CFTC Investigates Crypto Exchange BitMEX Over Client Trades

| Updated
by Teuta Franjkovic · 3 min read
CFTC Investigates Crypto Exchange BitMEX Over Client Trades
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The U.S. Commodity Futures Trading Commission (CFTC) is reportedly probing crypto derivatives exchange BitMEX to determine whether it broke rules by allowing U.S. traders on its platform.

The U.S. Commodity Futures Trading Commission is allegedly investigating crypto exchange BitMEX, a platform that had gained huge popularity in Asia for letting people make big bets with little money down.

This CFTC probe is focusing on questions considering BitMEX breaking rules by allowing U.S. citizens to trade on the platform, which isn’t registered with the agency. The regulator considers  Bitcoin to be a commodity, and therefore, it considers having jurisdiction over any futures and other derivatives based on it. As such, they think that BitMEX should be registered with the agency to allow Americans to trade such products in the U.S.

According to its website, BitMEX offers trading of cryptocurrencies with up to 100-times leverage and other products such as futures and swaps.

However, this investigation may not lead to misconduct allegations. Let’s just mention that in March, Bitcoin derivatives platform 1Broker settled a lawsuit with the CFTC for selling security-based swaps to U.S. investors.

Last year, Canadian regulator Autorité des marchés financiers (AMF) sent a letter to BitMEX considering their non-licensed status. However, according to BitMEX’s press representative Wachsman, the company have been closing accounts of all its U.S. and Canada-based customers already in 2015.

Allegedly, CFTC took action after a big debate between economist and public crypto-skeptic Nouriel Roubini and CEO of BitMEX Arthur Hayes earlier this month. Roubini then said that the exchange is an example of a company that is “openly involved in systematic illegality.”

He mentioned research that has shown that liquidations of customer savings consists more than a half of BitMEX’s revenue. He also mentioned that he had some informations that terrorists and criminals from Russia and Iran are using BitMEX services for money laundering “on a massive scale.”

Hayes answered they never trade against clients in the past.

He said:

“BitMEX provides safe, fast, professional and liquid ways for those who see the potential of crypto and to trade and hedge cryptocurrency risk. We continue to monitor all legal and regulatory developments around the world and will comply with all applicable laws and regulations; we reject any allegations of criminality, manipulation or unfair treatment of our customers, who are at the center of everything we do.”

They claim to be watching all legal affairs in every part of the world and are working really hard to make sure that all regulations are being satisfied.

Senior analyst at eToro, Mati Greenspan commented that this shouldn’t come as much of a surprise to anyone who’s been watching the space.

He said:

“I must admit that even I have several times been BitMEX Rekt. That place is like a black hole for bitcoin. Glad to see that someone is finally investigating them.”

Recently, US regulators have been clamping down on crypto trading firms. Examples are U.S.-based Bittrex and Poloniex who delisted tens of tokens earlier this year over concerns they could be deemed securities by the SEC.  As CoinSpeaker has reported earlier, Binance was also among the companies that withdrew from the US, even though they said they’re planning to open a regulated fiat-to-crypto exchange for American users on a separate platform. Also, let’s not forget that this month the New York Attorney General alleged crypto exchange Bitfinex and affiliated firm Tether had operated in the state as recently as January 2019.

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Teuta Franjkovic

Experienced creative professional focusing on financial and political analysis, editing daily newspapers and news sites, economical and political journalism, consulting, PR and Marketing. Teuta’s passion is to create new opportunities and bring people together.

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