Is trading on Bitmex over a VPN a crime for US traders?

[grood]

Thousands of US traders use VPN and false information to trade on Bitmex. Are they all committing crimes? Im aware that a regulatory violation is normally the exchanges fault. But using the VPN to dodge geoblocking could be considered a form of hacking and proving false information could be fraud. Im not talking about bitmex finding out and liquidating your account. Im talking about the us government finding out and charging you with a crime with prison time. How do you file your taxes and your fbars? Having these instutions in your return can trigger an inquiry. Are you worried about being caught? For a moment lets assume we are not all career criminals who dont pay taxes or commit fraud. What do you think would be the worst case scenario of a penalty if you are somehow caught trading at bitmex and have to explain that you were using a vpn?

[Gyfts]

It might not necessarily be a crime but using a VPN on any sort of exchange is just asking to get your account locked. The U.S. isn't going to hunt you down if you're trading small amounts. It's not worth their time. Exchange sites will usually just KYC you and keep rejecting your documents then close your account and forfeit any funds. If you use a VPN to sign up for an account and then use false information, that's 100% against TOS and will get your account blocked.

[grood]

Im aware of this. What I'm asking if that if any of the thousands of traders who have already done this receive in inquiry from the US government, if they could end up being charged with a crime. There was a case Craigslist vs 3taps where dodging a geoblock was ruled as hacking.

Also, are you transparent with identifying Bitmex in your tax returns?

[Gyfts]

Im aware of this. What I'm asking if that if any of the thousands of traders who have already done this receive in inquiry from the US government, if they could end up being charged with a crime. There was a case  where dodging a geoblock was ruled as hacking.

Also, are you transparent with identifying Bitmex in your tax returns?

Right, but that case was ruled by a giant corporation persuing litigation against a copy that was stealing their site's content for purposes of reposting it and profiting. If you are trading in small volumes, then it becomes a civil matter, not a criminal matter. The U.S. government is not going to get involved in civil proceedings over small amounts of cash because someone used a VPN to use an exchange. I can assure you of this, it's not on the government's radar. That being said, if Bitmex wanted to take the time to pursue litigation, I guess they could.

Also, are you transparent with identifying Bitmex in your tax returns?

The IRS identifies cryptocurrency as property, so yes --I pay taxes on crypto related profits/trades.

[grood]

The IRS identifies cryptocurrency as property, so yes --I pay taxes on crypto related profits/trades.

Sorry. The question is not "do you pay taxes" . Its do you specifically identify Bitmex in your return, or is it just lumped in with anonymous "bitcoin trading gains"? Also do you specifically list Bitmex in the FBAR if the account balance was over $10K equivalent?

My concern is that the feds are launching investigations into futures brokers (for all kinds of assets) that arent regulated with the US. A trader who lists one of these brokers in their federal documents automatically triggers an inquiry where they are asked to assist in gathering all kinds of details for the government investigation. Normally the trader isnt in trouble - its the exchange. But Im not sure if that still applies if you had to explain that they didnt really accept you but you defrauded and hacked your way in. My concern is not that bitmex will want to prosecute but that this automatic investigation by the US will be triggered by tax returns or otherwise.

[Gyfts]

The IRS identifies cryptocurrency as property, so yes --I pay taxes on crypto related profits/trades.

Sorry. The question is not "do you pay taxes" . Its do you specifically identify Bitmex in your return, or is it just lumped in with anonymous "bitcoin trading gains"? Also do you specifically list Bitmex in the FBAR if the account balance was over $10K equivalent?

My concern is that the feds are launching investigations into futures brokers (for all kinds of assets) that arent regulated with the US. A trader who lists one of these brokers in their federal documents automatically triggers an inquiry where they are asked to assist in gathering all kinds of details for the government investigation. Normally the trader isnt in trouble - its the exchange. But Im not sure if that still applies if you had to explain that they didnt really accept you but you defrauded and hacked your way in. My concern is not that bitmex will want to prosecute but that this automatic investigation by the US will be triggered by tax returns or otherwise.

