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BitMEX Pays a $100 Million Settlement for Unlawfully Handling Customer Funds

BitMEX exchange has agreed to pay $100 million to settle the charges by the U.S. Commodity Futures Trading Commission (CFTC) and the Financial Crimes Enforcement Network (FinCEN) unit of the U.S. Treasury Department.

The lawsuit arose from BitMEX unlawfully accepting customer funds to trade cryptos without registration. In addition to this, they failed to conduct customer due diligence. According to CFTC and FinCEN, this went on for six years with U.S. customers.

What the Lawsuit Entailed

The order found that BitMEX provided retail and institutional customers from each market with leveraged trading cryptocurrency derivatives. U.S. customers could access the BitMEX platform from November 2014 to October 1, 2020. 

CFTC found out that consumers in the United States placed orders via user interfaces of BitMEX directly. Thus, BitMEX somewhat played a counterpart to some transactions. The order thus concludes that BitMEX breached the CEA without approval as a DCM or Swap Execution Facility (SEF).

Moreover, BitMEX violated the CEA by acting as the Futures Commission Merchant (FCM) without the registration of CFTC, accepting bitcoin as a counterpart to the digital asset derivative operations. 

The ruling further found that BitMEX had not implemented a program to identify American individuals utilizing the platform. In addition, it did not implement a Customer Information Program (CIP), Know-Your-Customer (KYC) approach, and Anti-Money Laundering (AML) program.

BitMEX is Settling the Case

CFTC Acting President Rostin Behnam remarked that the case underlines the necessity for the digital assets world to take its duties in the regulated finance business seriously.

The settlement requires entities running BitMEX to pay a $100 million civil monetary penalty. In addition, the five entities behind BitMEX will pay $80 million for the charges and $20 million suspended for review. However, BitMEX neither admitted nor denied the findings.

The corporation is compelled to provide an independent consultant to examine its transactions, rules, and processes as part of the settlement. There seems to be no choice for BitMEX but to be on the ‘correct path.’

Alexander Höptner, Chief Executive Officer of BitMEX, said in a statement that comprehensive user inspections, robust compliance, and anti-money laundering capacities are not just the hallmarks of their company.

It’s Not Just BitMEX

Resolving BitMEX’s issue with authorities is only one example of the U.S. administration’s increasing interest in cryptocurrencies regulation. At present, BitMEX has taken much more substantial measures to solve its “sin” of hiding transactions. 

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FinCEN suggested rules on crypto wallets requiring identity to be attached to certain-sized transactions, and Securities and Exchange Commission members requested additional powers to control crypto-trading.

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