Bitmex is one of the largest Bitcoin futures marketplaces in the world. But the company kept coming into conflict with the law. The consequences are now showing.
Not only Binance is experiencing these days that cryptocurrency exchanges are not far removed from any law, but currently also the BitMEX futures exchange. In 2014 Arthur Hayes, Ben Delo, Samuel Reed founded the company, based in the Seychelles. Now the company is paying the hefty fine of $ 100 million to end a lawsuit with a government agency. The futures trader in the past missed careful scrutiny of its clients. In some cases, only an email address and a password were required to register. There is no trace of “I know your customer”.
However, by law, BitMEX should have taken a closer look at its users. In the past, the company was urged by US authorities to deny American market participants access to BitMEX products. However, since the company didn’t care much about auditing its customers, there were also Americans among BitMEX users. This was followed by an official lawsuit and, as a consequence, the fine of 100 million US dollars that the company now has to pay.
Not just BitMEX – regulatory pressure from authorities around the world
“This case underscores the expectation that the digital assets industry, which is attracting more and more market participants, takes its responsibilities in the regulated financial sector and its obligations to develop and maintain a legally compliant culture seriously,” said Rostin Behnam, the incumbent chairman of Commodity Futures Trading Commission, in the release published. He also announced that “the CFTC will immediately take massive action” if activities that affect the markets under the CFTC raise concerns about customer and consumer protection.
Since the lawsuit, BitMEX has struggled to regain the trust of the authorities. The company only announced on July 6, 2021 that BitMEX would be the first major verified derivatives exchange. 100 percent of customers are verified. If you want to create a BitMEX account now, you have to go through a thorough identity confirmation process.
All over the world, crypto trading platforms are currently experiencing that they are not outside the law. Authorities are exerting increased pressure on crypto exchanges, as Binance is currently clearly feeling. The CFTC is an independent American agency that aims to protect trading partners from fraudulent practices. The currently settled legal dispute with BitMEX proves that the CFTC is serious about taking strict measures to protect consumers.