BitMEX will pay $100 million to settle federal charges
Cryptocurrency futures trading platform BitMEX agreed to pay
$100 million Tuesday to settle charges brought by the Justice Department and
two federal financial regulators.
The five companies that operate BitMEX agreed to a consent
order with Commodity Futures Trading Commission (CFTC) and the Financial Crimes
Enforcement Network (FinCEN) approved Tuesday by the U.S. District Court for
the Southern District of New York.
BitMEX, a prominent trading hub for investment products
linked to cryptocurrencies, was charged in October with violating several CFTC
regulations that require companies that facilitate swaps and future trading to
register with the agency. FinCEN also charged BitMEX with failing to establish
basic anti-money laundering protocols required by the Bank Secrecy Act.
“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 CFTC Chairman Rostin Behnam (D) in a statement.
“The CFTC will take prompt action when activities impacting
CFTC jurisdictional markets raise customer and consumer protection concerns.”
BitMEX did not admit to or deny the charges, but will pay
$100 million split between the CFTC and FinCEN.
“Today marks an important day in our company’s history, and
we are very glad to put this behind us. As crypto matures and enters a new era,
we too have evolved into the largest crypto derivatives platform with a fully
verified user base, said BitMEX CEO Alexander Höptner in a statement.
“Comprehensive user verification, robust compliance, and
anti-money laundering capabilities are not only hallmarks of our business –
they are drivers of our long-term success”.
Registering with the CFTC and developing anti-money
laundering checks are two basic legal requirements for any major financial
platform involved in trading futures, swaps or other derivatives. BitMEX’s
alleged failure to do so underscores how many major online trading platforms,
such as Robinhood Financial, were able to grow to prominence without abiding by
fundamental financial rules.
Democrats and critics of the financial sector have called on
federal regulators to drastically step up their oversight of online trading
platforms, particularly within the cryptocurrency space, given their wide
reach. Several platforms also pitch themselves as unregulated even though they
likely should be.
Republicans have been more receptive to the online
investment boom and its ability to bring a broader range of investors into
financial markets, but have also expressed concerns about potential regulatory
gaps.
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