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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.

BitMEX Switches Up Leadership Following CFTC Allegations; CTO Samuel Reed Released

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Just last week, prominent cryptocurrency exchange, BitMEX made its way under the spotlight following a series of charges from the government of the United States. After publicly denying the accusations, the exchange recently released a blog post highlighting the change in leadership at the firm.

Defendants Step Down From Their Respective Roles

The parent company of BitMEX, 100x Group with the consent of the founders, has reportedly decided to change the management of the cryptocurrency exchange. The allegation made by the Commodities Futures Trading Commission [CFTC] highlighted Ben Delo, Arthur Hayes, and Samuel Reed, the owners of the exchange as the primary accused. The Department of Justice also charged the trio for disrupting the Bank Secrecy Act.

Soon after the charges were made public, BitMEX went on to share a blog post denying the allegations. However, almost a week later, the exchange decided to switch up the leadership roles in the firm. Arthur Hayes who was previously the CEO of the platform was replaced by Vivien Khoo who was serving as the chief operating officer at the 100x Group. However, Khoo’s latest upgradation is on an interim basis.

Samuel Reed was also dethroned from his role as the CTO of the exchange. The post further revealed that Ben Delo was restrained from holding any executive positions in the 100x Group. The Chairman of the 100x Group shared his stance on the latest switch in the management. He said,

“These changes to our executive leadership mean we can focus on our core business of offering superior trading opportunities for all our clients through the BitMEX platform, whilst maintaining the highest standards of corporate governance.”

While Wong suggested that the platform’s senior leadership team was well in place to continue running the operations, the firm revealed that the senior leaders and the technology team would carry out the daily management of the platform as usual.

Furthermore, Greg Dwyer had reportedly taken a leave of absence as the Head of Business Development.

BitMEX CTO Finds His Way Out Of Jail

After being arrested for violating the Banking Secrecy Act as well as illegally running the cryptocurrency exchange, Samuel Reed was arrested with the other two owners. Reed was the first to go behind bars while the others part of the case were still being questioned. However, his $5 million appearance bond was approved by the United States District Court on 3 October 2020.  A virtual court hearing had taken place on 1 October 2020 between Reed and the Court.

Capture

With the passports of both Reed as well as his wife being seized, he would have to appear before the court if he was to be convicted. While the maximum sentence for the allegations made against the trio is up to five years, Reed would have to surrender and serve a sentence if the allegations were proven by the prosecutors.

Over 45,000 BTC Pulled from BitMEX after CFTC Charges

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The US Commodity Futures Trading Commission [CFTC] and the acting U.S. Attorney for the Southern District of New York’s announcement charging BitMEX with facilitating unregistered trading and other illegal transactions did not make good reading.

Since then, more than 45,000 BTC have been pulled from the exchange which represents over 20% of the Bitcoin deposited on BitMEX, and nearly 1% of the total circulating BTC supply. This was noted by analysis firm Glassnode which further revealed this resulted in a major drop of 27% Bitcoin balance on BitMEX. The figures fell to 120,000 BTC.

Glassnode scaled

Notably, the largest drop happened on the 2nd of October, when 44,000 BTC were withdrawn from the exchange. This was observed to be the largest negative net flow until the date. Around 30% of those funds were transferred to crypto exchanges like Genimi and Binance in equal amounts.

It was not just the spot trading that was affected. On the derivatives front as well, Bitcoin’s open interest in perpetual futures contracts on BitMEX saw a significant decline by approximately 24%, from $590 million to $450 million. This level was last seen in May as the market was recovering from the Black Thursday crash.

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But could this be an omen?

The US prosecutors filing criminal charges on the four founders of BitMEX which has been a crucial player in both spot as well derivatives space is worrisome. And despite the fact that this news did not have much impact on the broader cryptocurrency market, a space that is mostly driven by FOMOs and FUDs, was indeed a sign of maturity.

The recent accusations could potentially help Bitcoin, and the rest of the cryptocurrency market by extension, to grow. According to popular Analyst Willy Woo, cases like this would help platforms “to clean up their practices”. He further expects to see “less volatility, less scam-wicking, more spot volumes, more organic moves, more institutional money.”

Bill Barhydt, Abra Co-Founder, and CEO had recently opined that the key reason as to why the US still does not have a Bitcoin ETF was because of markets such as Bitmex. He further went on to say that BitMEX is easily manipulated by large traders. He had further added,

“This episode will likely be a boon for other regulated futures exchanges that offer significant leverage. Gambling is gambling. If you work in crypto please wake up. If your firm hasn’t lawyered up then you’re working at the wrong firm. Hodlers and lawyers are the big winners here.”

