BitMEX to pay $100 million in fines to settle charges with CFTC, FinCEN

BitMEX has made an agreement to pay a hefty fine to settle a case with two regulatory agencies, the United States Commodity Futures Trading Commission (CFTC) and the Financial Crimes Enforcement Network (FinCEN).

BitMEX’s 10-month long regulatory battle ends

The CFTC and FinCEN have settled their civil lawsuits against the crypto derivatives exchange. 

BitMEX was accused of failing to put together a customer identification program, including know-your-customer (KYC) processes to identify American citizens using the platform. The CFTC further stated that the company was involved in illegally operating a crypto trading platform in the United States while violating anti-money laundering (AML) regulations.

The FinCEN explained that BitMEX violated the Bank Secrecy Act since it did not create a strong AML process as it failed to provide a customer identification platform and alert the authorities of suspicious activity for over six years. 

The consent order clarified that BitMEX is not allowed to offer derivatives products in the US or operate a swaps facility without obtaining approval from the CFTC.

The derivatives exchange will pay up to $100 million to settle the charges, with $80 million going toward the regulators, while $20 million may be suspended and offset following reviews of the company ordered by the FinCEN and CFTC.

FinCEN deputy director AnnaLou Tirol said that the rapid growth of the crypto derivatives exchange without a proper AML program could put the financial system in the United States at great risk. Tirol added that financial services firms must build in "financial integrity from the start" for there to be fewer vulnerabilities and exploitation in the future. 

The chief executive officer of BitMEX, Alexander Höptner, said that the development marks an important day for the crypto exchange as the firm is able to put the case behind them. Höptner said the company would ensure that they are in compliance with regulatory bodies worldwide moving forward.

According to the BitMEX CEO, the platform has evolved to be the largest crypto derivatives exchange with a fully verified user base. Höptner believes that the firm’s robust compliance and AML capabilities will drive long-term success.

Although the firm has settled with the FinCEN and CFTC, former executives at the derivatives exchange will still face trial in the United States in March next year. The Department of Justice brought criminal charges against former BitMEX CEO Arthur Hayes and executives Ben Delo and Samuel Reed for violating the Banking Secrecy Act. 

Delo has surrendered in New York and pleaded not guilty to the charges. He has been released on a $20 million bail bond while he returns to the United Kingdom to await trial. The former CEO also surrendered to the Hawaiian authorities and was released on a $10 million bond with the retention of a passport for travel between Singapore and the United States.