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BitMEX resolves case with CTFC, FinCEN in $100M settlement

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Prominent crypto exchange, BitMEX is once again making headlines after it came to a settlement with the Commodity Futures Trading Commission [CFTC], and the Financial Crimes Enforcement Network [FinCEN] of the United States.

Back in 2020, BitMEX made immense news after it fell under the purview of the Commodity Futures Trading Commission [CTFC] for its weak anti-money laundering protocols. Several executives of the exchange were arrested by the US government over the same. The platform’s former CEO, Arthur Hayes was one among them. While Hayes found his way out following a $10 million bail, the trial of the other founders, Ben Delo well as Sam Reed is said to kickstart in March 2022.

As this case persists, the exchange went ahead and decided to pay the financial watchdogs a whopping $100 million. The CTFC shared an announcement revealing the same and the reason behind the penalty. The platform will reportedly be paying this amount for carrying out functions of a crypto platform along with anti-money laundering violations.

BitMEX settles with CTFC and FinCEN

Alongside the $100 million, BitMEX would have to recruit an independent consultant in order to carry out a historical analysis of all the transactions to look for any suspicious activity in the past that had been overlooked.

Acting Chairman Rostin Behnam addressed the same and stated,

“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. The CFTC will take prompt action when activities impacting CFTC jurisdictional markets raise customer and consumer protection concerns.”

Additionally, the five other companies part of the settlement were namely, HDR Global Trading Limited, 100x Holding Limited, ABS Global Trading Limited, Shine Effort Inc Limited, and HDR Global Services (Bermuda) Limited.

BitMEX logo to be featured on AC Milan jersey following its latest deal

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Crypto is going places and this crypto exchange is leading the way. BitMEX, a prominent cryptocurrency exchange revealed that it had joined hands with AC Milan as a sleeve partner.

Crypto and sports go way back. The sports industry has been welcoming and accommodating to the crypto-verse. An array of sports clubs have made partnerships and embraced cryptocurrencies. The frequency of this has certainly increased over the last couple of months. Further elevating the presence of crypto in the sports sector, BitMEX signed a multi-year partnership with AC Milan.

In a recent press release, AC Milan revealed that the crypto platform was the very first sleeve partner as well as its official crypto trading partner.

BitMEX becomes AC Milan’s first sleeve partner

The crypto exchange’s logo will reportedly be seen on the sleeves of both the women’s as well as the men’s teams. Additionally, the logo will also be featured on AQM, its eSports team.

The BitMEX-featured jerseys would go live starting from 23 August 2021.

The CEO of BitMEX, Alexander Höptner, spoke about the platform’s debut into the sports sector and stated,

“Our partnership with AC Milan is the start of a hugely exciting new chapter for BitMEX as we look to ramp up brand awareness and increase understanding of crypto. AC Milan is one of the world’s most progressive football clubs, and combined with its rich footballing heritage boasts extraordinary reach and engagement with fans globally. We felt we’d come home when we started talking to the Club, and we can’t wait to start interacting with the global Rossoneri family.”

Not too long ago, another prominent crypto exchange, FTX decided to roll out an NFT marketplace exclusively for the sports sector. Turns out, the ardor for crypto in the sports industry still remains high.

With football being one of the most-watched and sought-after sport, BitMEX’s association with a prominent member of the industry would not only boost its popularity but also pave the way for elevated interest in crypto.

BitMEX receives ISO information security certification

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Seychelles-headquartered BitMEX has announced receiving International Organisation for Standardisation [ISO] information security certification on the 7th of June. ISO is essentially a global body that determines and reviews crucial standards across several different industries.

The official announcement of the exchange read,

“It’s difficult to overstate the importance of information security for a platform like BitMEX. Traders trust us because of our track record on security – we have never lost a single Satoshi through intrusion or hacking. But security is never a static process and in order to continue to set the bar as high as possible, we sought – and were awarded – one of the most rigorous certifications: ISO/IEC 27001.”

According to the cryptocurrency platform, ISO/IEC 27001 is much more than just an audit of IT systems. This particular certification requires a comprehensive examination of a particular organization’s information security risks such as threats, vulnerabilities, and impacts.

ISO/IEC 27001 also deals with the evaluation of a bespoke, comprehensive set of information security controls and risk mitigation tools as well as carrying out a thorough management process to make sure information security standards continue to advance and develop.

BitMEX’s legal issues

This news comes after the date for the derivatives platform’s money laundering trial was set to start in March next year.

The crypto derivatives platform had been on the business end of multiple legal cases and will face money laundering charges eighteen months after the charges were first announced.

2020 has been a challenging year for BitMEX and its founders. Is Co-founder and ex-CEO Arthur Hayes, co-founder Benjamin Delo, and CTO Samuel Reed, BitMEX’s head of business development, Gregory Dwyer, all faced charges of allegedly violating multiple regulatory requirements at once.