BitMEX Incurs Acute Loss Despite Denying CFTC And DOJ Charges

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Prominent cryptocurrency exchange, BitMEX recently fell under the purview of the Commodities Futures Trading Commission [CFTC] of the United States. The financial regulator reportedly charged the owners of BitMEX for illegally running the crypto derivatives platform.

BitMEX Strikes Back

BitMEX has been one of the notable exchanges in the crypto industry. However, the latest news could pose as a huge setback for the exchange. In a recent release, the CFTC alleged that BitMEX was an unregistered platform and had violated several regulations put forth by the CFTC including the embodiment of anti-money laundering procedures. Along with CFTC, the owners of BitMEX, Ben Delo, Arthur Hayes as well as Samuel Reed were also charged by the Department of Justice for violating the Bank Secrecy Act.

The announcement pointed out that the aforementioned trio was carrying out illegal leveraging services, futures, options, swaps on digital assets like Bitcoin [BTC], Ether [ETH], and other prominent cryptocurrencies since November 2014. The financial regulator further revealed that the exchange had garnered more than $1 billion worth of fees since 2014.

Soon after the CFTC charged the exchange with the case, BitMEX shared a press release to assure its users that it wasn’t in troubled waters. BitMEX went on to denounce the CFTC’s charges and suggested that the platform would continue to defend the accusations. The exchange affirmed that the latest news wouldn’t have an impact on the operations of the exchange. However, an off-cycle withdrawal would be processed at 8:00 UTC as well as 13:00 UTC on 2 October 2020.

The announcement further read,

“We strongly disagree with the U.S. government’s heavy-handed decision to bring these charges, and intend to defend the allegations vigorously. From our early days as a start-up, we have always sought to comply with applicable U.S. laws, as those laws were understood at the time and based on available guidance.”

BitMEX Faces Acute Losses

Despite its attempts to eliminate commotion in the crypto community, BitMEX failed to retain its users. Several online analytics platforms highlighted how the exchange was subject to huge losses since the CFTC and DOJ charges. Glassnode Studio reported that a total of 40,000 BTC was withdrawn from the exchange. The platform shared the same on Twitter,

While Bitcoin has been trading for $10,532.50, the aforementioned number of Bitcoins withdrawn from the exchange amounted up to a whopping $420 million. BitMEX went on to break several other records in terms of outflows. Glassnode also highlighted that a total of $243 million in BTC was withdrawn within a course of just one hour, making it the largest to date.

Additionally, the XBTUSD open interest had also taken a hit on the exchange. Prominent data analytics platform, Skew pointed out that the open interest was down by 20% since the news of the charges surfaced the internet.

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CFTC’s latest allegations have already begun taking a toll on the cryptocurrency exchange. The prolongation of this withdrawal spree could further cause a tremendous loss for BitMEX.

BitMEX Officials Get Slapped with Criminal Charges as US DoJ Investigates Money Laundering Activities

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The cryptocurrency market has again been mired in controversies, this time involving one of the most high profile companies in the industry. Recent reports revealed that prosecutors in the United States have filed criminal charges against crypto exchange primo BitMEX for flouting money laundering rules.

The case has sent shockwaves across the industry with the decision splitting the industry. According to the report, the top officials of Bitmex were all involved in the charges, including chief executive Arthur Hayes.

In the report put forth by the US Department of Justice, the judges have charges Arthur Hayes, Samuel Reed, Benjamin Delo, and Gregory Dwyer, BitMEX’s first employee who eventually became the company’s head of development. All four officials were accused of violating the Bank Secrecy Act instituted by the US federal government.

Federal prosecutors in Manhattan stated that the cryptocurrency exchange had taken few or no steps to limit customers on the platform even after warnings of hacks. The hacks were being investigated by the DoJ with the body suspecting that BitMEX was being used to launder money by citizens of countries like Iran. One of the reports said that “BitMEX made itself available as a vehicle for money laundering and sanctions violations”.

Another crucial point that brought BitMEX under the scanner was the fact that the company was incorporated in Seychelles even though its officers were in New York and Hong Kong. Earlier recordings have Hayes clearly claiming that bribing officials in Seychelles would be as expensive as buying a coconut. Hayes and his team of lawyers have come out strongly against the charges with the initial defense expected to be vigorous.

