Key Takeaways
- The Commodity Futures Trading Commission reported today that the United States District Court for the Southern District of New York has entered consent orders against Arthur Hayes, Benjamin Delo, and Samuel Reed, three co-founders of the BitMEX cryptocurrency futures trading platform.
- In October 2020, the CFTC filed a complaint against BitMEX and its three co-founders for operating without a license in the United States.
- Individuals in charge of bitcoin derivatives trading platforms doing business in the United States must verify that their platforms comply with federal commodities laws, including CFTC registration and regulatory requirements like Know-Your-Customer and Anti-Money Laundering legislation.
A New York court has imposed a consent order against the three co-founders of crypto derivatives exchange BitMEX, Arthur Hayes, Benjamin Delo, and Samuel Reed, according to the Commodity Futures Trading Commission (CFTC).
The BitMEX co-founders have been fined $30 million by a US court, with each co-founder of the crypto derivatives trading site ordered to pay a $10 million punishment.
As digital asset markets expand globally, the Commission will seek to use its current enforcement authorities in the digital asset commodities arena to safeguard clients and guarantee that these emerging economies are free of fraud and manipulation,” said Chairman Rostin Behnam. “This is just another example of the Commission taking decisive action where necessary to ensure that trading platforms for digital asset derivatives comply with the Commodity Exchange Act and Commission regulations.”
“Individuals who control cryptocurrency derivatives trading platforms conducting business in the United States must ensure that their platform complies with applicable federal commodities laws, including CFTC registration and regulatory requirements such as Know-Your-Customer and Anti-Money Laundering regulations,” remarked Acting Director of Enforcement Gretchen Lowe.
On October 1, 2020, the CFTC filed a complaint against the BitMEX trading platform and its co-founders for conducting business without a license in the United States.
Without CFTC approval to operate as a Designated Contract Market (DCM) or a Swap Execution Facility, the crypto exchange provided services to US residents (SEF). The firm also worked as an unregistered Futures Commission Merchant (FCM). It also failed to follow customer information program (CIP) and know-your-customer (KYC) processes, as well as anti-money laundering (AML) regulations.
The CFTC settled the case against the BitMEX businesses with a consent decree dated August 10, 2021, which included a $100 million civil monetary penalty and injunctions against future CEA and CFTC violations.
The US District Court for the Southern District of New York imposed a consent order against five firms charged with operating the BitMEX bitcoin derivatives trading platform in August, according to the Commodity Futures Trading Commission. HDR Global Trading Limited, 100x Holding Limited, ABS Global Trading Limited, Shine Effort Inc Limited, and HDR Global Services (Bermuda) Limited are the companies involved.
The CFTC also filed criminal charges against three BitMEX co-founders and one of the company’s employees for violating the Bank Secrecy Act and conspiring to commit crimes. Furthermore, all three co-founders pleaded guilty and are awaiting sentencing.
Hayes, Delo, and Reed have pleaded guilty to Count One of the indictments and are expected to be sentenced in the coming weeks.
Before contributing funds, the public should double-check a company’s registration with the CFTC. Customers should be mindful of giving payments to unregistered entities. NFA BASIC can be used to determine a company’s registration status.
