CFTC, Department of Justice file charges against BitMEX

[bitcoinst]

CFTC, Department of Justice file charges against owners of crypto derivatives exchange BitMEX

The U.S. Department of Justice and the Commodity Futures Trading Commission (CFTC) have filed charges against crypto derivatives exchange BitMEX and its owner-operators, including co-founder and CEO Arthur Hayes.

Hayes — along with co-founders Ben Delo and Samuel Reed — are accused of operating an unregistered trading platform as well as violating CFTC rules, including anti-money laundering and know-your-customer regulations.

"The complaint charges BitMEX with operating a facility for the trading or processing of swaps without having CFTC approval as a designated contract market or swap execution facility, and operating as a futures commission merchant by soliciting orders for and accepting bitcoin to margin digital asset derivatives transactions, and by acting as a counterparty to leveraged retail commodity transactions. The complaint further charges BitMEX with violating CFTC rules by failing to implement know-your-customer procedures, a customer information program, and anti-money laundering procedures," the CFTC said in a statement.

In a separate action, the Department of Justice filed criminal charges against Hayes, Delo, Reed and BitMEX head of business development Greg Dwyer with violating the Bank Secrecy Act. According to the DOJ press release, Reed was arrested in Massachusetts on Thursday morning "and will be presented in federal court there."

“As we allege here today, the four defendants, through their company’s BitMEX crypto-currency trading platform, willfully violated the Bank Secrecy Act by evading U.S. anti-money laundering requirements," FBI assistant director William Sweeney said in a statement.

The 40-page CFTC complaint also names HDR Global Trading Limited, BitMEX's parent company, as well as 100x Holdings Limited, ABS Global Trading Limited, Shine Effort Inc Limited and HDR Global Services (Bermuda) Limited as defendants.

https://www.theblockcrypto.com/linked/79483/cftc-bitmex-charges-lawsuit
https://www.scribd.com/document/478302514/Enf-Hdr-Global-Trading-Complaint-100120?language_settings_changed=English
https://www.cftc.gov/PressRoom/PressReleases/8270-20

[Slow death]

I just woke up and I’m seeing the market in red and I forgot to put a stop - loss and when I want to know what the hell is going on I know about it:

A statement by the Department of Justice reveals that Reed, BitMEX's CTO, was arrested on Thursday morning in Massachusetts. Hayes, Delo and Dwyer "remain at large.

 

[Lucky7btc]

I knew they were going to lock Arthur's blacc a$$ up sooner or later.

[Tytanowy Janusz]

This is ultimate test of market strength. 16 month consolidation is finally over (8-12k without covid dump to 4k). If 10-10.5k will hold for the next week, it will test 12k at the end of the month and then ATH in next 6 months. If not, we will discuss further fate at 7,000. This is huge news and market reaction for this will be crucial. This will show if weak hands are holding BTC or strong.

[Twentyonepaylots]

Well it's not about the US that is trying to pull crypto off because wealthy people in their country can buy all this shit up, it's about the existing laws that they have, the move was by the book. This is why literally we are not getting mass adopted everything seems just to be the same as fiat, people don't really want crypto because of innovation of currencies not for the use cases in short which is an unalterable transaction. Bitmex define something we aren't aware of.

[bitcoinst]

Interesting thoughts from Cryptomedication:

"Binance and Bitfinex are Next

You have to be high to think that they aren't.

They're way more egregious than BitMex.

Also, they're part of Crypto Capital Co. the same way that BitMex was (remember, BitMex was the very first exchange that signed up with Crypto Capital Co.)"

[desticy]

Wow news. On the one hand, we have Bitfinex, which has been in litigation for many years and remains afloat as if nothing had happened, on the other hand, we have example of Alexander Vinnik.
At the same time, Larry Cermak drew attention to the fact that BitMEX changed the processing time for withdrawal of funds, hinting that BitMEX allows users to withdraw funds before their probable arrest. What's happening.

https://twitter.com/lawmaster/status/1311727730820616199

[bitcoinst]

lil update:

BitMEX operator plans to fight U.S. government charges, says spokesperson

HDR Global Trading Limited, the parent company of crypto derivatives exchange BitMEX and one of the defendants named in Thursday's Commodity Futures Trading Commission (CFTC) civil lawsuit, has vowed to the fight the charges, according to a new statement.

A spokesperson for HDR told The Block in a statement:

"We strongly disagree with the U.S. government’s heavy-handed decision to bring these charges, and intend to defend the allegations vigorously. From our early days as a start-up, we have always sought to comply with applicable U.S. laws, as those laws were understood at the time and based on available guidance."

As The Block reported Thursday, both the CFTC and the U.S. Department of Justice — via the Southern District of New York — filed charges against the owner-operators of BitMEX, including co-founder and CEO Arthur Hayes.

The DOJ charged Hayes along with co-founders Samuel Reed and Ben Delo, as well as business development chief Greg Dwyer of violating the U.S. Bank Secrecy Act. When it announced the criminal charges, the DOJ said that Reed had been arrested in Massachusetts.

Separately, the CFTC accused BitMEX, its co-founders and a string of named businesses with a series of violations, including the failure to enforce anti-money laundering and know-your-customer rules.
Posts on social media indicate that BitMEX is responding to the news in another way: processing withdrawal requests outside the hours it normally does.

