BitMEX will pay $100 million to settle federal charges

Cryptocurrency futures trading platform BitMEX agreed to pay $100 million Tuesday to settle charges brought by two federal financial regulators.

The five companies that operate BitMEX agreed to a consent order with Commodity Futures Trading Commission (CFTC) and the Financial Crimes Enforcement Network (FinCEN) approved Tuesday by the U.S. District Court for the Southern District of New York.

BitMEX, a prominent trading hub for investment products linked to cryptocurrencies, was charged in October with violating several CFTC regulations that require companies that facilitate swaps and future trading to register with it. FinCEN also charged BitMEX with failing to establish basic anti-money laundering protocols required by the Bank Secrecy Act.

“This case reinforces the expectation that the digital assets industry, as it continues to touch a broader pool of market participants, takes seriously its responsibilities in the regulated financial industry and its duties to develop and adhere to a culture of compliance,” Acting CFTC Chairman Rostin Behnam (D) said in a statement.

“The CFTC will take prompt action when activities impacting CFTC jurisdictional markets raise customer and consumer protection concerns.”

BitMEX did not admit to or deny the charges, but will pay $100 million split between the CFTC and FinCEN. 

“Today marks an important day in our company’s history, and we are very glad to put this behind us. As crypto matures and enters a new era, we too have evolved into the largest crypto derivatives platform with a fully verified user base,” said BitMEX CEO Alexander Höptner in a statement.

“Comprehensive user verification, robust compliance, and anti-money laundering capabilities are not only hallmarks of our business — they are drivers of our long-term success”.

Registering with the CFTC and developing anti-money laundering checks are two basic legal requirements for any major financial platform involved in trading futures, swaps or other derivatives. BitMEX’s alleged failure to do so underscores how many major online trading platforms, such as Robinhood Financial, were able to grow to prominence without abiding by fundamental financial rules.

Democrats and critics of the financial sector have called on federal regulators to drastically step up their oversight of online trading platforms, particularly within the cryptocurrency space, given their wide reach. Several platforms also pitch themselves as unregulated even though they likely should be.

Republicans have been more receptive to the online investment boom and its ability to bring a broader range of investors into financial markets, but have also expressed concerns about potential regulatory gaps.

Updated at 5:30 p.m.

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