BitMex Reportedly Losing Users due to Regulatory Pressures from North America

[CloudFarm]

BitMex Reportedly Losing a Large Number of Users due to Regulatory Pressures from North America

BitMEX, the second largest Cryptocurrency Exchange by Reported Trading Volume and the most important exchange of Bitcoin Futures in the world, has had a tough start to the year after constant pressures from the regulatory bodies of the United States and Canada forced its team to close the accounts of a significant number of clients.

The company had settled in Hong Kong to avoid the need to comply with the legal requirements of the North American regulatory bodies, however, even though its services are oriented to the Asian market, a significant percentage of trading originates in the United States and Canada.

Despite formally prohibiting North American and Canadian users from operating on its platform, the popular exchange does not have a sufficiently elaborate security system to detect or prevent circumvention mechanisms for this prohibition, such as VPN connections.

According to a report by the South China Morning Post, BitMEX would not only be applying the policy to North American clients but would also be notifying users of “North Korea, Iran, Syria, Cuba, Sudan and Sevastopol in the Crimea since the fourth quarter of 2018 against holding positions or trading on BitMEX, as these are restricted jurisdictions.”

The decision to ban clients located in Quebec, Canada; came after a letter sent by the Autorité des Marchés Financiers (AMF) in 2018, explaining that Bitmex was committing an illegal activity by failing to be duly authorized by the Canadian authorities to provide trading services.

“BitMEX is not registered with the AMF and is therefore not authorized to have activities in the province of Quebec,” AMF’s director of media relations told the Post. “We informed this company that its activities were illegal.”

Likewise, the US Securities and Exchange Commission (SEC) had also issued previous statements explaining that the services offered by BitMEX imply mandatory registration, something that the company owned by Mr. Arthur Hayes clearly evaded.

Although there are no official figures from the team behind the exchange, the South China Morning Post mentions that anonymous sources close to the company indicated that accounts registered in BitMEX from the United States alone represent approximately one-seventh or near 10% of the total number of registered users.

The bearish market and regulatory pressures have substantially lowered the trading volume and profits perceived by BitMEX. Previously the exchange had been so successful that it caused a stir when it rented offices in Hong Kong for a canon of approximately 600k USD a month.



Source: Ethereum World News - January 17, 2019

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[coinwizard_]

Bitmex is one of the reasons why bitcoin prices tanked and show extreme volatility. Investors trying to short bitcoin or manipulate prices just before the deadlines

[BuyBuyBitcoin]

They Anonymous and De-centralized Exchanges will become more stable and liquid over the next 10 years.

The larger exchanges (long term) have the same problem banks and financial markets have -- there is too much incentive to assist manipulating shitcoins and ICO's to earn a profit.

The whole "Crypto" industry that people want to become a real thing, won't become a real thing until all of the bad actors get out. Which is why so many of us are bitcoin maximalists until the terrible projects die off.

[squatter]

Likewise, the US Securities and Exchange Commission (SEC) had also issued previous statements explaining that the services offered by BitMEX imply mandatory registration, something that the company owned by Mr. Arthur Hayes clearly evaded.

This is something I haven't heard before. Registration as what, a national securities exchange? I thought BitMEX only offered commodity futures contracts, which seem to fall under CFTC jurisdiction and not SEC jurisdiction.

It may be splitting hairs, but the SEC seems to have sharper teeth. They've been behind harsher and more notable enforcement actions. For instance, the SEC shut down 1Broker last year. By comparison, the CFTC fined Bitfinex $75,000 a few years ago for margin violations.

BitMEX, the second largest Cryptocurrency Exchange by Reported Trading Volume and the most important exchange of Bitcoin Futures in the world, has had a tough start to the year after constant pressures from the regulatory bodies of the United States and Canada forced its team to close the accounts of a significant number of clients.

Although there are no official figures from the team behind the exchange, the South China Morning Post mentions that anonymous sources close to the company indicated that accounts registered in BitMEX from the United States alone represent approximately one-seventh or near 10% of the total number of registered users.

I wonder how many accounts are being closed over this, and whether users consistently connecting through VPN are facing account closure. Are there any other reports about this?

[clrpod]

They Anonymous and De-centralized Exchanges will become more stable and liquid over the next 10 years.

The larger exchanges (long term) have the same problem banks and financial markets have -- there is too much incentive to assist manipulating shitcoins and ICO's to earn a profit.

The whole "Crypto" industry that people want to become a real thing, won't become a real thing until all of the bad actors get out. Which is why so many of us are bitcoin maximalists until the terrible projects die off.

I hope that you're right. But the people making the money tend to have a way of keeping it that way. And the real big winners in crypto are the exchanges, they're making millions or billions whether your precious crypto goes up or down in price.

[Marbelli]

This was to be expected since nothing ever ended well when the authorities interfered in the activities of someone.

[pixie85]

The decision to ban clients located in Quebec, Canada; came after a letter sent by the Autorité des Marchés Financiers (AMF) in 2018, explaining that Bitmex was committing an illegal activity by failing to be duly authorized by the Canadian authorities to provide trading services.

“BitMEX is not registered with the AMF and is therefore not authorized to have activities in the province of Quebec,” AMF’s director of media relations told the Post. “We informed this company that its activities were illegal.”

This is showing how stupid the system is and how it is unable to understand the Internet. An Internet business is available to anyone. If a country has a problem with it it should block the website or make their citizens aware that it's against the law to use that service.

The host can't watch and check every single person who enters the site and can't register in every single country in the world. What next? If you make a website you have to make sure the authorities in some shithole on the other side of the world give you a permit?

[squatter]

This is showing how stupid the system is and how it is unable to understand the Internet. An Internet business is available to anyone. If a country has a problem with it it should block the website or make their citizens aware that it's against the law to use that service.

We're stuck with it. The US government in particular acts like the world police, shutting down businesses that don't comply. The SEC mandates exchange registration under certain conditions:

A crypto asset trading platform may be subject to the US exchange registration requirements (unless an exemption is available) if the platform allows US persons or persons located in the US to access the platform and participate in trading digital assets that are viewed as securities by the SEC.

To date, the SEC seems to have gone only after services that specifically allowed access from the US -- no geo-blocking of US IP ranges, no KYC, no attempts to block US residents. They haven't gone after services like BitMex or Bitfinex, where users must go a step further and use a foreign VPN to access from the US, but that may change.

[franky1]

trading bitcoin for USD... is a big no no as that also requires MSB licences which are a SEC requirement
it doesnt matter if the 'USD' is just a mysql database balance, a crypto/stable coin.. any token/balance thats pegged or described as value as USD puts it in the realm of being a MSB

[Kakmakr]

This should not come as a surprise, because most industries where money laundering can occur, have to abide by the same KYC/AML regulations and it was just a question of time before the regulators caught onto this. It does not help them at all by being the second largest Cryptocurrency Exchange. 

You still have to abide by your own countries laws, even if your operations are abroad and when you allow people from other countries to access those services.