I would probably speak to a tax attorney but the IRS sent out letters to tens of thousands of people in 2017 after the crypto boom essentially threatening them to pay taxes on crypto earnings. I'm not sure how these people were targeted but if they indicated crypto earnings on their tax returns it may have flagged them.

I would speak to a CPA who handles crypto in regards to how you report your income because it's dependent on how much you've made, whether it's capital gains or income, ect. I'm not sure anyone here, unless their a tax attorney, could answer how the IRS would trigger their investigations. 

[highpassblockchain]

I've been searching for a definitive answer to this as well. Have you found anything updated in your hunt?

[el kaka22]

Im talking about the us government finding out and charging you with a crime with prison time. How do you file your taxes and your fbars? Having these instutions in your return can trigger an inquiry. Are you worried about being caught? For a moment lets assume we are not all career criminals who dont pay taxes or commit fraud. What do you think would be the worst case scenario of a penalty if you are somehow caught trading at bitmex and have to explain that you were using a vpn?

Are your VPN access and your nationality not a problem for bitmex?
Could you explain how USA government will find you that you are trading at a prohibited exchange?
You need to file taxes for your trades only when you take profits in fiats and bank accounts. If possible for you, you can withdraw your profits from bitmex in cryptos. (You are not cheating your government here; I mean your trade is not yet finished off. You trade using cryptos and you still hold cryptos and you may resume your trade again at any time hence for the trades which is not yet closed, you do not need to pay taxes).

For being a responsible citizen, you can show that you are earning from freelancing and getting paid in cryptos and with local exchange you may convert cryptos to fiat and then you may pay taxes for them.

<This is the idea I got from my local auditor with respect to my local law; I am sorry if I sound I am breaching anything legal and general moral>

[Emitdama]

I've been searching for a definitive answer to this as well. Have you found anything updated in your hunt?

There can never be a definitive answer because the exchange is never responsible if users are making account and trading via fake profiles and connecting with VPN services but this is very similar to gambling, I remember Edward (stake owner) during his streams clearly said that they do not stop users from using VPN but if you are not allowed to make accounts and gamble then you better stay away because any time if ID proofs are asked you will be in deep trouble.

The same goes for trading accounts and if you make fake accounts via VPN then you are good as long as you are not asked to verify your ID but once they do you will forced to forfeit all the balance despite doing nothing wrong technically.

So, avoid exchanges that don't allow users from your country or ask someone to do it on your behalf and share a small percentage with him.

[carlfebz2]

I've been searching for a definitive answer to this as well. Have you found anything updated in your hunt?

There can never be a definitive answer because the exchange is never responsible if users are making account and trading via fake profiles and connecting with VPN services but this is very similar to gambling, I remember Edward (stake owner) during his streams clearly said that they do not stop users from using VPN but if you are not allowed to make accounts and gamble then you better stay away because any time if ID proofs are asked you will be in deep trouble.

The same goes for trading accounts and if you make fake accounts via VPN then you are good as long as you are not asked to verify your ID but once they do you will forced to forfeit all the balance despite doing nothing wrong technically.

So, avoid exchanges that don't allow users from your country or ask someone to do it on your behalf and share a small percentage with him.

This is indeed the risk when you do make use of platforms via VPN and since we do know that a certain country is blocked nor restricted then once you do need up some verification then you are really fucked up.

If some people doesnt really trade of that much then this wont really be that much an issue but be sure that you  are ready that something can happen along the way.It isnt really a crime directly

but as a US trader you do know already the rules.Also there are several platforms that doesnt have restriction towards US traders.

[exstasie]

I've been searching for a definitive answer to this as well. Have you found anything updated in your hunt?

It is absolutely not a crime! Bitmex cannot legally offer unregulated derivative markets to Americans, but it is still legal for Americans to trade them.

Keep in mind that if your account is flagged and they demand KYC, you do risk having your funds confiscated for violating their terms. However Bitmex is known to return customer funds (and then close their accounts) in these cases.

