Entitling BitMEX to be an unregistered trading platform, the Commodity Futures Trading Commission (CFTC) alleged that the platform has been running its activities transgressing anti-money laundering (AML) procedures.
The likely voice came from the DOJ, the U.S. Department of Justice, saying BitMEX’s three founders along with its first employee violated the Bank Secrecy Act (BSA). Such an incident indicates regulatory scrutiny that should be bolstered. U.S. regulators should look into everyone’s responsibility for registration violations. Founders of BitMEX own 90% ownership and control on this centralized exchange platform. Any offering of DeFi of any financial products to U.S. residents may cause AML obligations for a centralized entity as the BitMEX actions have some implications for decentralized finance (DeFi).
Violation of the Commodities Exchange Act is the core complaint of CFTC against BitMEX. BitMEX has allegedly earned more than $1 billion in user transaction fees till now. BitMEX users will be allowed to trade cryptocurrency derivatives once the exchange gets registered in the Seychelles. BitMEX has allegedly developed a network of paths and hedges designed as a puzzle through which it has to find a way. DOJ asserted that BitMEX’s willfully violated the BSA. THE CFTC and DOJ agreed upon that BitMEX opened a defendant’s business. You will allegedly find no presence of BitMEX in the U.S. even though it is registered in the Seychelles.
Running of website and half of BitMEX’s workforce are done in the U.S. One of the founders of BitMEX lives in the U.S. whereas another resides abroad, as pointed out by CFTC.
BitMEX emphasized only the user IP verification at the time of creating an account and allowed access through Tor Network and VPN. By incorporating the Seychelles, the defendant tried to avoid U.S. law is the compliant by the government. U.S. residents’ continued access to BitMEX was an open secret that stirred up doubt and raised question. All these prove their willful violation of the BSA.
Both their offshore registration and living offshore strongly go against the purview of U.S. law. Another fact is that the absence of immediate legal repercussions is not proof of an absence of liability. BitMEX’s activities are beyond the reach of U.S. law the how U.S. regulators will work together in bringing enforcement actions.