The US Commodity Futures Trading Commission [CFTC], in particular, accused the firm of functioning an “unregistered trading platform” that did not offer the essential measures to fight money laundering. As a result, the four execs lost their positions at the company.

Bitcoin scaling researcher acquires $150K grant from crypto exchange BitMEX

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Bitcoin [BTC] was the first cryptocurrency to ever exist. Despite being more than a decade old, the king coin hadn’t given up on its spot as the largest cryptocurrency, in terms of price as well as market cap. Not only did Bitcoin pave the way to an array of other cryptocurrencies, but also formulated an entire industry. The emergence of other crypto assets opened the doors to better use cases and features.

In order to make sure BTC remains on top, a Korean Bitcoin scaling researcher, Calvin Kim went on to roll out Utreexo. Aiding this initiative, prominent cryptocurrency exchange, BitMEX announced its second grant.

Bitcoin scaling solution receives aid from Human Rights Foundation

Back in August 2020, BitMEX revealed that would support Kim’s research by providing him with a grant of $30,000. In the exchange’s recent blog post it was revealed that BitMEX was offering a total of $100,000 once again to support Kim’s research up until June 2022.

The CEO of BitMEX, Alex Höptner addressed the same and noted that the exchange was glad to be funding a Korean developer like Calvin Kim as it emphasizes “Geographic Diversity Of Bitcoin Development.” Elaborating on BitMEX’s latest move, Kim stated,

“I’m incredibly grateful for the financial support that BitMEX has provided me for the past year. Being financially stable has allowed me to focus more attention to furthering research and development of the Utreexo Project. Last year, I focused on prototyping a Utreexo Bitcoin Full Node, moving the project closer to reality from just a research project.”

Additionally, BitMEX went on to partner with the Human Rights Foundation to support Kim. The non-profit platform reportedly offered a lump sum grant of $50,000 to Kim in BTC. The Chief Strategy Officer of the Human Rights Foundation, Alex Gladstein suggested that the Human Rights Foundation intended to make BTC a “more useful and resilient tool of liberty for people across the globe.” He added,

“It is exciting for HRF to have the opportunity to bolster Calvin’s efforts and we hope that his work can inspire others from the region to get involved with Bitcoin and contribute to its mission to provide open-source freedom money for the world.”

Former BitMEX Exec Arthur Hayes Released On $10M Bond After Surrender

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Arthur Hayes, the former chief executive officer of the cryptocurrency exchange BitMEX, was reportedly released on a $10 million bond pending court proceedings in New York. According to an exclusive report by Bloomberg, Hayes had turned himself in Hawaii on 6th April.

Nearly xix months prior to the surrender, the federal prosecutors had levied charges against him along with three other BitMEX executives. All four of the top officials of the cryptocurrency exchange were previously accused of conspiring to evade US laws requiring the implementation of money-laundering controls.

Hayes’ lawyers claimed the former BitMEX CEO to be “self-made entrepreneur who has been wrongly accused of crimes”. They also described him as “Singaporean resident” and stated,

“Mr. Hayes voluntarily appeared in court and looks forward to fighting these unwarranted charges.”

The Commodity Futures Trading Commission [CFTC] first began investigating BitMEX in 2019. According to the prosecutors, instead of working with the US agency, the crypto exchange was allegedly involved in circumventing compliance programs and chose to base the company in Seychelles in a bid to escape regulatory scrutiny.

Along with Hayes, Ben Delo and Samuel Reed were each charged with one count of violating the Bank Secrecy Act and one count of conspiring to violate the act. Delo, who happens to be one of the co-founders of BitMEX was released on a $20 million bond after surrendering to the US prosecutors.

The company’s former CTO, Reed, on the other hand, was arrested in Massachusetts on the very same day the charges were disclosed in last October.

BitMEX’s fourth fugitive exec, Gregory Dwyer, had earlier had declined to surrender. On this regard, the lawyers had stated,

“We have been in touch with the government on Mr. Dwyer’s behalf and have informed them of his whereabouts. They are also aware that he has every intention to defend himself in court against these meritless charges and is eager to do so.”

BitMEX Exec Delo Released On $20M Bond After Surrendering To US prosecutors

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Cryptocurrency trading and derivatives exchange BitMEX has been treading the troubled waters for the past several months and hence has been laying low. In the recent development, one of its co-founders, Ben Delo has been now released on a bail bond of $20 million after pleading not guilty to all charges.

The Co-owner of the platform had surrendered to US prosecutors on the 15th of March for the criminal charges brought against him for violation of the country’s Banking Secrecy Act by the US Department of Justice and the Commodity Futures Trading Commission [CFTC]. According to Bloomberg, Delo was reportedly arraigned remotely before Magistrate Judge Sarah L. Cave during a proceeding on the same day.