[gentlemand]

I've been searching for a definitive answer to this as well. Have you found anything updated in your hunt?

The most likely scenario is that it's a crime for Bitmex, not the user. But it would only be a crime for them if they were actively soliciting Americans to join despite it being against regulations.

Since they're not doing that they're not breaking any laws. As soon as they discover someone who has sneaked in then they're shut down which is upholding the laws they're subject to.

[Findingnemo]

Thousands of US traders use VPN and false information to trade on Bitmex. Are they all committing crimes? Im aware that a regulatory violation is normally the exchanges fault. But using the VPN to dodge geoblocking could be considered a form of hacking and proving false information could be fraud. Im not talking about bitmex finding out and liquidating your account. Im talking about the us government finding out and charging you with a crime with prison time. How do you file your taxes and your fbars? Having these instutions in your return can trigger an inquiry. Are you worried about being caught? For a moment lets assume we are not all career criminals who dont pay taxes or commit fraud. What do you think would be the worst case scenario of a penalty if you are somehow caught trading at bitmex and have to explain that you were using a vpn?

It may not be a crime but it is definitely violating bitmex Tos so you will lose your funds if you get caught.And if someone is using this strategy and avoid tax paying for the profits then it may be a crime as well so don't evade your tax if you are getting afraid of being in a jail.

[XZERO1]

It's not a crime or anything like that but with using VPN you are violation their rules and they can liquidate your open position as they said in their TOS if you accidentally logging in without VPN or your VPN get disconnected and their system get your real IP, I had the same experience with them more than a year ago when they just added some restricted countries to their rules and what they did was that they just told me to withdraw my btc, I didn't have any open position at the time but pretty sure they would close my positions at market value if I had any positions open, I heard that recently they ask you for KYC information the moment you get flagged and only after that you will be able to withdraw, you also won't be able to make any trades on their platform obviously once you get caught so the only option available as I said would be withdrawal of your assets.

[slaman29]

I've been searching for a definitive answer to this as well. Have you found anything updated in your hunt?

The most likely scenario is that it's a crime for Bitmex, not the user. But it would only be a crime for them if they were actively soliciting Americans to join despite it being against regulations.

Since they're not doing that they're not breaking any laws. As soon as they discover someone who has sneaked in then they're shut down which is upholding the laws they're subject to.

Same thing goes for almost any service. If you break their TOS they shut you down. If they can't catch you but they did their best to determine that you were legit, they're not doing any crime. Regulations only ask that they do their best to conduct strict kyc and have systems in place. If people bypass it but they did all they were required to, it's fine for them.

[GreatArkansas]

(...)
It may not be a crime but it is definitely violating bitmex Tos so you will lose your funds if you get caught.And if someone is using this strategy and avoid tax paying for the profits then it may be a crime as well so don't evade your tax if you are getting afraid of being in a jail.

Oh, I see, I just know this by now.
That's why Bitmex is extremely cautious and strict about those accounts that are using a VPN.
Because of my experience, I already tried to use VPN before while trading in Bitmex, and my account just got suspended, but they informed me that I should transfer or withdraw my funds their AS SOON AS POSSIBLE because they found that I am from the United States even I am not.
 

[exstasie]

The most likely scenario is that it's a crime for Bitmex, not the user. But it would only be a crime for them if they were actively soliciting Americans to join despite it being against regulations.

Since they're not doing that they're not breaking any laws.

We can't be sure their sluggishly implemented warning to US customers and IP address filters are enough to meet the CFTC's standards. For all I know, this probe is still ongoing, as the CFTC doesn't announce when these matters are opened or closed or passed onto the criminal enforcement division: U.S. Regulator Probing Crypto Exchange BitMEX Over Client Trades

One curiosity is that Bitmex has an office in San Francisco, and they have for years. I've always wondered why they would take that risk since it seems like it could help establish in court that Bitmex has an operational presence in the US. I'm no lawyer though.

[Zemomtum]

If they don't provides services to the US customers, then anybody that makes an attempt in using the exchange through illegal means is already committing a crime. There are a lot of other alternatives.