The CFTC has revealed that the US District Court for the Southern District of New York charged five companies operating the BitMEX cryptocurrency derivatives trading platform, including HDR Global Trading Limited, 100x Holding Limited, ABS Global Trading Limited, Shine Effort Inc Limited, and HDR Global Services (Bermuda) Limited.
The BitMEX entities are required to pay a penalty of $100 million.
Acting Chairman Rostin Behnam said:
This case reinforces the expectation that the digital assets industry, as it continues to touch a broader pool of market participants, takes seriously its responsibilities in the regulated financial industry and its duties to develop and adhere to a culture of compliance. The CFTC will take prompt action when activities impacting CFTC jurisdictional markets raise customer and consumer protection concerns.
Acting Director of Enforcement Vincent McGonagle added:
This action highlights that the registration requirements and core consumer protections Congress established for our traditional derivatives market apply equally in the growing digital asset market. Cryptocurrency trading platforms conducting business in the U.S. must obtain the appropriate registration, and must implement robust Know-Your-Customer and Anti-Money Laundering procedures.
CFTC brought charges against the BitMEX entities and their founders, Arthur Hayes, Benjamin Delo, and Samuel Reed in October 2020 for operating the BitMEX platform while conducting significant part of the company’s business from the US. They also unlawfully accepted orders and funds from US customers to trade cryptocurrencies, including derivatives on bitcoin, ether, and litecoin.