US Court Orders BitMEX To Pay $100 Million

[Updated] The U.S. CFTC announced that the “U.S. District Court for the Southern District of New York entered a consent order against five companies charged with operating the BitMEX cryptocurrency derivatives trading platform,” with the order requiring the “BitMEX entities to pay a $100 million civil monetary penalty.”

The CFTC said, “The Commodity Futures Trading Commission announced that the U.S. District Court for the Southern District of New York entered a consent order against five companies charged with operating the BitMEX cryptocurrency derivatives trading platform. The companies are HDR Global Trading Limited, 100x Holding Limited, ABS Global Trading Limited, Shine Effort Inc Limited, and HDR Global Services [Bermuda] Limited.

“The order requires the BitMEX entities to pay a $100 million civil monetary penalty, and provides that up to $50 million of the penalty may be offset by payments the BitMEX entities make or are credited pursuant to a Consent to Assessment of Civil Monetary Penalty entered by the Financial Crimes Enforcement Network [FinCEN]. The order also prohibits BitMEX from further violations of the Commodity Exchange Act [CEA] and CFTC’s regulations as charged.”

“This case reinforces the expectation that the digital assets industry, as it continues to touch a broader pool of market participants, takes seriously its responsibilities in the regulated financial industry and its duties to develop and adhere to a culture of compliance,” said Acting Chairman Rostin Behnam. “The CFTC will take prompt action when activities impacting CFTC jurisdictional markets raise customer and consumer protection concerns.”

Acting Director of Enforcement Vincent McGonagle added, “This action highlights that the registration requirements and core consumer protections Congress established for our traditional derivatives market apply equally in the growing digital asset market. Cryptocurrency trading platforms conducting business in the U.S. must obtain the appropriate registration, and must implement robust Know-Your-Customer and Anti-Money Laundering procedures.”

“The order stems from a CFTC action filed on October 1, 2020 against the BitMEX entities and their three individual founders, Arthur Hayes, Benjamin Delo, and Samuel Reed. The CFTC complaint charged the entities and founders with operating the BitMEX platform while conducting significant aspects of BitMEX’s business from the U.S. and unlawfully accepting orders and funds from U.S. customers to trade cryptocurrencies, including derivatives on bitcoin, ether, and litecoin. The CFTC’s litigation against BitMEX’s founders continues.

“The CFTC thanks the Financial Crimes Enforcement Network [FinCEN] for its assistance in this matter. The CFTC also thanks and acknowledges the assistance of the Hong Kong Securities and Futures Commission, the Bermuda Monetary Authority, and the Financial Service Authority Seychelles.”

Update Aug 12, 12.20pm: A BitMEX spokesperson said, “We are pleased to have reached a resolution with both the CFTC and FinCEN and to put these matters behind us. As responsible innovators, we are continuously strengthening our compliance framework and have already delivered industry leading user verification and anti-money laundering controls which will remain at the centre of everything we do. We are committed to becoming a regulated exchange and are looking to set the benchmarks in this new era for crypto. This is the beginning of a new BitMEX and we’ve never been more confident in our potential for future growth.”

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