U.S. federal court litigation charged exchange operators with running an unregistered trading site and failure to impose anti-money laundering and other restrictions. Criminal cases have since been filed
Just at the beginning of October 2020, the US Commodity Futures Trading Commission (CFTC) sued operators of the BitMEX bitcoin derivatives exchange with unlawfully working in the United States.
In a lawsuit that the U.S. District Court for the Southern District of New York filed, the CFTC brought federal law enforcement proceedings against Arthur Hayes, who is the CEO and co-founder of BitMEX, Samuel Reed, CTO Exchange and co-founder, and Ben Delo, its co-founder for running an unregistered trading platform and breaching a variety of CFTC rules. This included failing to enact the requisite know-how.
The Legal Battle Poses a Tough Moment for BitMEX
The CFTC contends that, under the leadership of Hayes, Reed, and Delo, BitMEX has unlawfully sold leverage retail commodity trades, options, futures, and cryptocurrency swaps since 2014 allowing consumers to exploit up to 100x of exploit and giving them the opportunity to make high-level gains from minor fluctuations in crypto markets.
According to the CFTC, BitMEX has failed to enforce the core regulatory frameworks expected by financial firms that have an effect on U.S. markets. The Agency charged BitMEX with running a swap processing or trading facility without the sanction of CFTC as a designated swap execution facility or a contract market facility.
The regulatory body also accused BitMEX with infringing the CFTC regulations by failing to enforce anti-money laundering, client identification systems and client-knowledge procedures.
It is not the first time BitMEX has been faced with regulatory problems. The cryptocurrency exchange has been on the receiving end of several litigation over the past six months or so, which has cast a long shadow across one of the main crypto operators in the industry. In March of this year, the U.K. Financial Conduct Authority ( FCA) released a whistle on BitMEX for not being allowed to work in the region.
The financial watchdog disclosed that the Crypto Exchange was running and selling financial services and goods to citizens of the United Kingdom without being granted regulatory authority by the regulator. BitMEX working without the authorisation of regulators leaves markets vulnerable.
