The Commodity Futures Trading Commission (CFTC) announced yesterday that BitMEX, a cryptocurrency exchange that operated in the U.S. from November 2014 to October 2020, was ordered to pay $100 million for violating numerous regulations.
BitMEX was accused of serving as a Designated Contract Market, Swap Execution Facility, and Futures Commission Merchant without the appropriate registration with the CFTC by allowing users in the U.S. to make various crypto-related transactions.
The CFTC said BitMEX also violated its regulations by "failing to implement a Customer Information Program (CIP) and Know-Your-Customer (KYC) procedures that would enable the identification of U.S. persons using the platform, and by failing to implement an adequate Anti-Money Laundering (AML) program."
The U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) added more complaints to the list. FinCEN said that BitMEX "failed to report certain suspicious activity" that was happening on its cryptocurrency exchange.
These "willful failures expose financial institutions to an increased risk of conducting transactions with money launderers and terrorist financiers, including noncompliant exchanges in high-risk jurisdictions, ransomware attackers, and darknet marketplaces," FinCEN said in its press release. And that wasn't just idle speculation.
FinCEN said "BitMEX conducted at least $209 million worth of transactions with known darknet markets or unregistered money services businesses providing mixing services," allowed transactions "involving high-risk jurisdictions and alleged fraud schemes," and didn't properly report "at least 588 specific suspicious transactions."
BitMEX addressed these issues by prohibiting U.S. customers from its platform —anyone visiting the company's website from the country is shown a prominent "BitMEX trading is not available in your region" warning on top of the homepage.
CFTC also said that BitMEX "is no longer maintaining any operations or business functions in the U.S., except for limited personnel performing technology, systems maintenance, and security functions, all of whom have no direct or indirect involvement with marketing or solicitation of customers" as of June 30.