October 7, 2020 – Philippine Digital Asset Exchange (PDAX) confirms that despite BitMex’s investment in the organization in June 2019, the current legal issue facing the cryptocurrency derivatives exchange in the United States will have no effect on the local operation of PDAX.
“PDAX is fully licensed by the BSP to operate an exchange in the Philippines and BitMEX is one of PDAX’s early shareholders. They are a financial investor with no operational involvement at PDAX,” said Nichel Gaba, CEO of PDAX.
Last year, both parties jointly announced that the Seychelles-based exchange has invested in PDAX, the terms of which were not disclosed. In a statement at the time, BitMEX said the investment will help PDAX strengthen its platform so that it can create a marketplace not only for cryptocurrencies but for other digital assets as well. It was well known that PDAX has plans to enable commodities and other forms of trading in the platform in the future.
PDAX is a licensed virtual currency exchange in the Philippines with approval from the Bangko Sentral ng Pilipinas (BSP), the country’s central bank, to engage in the business of converting cryptocurrencies to fiat and vice versa. Additionally, PDAX does not offer leveraged and/or derivatives trading, which was a key subject of BitMEX’s legal issue in the United States.
Pursuant with local laws, PDAX had anti-money laundering (AML) and know-your-customer (KYC) procedures in place before they start operating in the Philippines as required by the BSP’s Virtual Currency Exchange (VCE) Guidelines.
The U.S. Commodity Futures Trading Commission (CFTC) charged cryptocurrency derivatives exchange BitMEX with money laundering violations and for operating an unregistered cryptocurrency trading platform which offers futures and options trading.
According to the CFTC, BitMEX has failed to impose adequate AML and KYC procedures and alleged that the it has been operating its derivatives exchange and made it available to U.S. customers without the necessary license from the regulator. This, the CFTC said, may have enabled money launderers to use BitMEX as a way to send and receive funds without the proper checks and balances.
Subsequently, the U.S. Department of Justice (US DOJ) has charged BitMEX, CEO Arthur Hayes, and key executives of violating the country’s Bank Secrecy Act, which carries a heavier penalty of up to 5 years of imprisonment plus fines. The agency said CEO Arthur Hayes, key executives Samuel Reed and Ben Delo, and employee Gregory Dwyer did not do their obligation to implement AML and KYC obligations, which they knew were needed if BitMEx is to serve U.S. customers. Instead, the agency continued, Hayes tried to get away by registering the company in the Seychelles, which has less stringent regulations.
The exchange, the indictment stated, continued to be visited by U.S. customers. “As of in or about September 2018, for example, internal BitMEX records reflected thousands of BitMEX accounts with United States location information that were enabled for trading,” the DOJ said.
BitMEX, in a blog post, denied all the allegations. “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 said in a statement.
This article is first published on BitPinas: PH Local Exchange PDAX Says BitMEX Has No Operational Involvement With the Company
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