives from the operation of the platform from the U.S. and its extensive solicitation of and access to U.S. customers, the complaint alleges. Nevertheless, BitMEX has failed to register with the CFTC, and has failed to implement key safeguards required by the CEA and CFTC’s regulations designed to protect the U.S. derivatives markets and market participants."