The U.S. CFTC and FinCEN 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. BitMEX has received more than $11 billion in bitcoin deposits and made more than $1 billion in fees.
The U.S. Commodities and Futures Commission (CFTC) and Financial Crimes Enforcement Network (FinCEN) have taken coordinated action against BitMEX. The court order requires the BitMEX entities to pay a $100 million civil monetary penalty. 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 FinCEN. The order also prohibits BitMEX from further violations of the Commodity Exchange Act (CEA) and CFTC’s regulations as charged.
FinCEN has assessed a civil money penalty in the amount of $100 million against BitMEX for violations of the Bank Secrecy Act (BSA) and FinCEN’s implementing regulations. According to FinCEN, BitMEX operated as an unregistered futures commission merchant (FCM) and provided money transmission services. It willfully failed to comply with its obligations under the BSA. FinCEN’s action is part of a global settlement with the CFTC.
As reported by FinTelegram, the CFTC filed a civil enforcement action on October 1, 2020, against the BitMEX entities and their three individual founders, Arthur Hayes, Benjamin Delo, and Samuel Reed (see press release). The 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.