Global cryptocurrency derivatives exchange Bitmex has settled charges with the U.S. Commodity Futures Trading Commission (CFTC) and the Financial Crimes Enforcement Network (FinCEN). The exchange has agreed to pay as much as $100 million to end investigations by the two agencies.
Bitmex Settles With CFTC and FinCEN
Bitmex confirmed Tuesday that “it has reached a resolution with both the United States Commodity Futures Trading Commission (CFTC) and Financial Crimes Enforcement Network (FinCEN) in relation to investigations by both agencies.” The company wrote:
Bitmex agreed to pay as much as US$100 million to resolve the charges.
“Today marks an important day in our company’s history, and we are very glad to put this behind us,” commented Bitmex CEO Alexander Höptner. “As crypto matures and enters a new era, we too have evolved into the largest crypto derivatives platform with a fully verified user base.”
The CFTC separately announced Tuesday that “the U.S. District Court for the Southern District of New York has entered a consent order against five companies charged with operating the Bitmex cryptocurrency derivatives trading platform.” The companies are HDR Global Trading Ltd., 100x Holding Limited, ABS Global Trading Ltd., Shine Effort Inc Limited, and HDR Global Services (Bermuda) Ltd.
FinCEN, a bureau of the U.S. Department of the Treasury, also confirmed in an announcement Tuesday that it has assessed a $100 million civil money penalty against Bitmex “for willful violations of the Bank Secrecy Act” and its regulations.
“Bitmex, which operated as an unregistered futures commission merchant (FCM) and provided money transmission services, willfully failed to comply with its obligations under the BSA,” FinCEN detailed. “For over 6 years, BitMEX failed to implement and maintain a compliant anti-money laundering program and a customer identification program, and it failed to report certain suspicious activity.” This is FinCEN’s first enforcement action against an FCM.
The bureau added:
These willful failures expose financial institutions to an increased risk of conducting transactions with money launderers and terrorist financiers, including noncompliant exchanges in high-risk jurisdictions, ransomware attackers, and darknet marketplaces.
Furthermore, FinCEN detailed that the exchange “conducted at least $209 million worth of transactions with known darknet markets or unregistered money services businesses providing mixing services.” It also “conducted transactions involving high-risk jurisdictions and alleged fraud schemes” and “failed to file a Suspicious Activity Report (SAR) on at least 588 specific suspicious transactions.”
Besides the civil penalty, Bitmex has agreed to several independent consultations to determine if it must file additional SARs and “to ensure that appropriate policies, procedures, and controls are in place.” The announcement concludes:
FinCEN’s $100 million assessment will be satisfied by immediate payments totaling $80 million to FinCEN and the CFTC, with $20 million suspended pending the successful completion of the SAR lookback and independent consultant reviews.
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