The Commodity Futures Trading Commission (CFTC) announced on Thursday that a New York court entered a consent order against all three co-founders of crypto derivatives exchange BitMEX, Arthur Hayes, Benjamin Delo and Samuel Reed.
They have been ordered to pay a total civil penalty of $30 million as each has to shell out $10 million. Also, the court enjoined all three of them from any further violations of the Commodity Exchange Act (CEA) and CFTC regulations.
“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,” CFTC’s Chair, Rostin Behnam said.
Operating without Licenses
The CFTC moved against BitMEX and its three co-founders in October 2020 for conducting business in the United States without any license.
The exchange, under the control of its co-founders, offers trading services to the US residents without obtaining CFTC’s approval to operate as a Designated Contract Market (DCM) or a Swap Execution Facility (SEF). Further, it operated as a Futures Commission Merchant (FCM) without registration and failed to implement customer information program (CIP) and know-your-customer (KYC ) procedures, along with anti-money laundering (AML ) measures.
BitMEX already settled with the US regulator earlier, paying a monetary penalty of $100 million.
Additionally, the CFTC filed criminal charges against the three BitMEX co-founders and one of its employees for the violation of the Bank Secrecy Act and conspiracy to commit offences. Moreover, all the three co-founders entered a guilty plea and are now awaiting sentencing.
“Individuals who control cryptocurrency derivatives trading platforms conducting business in the U.S. must ensure that their platform complies with applicable federal commodities laws, including CFTC registration and regulatory requirements such as Know-Your-Customer and Anti-Money Laundering regulations,” Gretchen Lowe, CFTC’s Acting Director of Enforcement, said.