The terms of the bail bond will allow the Oxford-educated computer scientist to return to UK after being subjected to a travel ban to the country.

Rachel Miller, a spokesperson for BitMEX’s exec, was quoted saying

“The charges against Ben are unfounded and represent unwarranted overreach by the U.S. authorities, Ben intends to defend himself against the charges and clear his name in court.”

Apart from Delo, there are two other co-founders, who help build BitMEX, and are facing similar charges from the US authorities.

Where Are BitMEX’s Other Three Execs?

Just days after BitMEX was charged for allegedly flouting banking laws while serving customers of the country, its CTO, Samuel Reed was arrested by the authorities in Massachusetts before releasing on a bail bond. Also, the former CEO of the derivatives platform, Arthur Hayes, was, still at large and currently residing in Singapore.

While he is expected to stay there, however, it was reported that he would appear for proceedings in Hawaii, US should the trial go to court.

This news comes a week after BitMEX’s fugitive executives Arthur Hayes and Ben Delo were reported to be negotiating a surrender with the country’s authorities. The US attorney Jessica Greenwood had previously revealed that Delo had intended to surrender in New York by the end of the month.

This was according to transcripts obtained from a court teleconference back in February in which the attorney had also revealed that Greg Dwyer, BitMEX’s fourth exec and Head of Business Development, Greg Dwyer had declined to surrender. Extradition proceedings were initiated following this to bring him back from Bermuda.

Binance’s CZ: “Certain CBDCs Could Lack The Freedom That Bitcoin Has”

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Over the course of this month, a lot of stuff went down in the crypto-verse. The crypto exchanges under the spotlight for steering into the bad side of the regulators were BitMEX and OKEx. Although some proposed that the arrest of BitMEX ‘s founders was a crypto-verse lesson, a few others thought otherwise. Several crypto personalities have commented on the spiraling of BitMEX, and Binance’s Changpeng Zhao is the latest to join the list. CZ also addressed the development of CBDCs in a recent interview.

A Wake-Up Call For The Crypto-Verse

BitMEX fell under the purview of the United States’ regulators as it failed to put into place the required user verification procedures. While the negligence of the exchange has caused it a hefty price to pay, CZ revealed that the regulatory climate across the globe has become increasingly severe since 2018. He added,

“[BitMEX’s indictment] is a wake-up call for the rest of the players to be more cautious, to be fully compliant. Back in the summer of ’15, you could probably do anything because there was no regulatory [guidance]. But I think by 2018 and in the last couple of years, there has been a lot of regulatory guidelines.”

Elaborating on how his Malta-based crypto exchange has always been compliant with the decrees put forth by the regulators across the globe, CZ mentioned the launch of Binance’s United States exclusive platform, Binance US. He further added that the exchange was striving to keep the residents of the US away from the other platforms of Binance. He suggested that the exchange was not intending on stepping on anybody’s toes.

Furthermore, the development of Central Bank Digital Currencies [CBDC] has been on the mind of every nation. While several propose that these assets could pose as a threat to Bitcoin, CZ suggested otherwise. He pointed out how certain CBDCs could be deprived of the freedom that Bitcoin entails. However he added,

“If there is a government pushing another cryptocurrency that’s even more open, more free, has less restrictions than Bitcoin, and is faster and cheaper to use, then that would threaten Bitcoin. But that is good for the industry, it’s just something better than Bitcoin, and would replace it.”

With China at the forefront of developing CBDC, CZ revealed that Binance has no immediate plans of rolling out a yuan-based stablecoin following the several stipulations in China.

OKEx Lifts Temporary Ban On P2P Trading For Its Asian Currencies

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Several crypto exchanges were on the bad side of regulators this October. BitMEX and OKEx were one of the most popular exchanges that made a lot of news. While BitMEX was being slapped with more lawsuits, OKEx had commenced P2P trading for a few currencies.

Chinese, Indian and Vietnamese Currencies Find Leeway On OKEx

In a recent announcement titled, “Resumption of P2P Trading”, OKEx revealed that all trading activities would commence on the exchange from 21 October 2020 post 12:00 PM [UTC]. The platform revealed that the peer-to-peer trading wing for the Indian rupee, the Chinese yuan as well as the Vietnamese dong would be opened.

Just last week the exchange put a halt on its withdrawals following an investigation that was underway. The previous announcement suggested that a private key holder was working with a public security bureau and the exchange had reportedly been “out of touch” with the private key holder. While the details pertaining to the investigation was not disclosed by the exchange, OKEx suggested that the ban on withdrawals was temporary. This ban was enforced keeping in mind the security of the users.

