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US court orders BitMEX co-founders to pay a $30M fine for their illegal operations

BitMEX
TL;DR Breakdown
  • A US court has ordered the three co-founders of crypto exchange BitMEX to pay fines for trading cryptocurrencies illegally.
  • Co-founders Arthur Hayes, Samuel Reed, and Benjamin Delo will each pay $10M in fines for operating BitMEX with US citizens without the use of AML/KYC details.

On 5th May 2022, the CFTC reported that a New York court fined BitMEX co-founders $30M for operating a crypto exchange in contravention of the law. The fines are a resolution of February 2022 court proceedings of February where the three agreed that they ran BitMEX against US laws.

During the time, the three were charged with violating the Bank Secrecy Act by running the exchange without using the directed AML protocols. The exchange ran its operations in the US against these rules between 2014 and 2020.

The story so far

The legal battle between the US regulators, BitMEX, and its co-founders continues but seems to be at the climax. The exchange had also dealt with the CFTC last August, where it consented to pay a fine of $100M for the illegal operations.

The exchange had operated from its launch to 2020 without the proper anti-money laundering protocols while it was still under the leadership of its co-founders. It was also under heavy criticism for several years under the allegations of helping crypto hackers liquidate their loot. However, its management did not take any feasible action to resolve the matter.

The US regulators reacted by first sanctioning the platform in 2020 and when it also decided to remove the co-founders from its management. It was also around the same time that it introduced KYC registration. According to the CFTC, the three will have to settle the fines and are still awaiting sentencing on criminal charges.

Regulators react to the BitMEX case and the illegal use of cryptos

The CFTC chair Rostin Benham has reacted following the BitMEX case assuring that the agency will continue keeping order in the crypto space. He said that it has to keep a sharp eye for wrongdoers as the crypto sphere grows. Also, it is best to protect investors from unfair markets where fraud and other vices like manipulation are common.

Benham also clarified that the agency is making an example out of BitMEX to ensure that the crypto stakeholders and services providers comply with the regulator’s rules before offering any service.

The acting director of CFTC, Gretchen Lowe, also noted that the individuals who manage crypto platforms that offer services in the US must be ready to comply with all rules. Lowe said that no platform could evade federal laws like registering with the CFTC and using protocols that keep financial fairness at play.

Regarding the ongoing case against the three co-founders, BitMEX also commented via its spokesperson, Taylor Bossung. He said that the platform wishes to keep its distance from the case proceedings as it is no longer directly involved after its settlement last year. He also clarified that the exchange is operating as usual and is currently focused on launching the BitMEX spot exchange.

Crypto regulation continues globally

Away from the BitMEX case, the regulators are also coming up with new global rules for the crypto space. France has allowed Binance to trade cryptos by giving it a DASP registration via the AMF. The registration will allow the exchange to trade without fearing any legal actions against it in France.

The new South Korean President has also communicated that the country would delay crypto taxes to protect its investors. The crypto tax that was to come in force in the fiscal year 2022 has been delayed to 2024. This pro-crypto President based his campaigns on digital assets and their regulation.

Panama also passed a law that would regulate cryptocurrencies last month. The law seeks to amplify financial inclusion in the country and the creation of new jobs based on the crypto space.

Nellius Irene

Nellius Irene

Nellius Irene is a cryptocurrency investor and journalist who has been in the nascent space since 2018. She has researched and written on several crypto-related topics including non-fungible tokens (NFTs), decentralized finance (DeFi), fundraising, mining, etc. Her major focus is covering regulatory events that are capable of shaping the entire crypto ecosystem.

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