The US Commodity Futures Trading Commission aka CFTC, is investigating crypto exchange BitMEX, a platform that’s become popular in Asia for letting people make big bets with big leverage.
The months-long CFTC probe is focused on whether BitMEX broke rules by allowing Americans to trade on its platform, which is not registered with the agency, said one of the people who asked not to be named discussing the investigation, which has not yet been made public. The regulator considers virtual currencies like Bitcoin (BTC) to be commodities, and it has jurisdiction over futures and other derivatives based on them.
The probe is ongoing and the regulator’s investigations often do not lead to allegations of misconduct.
The CFTC declined to comment.
“HDR Global Trading Limited, owner of BitMEX, as a matter of company policy, does not comment on any media reports about inquiries or investigations by government agencies or regulators and we have no comment on this report,” a BitMEX spokesperson said.
BitMEX CEO Arthur Hayes said in a January interview that BitMEX removes anyone who flouted company rules barring US residents and nationals. But, that it is possible clients masked their location by using virtual private networks to assign their computer an Internet protocol address from a BitMEX permitted country, tricking filters put in place.
Several US agencies claim some jurisdiction over digital currencies and the CFTC’s overview is largely limited to crypto derivatives and fraud and manipulation in the Spot market. Still, the main American swaps regulator has staked out a leading role overseeing virtual currencies and sued crypto firms for violating its derivatives regulations at home and abroad when US clients are involved.
BitMEX is registered in the Seychelles, its main office is in Hong Kong and it also has an office in San Francisco, California.
Mr. Hayes, one of the firm’s 3 co-founders, is a former Citigroup (NYSE:C). equities trader and a well-known presence at crypto conferences around the globe.
Samuel Reed, another co-founder, has a background in programming.
The 3rd, Ben Delo, previously worked as a VP at JPMorgan Chase & Co. (NYSE:JPM) in Hong Kong, at JPMorgan, Delo developed high-frequency trading systems.
The CFTC’s probe of BitMEX comes as authorities around the world step up scrutiny of a largely unregulated crypto market that has been beset by scams, accusations of price manipulation and a collapse in value of many heavily traded tokens.
President Trump wrote on Twitter 11 July that “I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air.”
BitMEX has posted a notice on its website that people who are citizens or residents of the US or the Canadian province of Quebec are prohibited from using the platform under its terms of service.
Founded in January 2014, BitMEX is regularly among the Top exchanges by reported volume, according to data from CoinMarketCap.com.
Its early selling point was a referral system which gave a portion of trading fees to clients who introduced new traders to the platform.
BitMEX also offers contracts similar to futures that let investors make leveraged bets of up to 100 to 1 on the direction of various digital currencies including Bitcoin and Ethereum.
Currently, Bitcoin is trading at 10,524.98, -7.96 (-0.08%) as of 4:31a BST, the market is open.
Just in: the US government has seized $19-M worth of Bitcoins from a drug trafficker, who allegedly laundered funds through the cryptocurrency on the dark website known as “Silk Road.”
The US Attorney’s Office for the Southern District of New York announced the news saying that the trafficker, Hugh Brian Haney, 60 anni, was arrested near Columbus, Ohio. In Y’s 2017 and 2018, Mr. Haney allegedly transferred Bitcoins representing drug proceeds he had earned through Silk Road to an account held at a company involved in the exchange of Bitcoin and other cryptocurrencies. He claimed falsely that the source of these Bitcoins was from mining.
The US Homeland Security Investigations (HSI) special agent-in-charge said: “HSI special agents employed blockchain analytics to uncover and seize bitcoins valued at $19-M and usher Haney out of the dark web shadows to face justice in the Southern District of New York.”
Mr. Haney is charged with 1 count of concealment money laundering and 1 count of engaging in a financial transaction in a criminally derived property. The former count carries a maximum jail term of 20 years, while the latter a maximum term of 10 years.
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