Just yesterday, OKEx shared a tweet pointing out the ban of several accounts following security issues. The tweet read,

“Multiple accounts have triggered our risk management system. As a result, those accounts have been automatically banned for internal transfers. To ensure the safety of your assets, we’d like to remind users not to engage in unauthorized platforms.

Your funds are safe @OKEx”

Furthermore, the Head of Marketing who goes by the Twitter user name, Molly highlighted that certain users on the crypto exchange were persistent about taking their funds out. She added, “people been selling their USDT on OKEx with 15~20% price off. (the withdrawal is close, but transfer between OKEx users is still available.)”

Additionally, BitMEX seems to have taken its recent charges and arrests quite seriously as the exchange was implementing verification processes for its users that included KYC procedures. Users were reportedly required to complete the verification process before 5 November 2020. Users who fail to do so would be banned from withdrawing their funds after 4 December 2020.

BitMEX Continues To Swim In Troubled Waters As Another Lawsuit Haunts The Exchange

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Lady luck was clearly miles away from the prominent cryptocurrency exchange BitMEX. While the exchange is still dealing with the allegations made by the regulators of the United States, another set of changes have come in the way of BitMEX. However, the latest lawsuit is from another country.

BitMEX Slapped With Another Lawsuit

While BitMEX is still recovering from the blow it endured in the first week of October, the exchange was slapped with another lawsuit. This time, it was a Russian citizen, Dmitry Dolgov. Once again, the founders of the platform, Arthur Hayes, Ben Delo, and Samuel Reed were in trouble as the Moscow resident alleged that they were part of racketeering activities.

Dolgov alleged that the trio along a few others had garnered billions of dollars through illicit activities. In a 188-page lawsuit, filed in the Northern District of California suggested that the exchange steered away from anti-money laundering as well as know your customer obligations. Dolgov in his lawsuit accused the exchange of garnering money from anybody and everybody without looking into their background.

The lawsuit read,

“[….]unlimited funds from anyone, without a single question asked. Understandably, because of total lack of controls of any kind, hackers, tax evaders, money launderers, smugglers, drug dealers all flocked to BitMEX flooding the platform with hot money.”

The lawsuit also alleged that the exchange was procuring benefits from engaging in money laundering as well as market manipulation. BitMEX reportedly did so by employing its internal trading desk as well as indirectly. Two exchange accounts were opened by every money launder, where one would be a helper account while the other would be a winner account on BitMEX. The lawsuit detailed,

“The money launderer (Defendants) would then enter into a large leveraged derivatives position on BitMEX and immediately execute market orders from the helper account with maximum slippage to move the index price in a favorable direction.”

Pavel I. Pogodin, the plaintiff’s attorney demanded a trial by jury for all the issues that were triable to a jury.

The previous charges from the CFTC as well as DOJ still remain intact. While Arthur Hayes was still being questioned, Samuel Reed found his way out of prison on bail.

Crypto Mom Believes US Govt Intended To Send A Message To The Crypto-Verse Via BitMEX Arrests

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October was rather detrimental to BitMEX’s cryptocurrency exchange. The US regulators have charged and arrested the owners of BitMEX for illegally running the exchange. Apart from this, over the course of the case, the exchange even suffered acute losses. The Commissioner of the Securities and Exchange Commission, Crypto Mom, Hester Peirce, commented on the same in a recent interview.

US Law Enforcement Taking Crypto Seriously?

Hester Peirce is rightfully called the Crypto Mom following her inclination towards cryptocurrencies. The Commissioner has been vocal about her stance on crypto as well as the regulators’ less progressive attitude towards cryptocurrency. While Peirce was recently elected to serve as the Commissioner of the SEC once again, the crypto community viewed this as a great boost for the industry.

Appearing in a recent interview with Laura Shin, Peirce revealed her opinion about the latest tiff between BitMEX and the United States Commodity Futures Trading Commission [CFTC]. Peirce believes that the US government was trying to put out a message. Elaborating on the same, the Commissioner said,

“Well, I think that the message has been coming to the industry fairly loud and clear on the AML, KYC front, and I’m sure it will continue. It’s a difficult area frankly for very traditional financial firms, as well, and I think that lots of firms run into trouble there, but I think that it’s definitely sending a message to the crypto world.”

Highlighting how the case was not under the purview of the SEC, Peirce suggested that her knowledge about the case was limited to what she read on the papers.

After being accused by the CFTC as well as the Department of Justice for violating the Bank Secrecy Act, BitMEX publicly denounced all the allegations. Following these charges, the exchange incurred an immense loss as a total of $243 million in BTC was withdrawn within one hour post the announcement. However, the exchange went on to change the management as all the three owners were charged. While Samuel Reed sought a way out of jail, he was mandated to appear before court whenever summoned.