The United States Commodity Futures Trading Commission also known as CFTC has been accused of a the derivatives trading platform BitMEX with operating a platform for trading that is not registered and committing violations of Anti-Money Laundering regulations.
In a statement issued Thursday that the CFTC issued an enforcement action civil that is pending in the Southern District of New York against five entities and three individuals who are believed to run the exchange.
The accused include Arthur Hayes, publicly known as the CEO of BitMEX in addition to Ben Delo and Samuel Reed. The CFTC claims that the accused are the owners and operators of BitMEX through an “maze of corporate companies.”
The corporations mentioned that are also listed as defendants in this case are HDR Global Trading Limited, Ico SA Limited, ABS Global Trading Limited, Shine Effort Inc Limited and HDR Global Services (Bermuda) Limited (BitMEX).
The CFTC demands disgorgement, or the restitution of the totality of “ill-gotten gain,” civil monetary penalties in the form of permanent trading bans and injunctions for any future violations.
It believes BitMEX is illegally providing leveraged trading for retail traders in the amount of $1 trillion in nominal value since its beginning at the beginning of 2014. Despite its success, CFTC believes that BitMEX was not able to follow “the most fundamental compliance measures.” They include the inability to be registered with the commission as well as the absence in Know Your Client and Anti-Money Laundering policies.
In addition to the civil charges in addition to criminal charges, authorities from the U.S. charged Hayes, Delo, Reed and Gregory Dwyer, BitMEX’s head of business development as a result of conspiring to break the bank Secrecy Act. If found guilty the executives could be facing the possibility of up to five years in jail and the possibility of a fine of $250,000.
As per FBI assistant director William Sweeney, “One defendant was even able to claim that the company was formed in a different jurisdiction than the U.S. because bribing regulators in the country cost only “a coconut. The diligence of our analysts, agents as well as our partners in the CFTC, the defendants will soon discover the consequences of their violations are not paid with exotic fruit, but could lead to fines, restitution and federal prison time.”
The statement issued by the Department of Justice reveals that Reed, the Chief Technology Officer, was detained early on Thursday in Massachusetts. Dwyer, Delo, and Hayes “remain in the wild.”
The first reports surfaced in July 2019, indicating that there was a possibility that the CFTC was reviewing the exchange in large part because of speculation there was a possibility U.S. residents were able to use the platform in spite of an official ban. BitMEX’s terms of service clearly restrict users from those in the U.S., certain provinces within Canada, China and a number of other nations in together BitMEX as an exchange.