BitMEX 'Attempted to Evade' US Regulations, CFTC Charges

Published on by Coindesk | Published on

Oct 1, 2020 at 15:54 UTCUpdated Oct 1, 2020 at 19:50 UTC.The U.S. Commodity Futures Trading Commission and federal prosecutors are charging crypto trading platform BitMEX with facilitating unregistered trading and other violations.

In a statement sent to CoinDesk after the publication of this article, attorneys for Dwyer said they would contest the charges, adding that their client had complied with the CFTC investigation "And was never so much as invited to speak with prosecutors in the United States Attorney's Office in Manhattan."

Dwyer "Always worked in good faith to comply with all applicable regulations and requirements," the statement said.

In a press release, the CFTC alleged that BitMEX received some $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 charged BitMEX with executing futures transactions on an unregistered board, offering illegal options, failing to register as a futures commission merchant, failing to register as a designated contract market, failing to implement proper know-your-customer rules and other counts, according to an attached legal filing.

BitMEX, which has reportedly been under investigation by the CFTC since at least July 2019, implemented mandatory KYC in April of this year.

"Nevertheless, BitMEX has never been registered with the CFTC in any capacity and has not complied with the laws and regulations that are essential to the integrity and vitality of the U.S. markets."

The CFTC is looking for a permanent injunction prohibiting the defendants from entering into any transactions "Involving 'commodity interests,'" soliciting funds for purchasing or selling commodity interests and applying for registration with the CFTC.In addition, the agency wants the defendants to disgorge profits; provide full restitution to its customers; pay civil penalties; and rescind "All contracts and agreements" with any customers if those agreements violate the law.

"As a derivatives market regulator that supports innovation and ingenuity, it is imperative that we actively police trading platform activity and remove the bad apples so that legitimate, law-abiding marketplaces can flourish," said CFTC Commissioner Brian Quintenz in a statement.

"In the meantime, the BitMEX platform is operating entirely as normal and all funds are safe. To allay any potential customer concerns, pending withdrawal requests were processed at 17:45 UTC, in line with our standard procedures. We will process another off-cycle withdrawal at 08:00 UTC, 02 Oct 2020, and then 13:00 UTC, as usual," the statement said.