As BitMEX plans to defend itself, the Commodity Futures Trading Commission [CFTC] has filed a separate civil lawsuit to halt BitMEX’s US derivatives business. The CFTC was also joined by the Federal Bureau of Investigation [FBI] Assistant Director William Sweeney in the case against BitMEX. Sweeney was livid that the company officials had openly talked about bribing government officials and assured the public that justice would be served.

Brazil’s Regulator Orders Binance to Stop Providing Crypto Derivatives

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Brazil ‘s financial regulator, the Securities and Exchange Commission, which is commonly known as CVM, has prohibited Binance ‘s giant trading platform from offering cryptocurrency derivatives in the country. According to the authority, derivatives are cryptos or underlying assets, which are considered to be securities.

As such, Binance is required to register with CVM in order to secure an operating license to offer crypto derivatives. The Binance Exchange Platform does not, however, hold such a license to operate as a securities intermediary in Brazil. Indeed, the regulator’s notice points to the growing interest of the investor in cryptocurrency derivatives.

Growing investor interest in the crypto derivatives market

Crypto derivatives allow investors to bet on the market value of cryptos without the need for an actual token. Caution also follows a period when the majority of vital cryptocurrency spots begin to focus on public crypto derivatives offerings on the market, such as BitMEX. For instance, Binance launched a trading margin functionality.

Crypto derivatives offered by Binance aim to form a market that imitates the traditional markets sub-structure. Binance primarily focuses on integrated investment products to drive cryptocurrency adoption in the form of crypto derivatives. As of now, Binance is yet to respond to the ban. Furthermore, the ban will directly impact traders who deal with crypto derivatives in Brazil. The order by CVM reads: 

“It remains evident that the company Binance Futures, through the webpage ‘www.binance.com,’ captures customers residing in Brazil with a public offering of derivative intermediation services…; the aforementioned company does not hold authorization from this Securities and Exchange Commission to act as a securities intermediary.” 

Brazilians not missing cryptocurrency trend

Brazil has off late been a hive of crypto activities in recent years. Brazilians are yet to miss crypto-related trends in the nation. Indeed, in the LATAM region Brazil was the top country in terms of both policing and innovation. In conclusion, Brazil’s journey towards crypto oversight took an additional step in 2019 after the lawmakers formed a commission to contemplate the subject. 

Bitmex Announces Native ETHUSD Quanto Futures Contract with Fixed Bitcoin Multiplier

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The cryptocurrency market has witnessed several updates and developments in the past few months. One of the biggest positive takeaways from this was the fact that multiple activities took place despite the crypto market cap taking a hit over the last couple of weeks.

In another message that virtual asset markets were more confident than ever, BitMEX launched its latest Ethereum-based futures contract on 24 April. The derivative contract will contain a fixed bitcoin multiple that will be untouched by the value of Ethereum in USD.

The popular trading platform stated that the latest feature was one of its kind in the market with the ability to open new doors for trading on the platform. Investors holding ETHUSD quanto futures contracts will not have to worry about daily exchange rate changes, according to the platform.

BitMEX users can use the latest feature to their advantage by going long or short on ETH trade without holding actual tokens or USD. According to an official BitMEX release:

“This allows traders to long or short the ETH/USD exchange rate without ever touching either ETH or USD! Traders post margin in XBT, and earn or lose Bitcoin as the ETH/USD rate changes.This contract combines the quanto feature of our ETHUSD perpetual swap with the expiry and settlement found in traditional futures. As with every BitMEX altcoin future, it expires quarterly.”

Sources indicate that BitMEX will enter into a futures contract on May 5, the day after the much-awaited bitcoin halving. Users will be able to trade the same contract with a leverage of 50x, a high rate considering that BitMEX has been trailing its competitors in terms of market share capture. The exchange created the new contract by combining its perpetual swap contract quanto feature with the expiry of traditional futures.

Users also need to keep in mind that quanto contracts will also expire every quarter just like BitMEX’s altcoin futures contract. The Bitcoin multiplier will work at a rate of 0.000001 with a maker fee of -0.025 percent. The taken fee proposed by the exchange is 0.075 percent with a base initial margin of 2 percent.

Those interested in dabbling in the futures contract can test BitMEX’s product for the next two weeks on the released testnet version of the quanto futures. The company will want to win back its lost ground by gaining dominance in the burgeoning market. The current ETH-USD trading contract will expire by June, after which analysts expect a new surge of investors.