The Commodity Futures Trading Commission has charged leading crypto derivatives exchange BitMEX for running an unregulated exchange and violation of CFTC’s policies.

Civil Enforcement Action against BitMEX

CFTC has filed a civil enforcement action in the US District of New York against five entities and three owners of BitMEX. “Among those charged are company owners Arthur Hayes, Ben Delo, and Samuel Reed, who operate BitMEX’s platform through a maze of corporate entities. These entities, also named as defendants in the complaint, are HDR Global Trading Limited, 100x Holding Limited, ABS Global Trading Limited, Shine Effort Inc Limited, and HDR Global Services (Bermuda) Limited (BitMEX),”CFTC’s announcement reads.

The derivatives exchange is very popular among crypto investors and it was the first trading company to launch Bitcoin perpetual swap contracts, which have now become a new normal in the crypto space. Traders favor it due to its easy registration process, but in August, the company announced that users would need to comply with KYC and AML policies of the exchange. But CFTC claims that it fails to comply with Anti-Money Laundering procedures.

“Digital assets hold great promise for our derivatives markets and for our economy,” CFTC Chairman stated. “For the United States to be a global leader in this space, it is imperative that we root out illegal activity like that alleged in this case. New and innovative financial products can flourish only if there is market integrity. We can’t allow bad actors that break the law to gain an advantage over exchanges that are doing the right thing by complying with our rules.”

CFTC’s Charges against Exchange

The data reveals that BitMEX has collected $11 billion from BTC deposits and received more than $1 billion in fees.  It is one of the biggest Bitcoin crypto exchanges as volume reaches billions of dollars on a daily basis. CFTC’s press release stated:

“The complaint charges BitMEX with operating a facility for the trading or processing of swaps without having CFTC approval as a designated contract market or swap execution facility, and operating as a futures commission merchant by soliciting orders for and accepting bitcoin to margin digital asset derivatives transactions, and by acting as a counterparty to leveraged retail commodity transactions.”