Bitcoin and other cryptocurrencies crash after CFTC indicted BitMEX founders on charges of anti-money laundering violations and illegally operating cryptocurrency derivatives trading platform
Nickie Louise
Posted On October 1, 2020
The prices of Bitcoin and other cryptocurrencies plunged early this morning after the US Commodity Futures Trading Commission (CFTC) charged the founders and executives of BitMEX with illegally operating a cryptocurrency derivatives trading platform and anti-money laundering violations. The news of the CFTC charges caused a ripple effect across the entire crypto space. At one point, Bitcoin lost over $800 in value. As of this afternoon, Bitcoin has recouped some of its losses before it finally settled at $10,460.
According to the announcement, CFTC charged BitMEX, CEO Arthur Hayes, company owners Ben Delo and Samual Reed with offering U.S. customers illicit crypto derivative trading services. Other 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).
In a press release, the CFTC alleged that BitMEX’s platform has received more than $11 billion in bitcoin deposits and made more than $1 billion in fees, “while conducting significant aspects of its business from the U.S. and accepting orders and funds from U.S. customers.”
“Digital assets hold great promise for our derivatives markets and for our economy,” said Chairman Heath P. Tarbert. “For the United States to be a global leader in this space, it is imperative that we root out an 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.”
“As the CFTC has made clear, registration requirements are a cornerstone of the regulatory framework that protects Americans and U.S. financial markets,” added Division of Enforcement Director James McDonald. “Effective anti-money laundering procedures are among the fundamental requirements of intermediaries in the derivatives markets, whether in traditional products or in the growing digital asset market. This action shows the CFTC will continue to work vigilantly to protect the integrity of these markets.”
In its continuing litigation against the defendants, the CFTC seeks disgorgement of ill-gotten gains, civil monetary penalties, restitution for the benefit of customers, permanent registration and trading bans, and a permanent injunction from future violations of the Commodity Exchange Act (CEA).
In a related criminal action, the U.S. Attorney for the District of New York indicted Hayes, Delo, and Reed, along with Gregory Dwyer, on federal charges of violating the Bank Secrecy Act and conspiracy to violate the Bank Secrecy Act. The indictment was unsealed today.
