Cryptocurrency Trading Platform BitMEX Slapped with $100 Million Penalty for Money Laundering Violations

In a significant crackdown on illegal activities in the digital assets industry, the US Commodity Futures Trading Commission (CFTC) has announced that five companies operating the BitMEX cryptocurrency derivatives trading platform have agreed to pay a $100 million civil monetary penalty for violating anti-money laundering and consumer protection regulations.

CFTC Finds Violations

According to court documents, the companies - HDR Global Trading Limited, 100x Holding Limited, ABS Global Trading Limited, Shine Effort Inc Limited, and HDR Global Services (Bermuda) Limited - were charged with operating BitMEX while conducting significant aspects of its business from the US, including accepting orders and funds from US customers.

The CFTC found that BitMEX violated the Commodity Exchange Act by:

Operating a facility to trade or process swaps without being approved as a Designated Contract Market (DCM) or Swap Execution Facility (SEF)
Failing to implement adequate anti-money laundering (AML) procedures, allowing it to accept bitcoin and other cryptocurrencies from US customers without proper verification

Regulatory Concerns

The CFTC’s enforcement action is the latest in a series of crackdowns on cryptocurrency trading platforms that fail to comply with anti-money laundering regulations. The agency has warned that digital asset markets are increasingly vulnerable to money laundering and terrorist financing due to their lack of transparency and regulatory oversight.

Bermuda, known for its lax financial regulations, has become a haven for crypto criminals.
“It’s no surprise that BitMEX, which is headquartered in Bermuda, was able to operate without proper AML procedures in place.”

Global Efforts

The CFTC’s action against BitMEX comes as regulators around the world are stepping up their efforts to combat money laundering and terrorist financing in the digital assets industry.

“This case reinforces the expectation that cryptocurrency trading platforms must take seriously their responsibilities in the regulated financial industry.”
“We will continue to take prompt action when activities impacting CFTC jurisdictional markets raise customer and consumer protection concerns.”

Impact on BitMEX

The CFTC’s enforcement action against BitMEX is a major blow to the company, which has already lost millions of dollars in revenue due to its inability to operate in the US market.

“This decision sends a clear message to cryptocurrency trading platforms that fail to comply with anti-money laundering regulations.”
“We will continue to work closely with our international partners to ensure that these markets are transparent, fair, and free from illegal activities.”

Public Warning

The CFTC has urged the public to verify a company’s registration with the agency before committing funds. If unregistered, customers should be wary of providing funds to that entity.

In related news, the US Attorney’s Office for the Southern District of New York indicted four individuals, including BitMEX founders Arthur Hayes, Benjamin Delo, and Samuel Reed, on charges of willfully causing BitMEX to violate the Bank Secrecy Act and conspiracy to commit that same offense. The defendants have entered not guilty pleas in the criminal matter.

Acknowledgments

The CFTC has thanked the Financial Crimes Enforcement Network (FinCEN) for its assistance in this matter. The agency also acknowledged the assistance of the Hong Kong Securities and Futures Commission, the Bermuda Monetary Authority, and the Financial Service Authority Seychelles.