US Court: BitMEX Founders to Pay $30M for Illegal Trading

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In a statement published on May 5, a federal judge of the U.S. District Court for the Southern District of New York ordered the three co-founders of BitMEX to pay $30 million total for operating an illegal cryptocurrency derivatives platform and violating money-laundering rules.

According to the Commodity Futures Trading Commission (CFTC)  the platform’s founders—Arthur Hayes, Benjamin Delo and Samuel Reed—will each pay $10 million for their role in operating BitMEX.

The order to impose penalties stems from a complaint in October 2020 containing information that from at least the end of 2014, the platform’s operating entities and founders conducted business with US customers illegally by unlawfully accepting orders and funds from them to trade cryptocurrencies including derivatives on Bitcoin, Ether, and Litecoin.

“BitMEX operated as a Futures Commission Merchant (FCM) without CFTC registration, failed to implement a Customer Information Program (CIP) and Know-Your-Customer (KYC) procedures, and failed to implement an adequate Anti-Money Laundering (AML) program.”

Commodity Futures Trading Commission

As per the CFTC, the violations of the founders include “the operation of a facility to trade or process swaps without having CFTC approval to operate as a Designated Contract Market (DCM) or a Swap Execution Facility (SEF).”

“This is another example of the Commission taking decisive action where appropriate to ensure that digital asset derivatives trading platforms comply with the Commodity Exchange Act and Commission regulations.” – Rostin Behnam, CFTC chairperson

On the other hand, rather than a jail term, BitMEX former CEO Arthur Hayes has asked the court for probation so he can be able to travel and be with his family, arguing that what he did, though a crime, was what everyone else in the industry was doing.

“…we request that the Court sentence Mr. Hayes to a term of probation, with no home detention or community confinement, and that he be permitted to reside abroad and travel freely during the term of his probation,” Hayes’ legal team said in a filing.

Further, in support of his request, Hayes argues his crimes didn’t facilitate bigger crimes like other digital asset-related entities such as Silk Road. 

BitMEX is a cryptocurrency exchange and derivatives trading platform that offers investors access to the global financial markets using Bitcoin and other cryptocurrencies. It is owned and operated by HDR Global Trading Limited, which is registered in the Seychelles.

This article is published on BitPinas: US Court: BitMEX Founders to Pay $30M for Illegal Trading

Disclaimer: BitPinas articles and its external content are not financial advice. The team serves to deliver independent, unbiased news to provide information for Philippine-crypto and beyond.

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Shiela Bertillo

    BitPinas is the oldest blockchain and cryptocurrency news outlet that covers the Philippine blockchain and crypto scene. We are also writing general and international blockchain topics that are relevant to our audience.