According to BitMEX's frequently-asked-questions page, "[t]he cutoff time for Bitcoin withdrawals is 13:00 UTC. Shortly after that, Bitcoin will be sent to the address you specified." 13:00 UTC is 9 a.m. EST.
However, users of the service report that a fresh batch of withdrawals have been processed. The HDR spokesperson declined to comment further when reached.

https://www.theblockcrypto.com/linked/79504/bitmex-operator-to-fight-charges

[Lanatsa]

This is ultimate test of market strength. 16 month consolidation is finally over (8-12k without covid dump to 4k). If 10-10.5k will hold for the next week, it will test 12k at the end of the month and then ATH in next 6 months. If not, we will discuss further fate at 7,000. This is huge news and market reaction for this will be crucial. This will show if weak hands are holding BTC or strong.

Anytime on where a sentiments do pop out like this then it will really probably or likely have the chance to crumble out the entire market and you're right that this will indeed show on whose weak hands and to those who are strong to hodl up their coins for the future.

Interesting thoughts from Cryptomedication:

"Binance and Bitfinex are Next

You have to be high to think that they aren't.

They're way more egregious than BitMex.

Also, they're part of Crypto Capital Co. the same way that BitMex was (remember, BitMex was the very first exchange that signed up with Crypto Capital Co.)"

I have a bad feeling about this and when this time comes then I already imagine on how market moves on that time.
It will be a bloody red for sure.

[bitcoinst]

Wow news. On the one hand, we have Bitfinex, which has been in litigation for many years and remains afloat as if nothing had happened, on the other hand, we have example of Alexander Vinnik.
At the same time, Larry Cermak drew attention to the fact that BitMEX changed the processing time for withdrawal of funds, hinting that BitMEX allows users to withdraw funds before their probable arrest. What's happening.

https://twitter.com/lawmaster/status/1311727730820616199

It looks like the truth.


Update: BitMEX promised to process the following withdrawals at 8:00 and 13:00 UTC (October 2).


It looks like the fun is just beginning.

[DarkDays]

Yep and then we see USDT drop by 2% because complete idiots confused BitMEX with Bitfinex lol.

Imagine selling $1 for $0.98, with enough volume to crash one of the most liquid markets in the cryptocurrency industry. Absolute fools.

Well, they do say that fools and their money are easily parted.

Does anybody know how to actually profit on these USDT dumps? I've checked most stablecoin:USDT pairings and have founded that they're never actually 2% apart.

Is it just fiat USD:USDT that see the 2% dip?

[stompix]

Auch, this is going to hurt.
I don't know how much bitmex inflated their operations but they did have some, I'm not expecting a drop below 10k but at least another small period of ups and drops just above the line

One paragraph from cointelegraph:

According to FBI Assistant Director William Sweeney, "One defendant went as far as to brag the company incorporated in a jurisdiction outside the U.S. because bribing regulators in that jurisdiction cost just ‘a coconut.’ Thanks to the diligent work of our agents, analysts, and partners with the CFTC, [the defendants] will soon learn the price of their alleged crimes will not be paid with tropical fruit, but rather could result in fines, restitution, and federal prison time."

This might be a message for the other exchanges that think staying outside of the US means they are safe from the CTFC or FBI.
I'm betting CZ will not take this news with his usual smile, there are a few exchanges out there who are praying not to be next, as none of them can even claim they are 100% clean.

A spokesperson for HDR told The Block in a statement:

"We strongly disagree with the U.S. government’s heavy-handed decision to bring these charges, and intend to defend the allegations vigorously. From our early days as a start-up, we have always sought to comply with applicable U.S. laws, as those laws were understood at the time and based on available guidance."

Yeah, they totally disagree, I'm sure the CTFC will take note of that  . If it has come to arrests, it's too late for this kind of statement.

Yep and then we see USDT drop by 2% because complete idiots confused BitMEX with Bitfinex lol.
Is it just fiat USD:USDT that see the 2% dip?

Binance coin is down 6.5% 

[target]

Their violation as said is almost similar to what the big exchanges in crypto, it looks like they are going to crack them all. They took the first one that started the crypto derivatives trading and so the next are probably the next ones who also did it like Binance.

Wow news. On the one hand, we have Bitfinex, which has been in litigation for many years and remains afloat as if nothing had happened, on the other hand, we have example of Alexander Vinnik.
At the same time, Larry Cermak drew attention to the fact that BitMEX changed the processing time for withdrawal of funds, hinting that BitMEX allows users to withdraw funds before their probable arrest. What's happening.

https://twitter.com/lawmaster/status/1311727730820616199

It looks like the truth.


Update: BitMEX promised to process the following withdrawals at 8:00 and 13:00 UTC (October 2).


It looks like the fun is just beginning.

Thread is getting lots of replies and seem to be true.  The market is closed, its good to get out there before thigns happen.

[jackg]

I just woke up and I’m seeing the market in red and I forgot to put a stop - loss and when I want to know what the hell is going on I know about it:

A statement by the Department of Justice reveals that Reed, BitMEX's CTO, was arrested on Thursday morning in Massachusetts. Hayes, Delo and Dwyer "remain at large.

 

Yeah fwiw set an sl a little above the liquidation price ($10) otherwise you're just unnecessarily losing a bit of the maintenance margin each time....



Wow, wait they're running the thing from the US? Now thst is a surprise, how did they not think they were breaking regulations with that one - they could've at least moved to Canada...

[JakobFugger]

https://twitter.com/WhalePanda/status/1311733570642284554

So this shows that they want to calm down the markets, still have access to the user funds and that only 1 of them is in jail so they can still process withdrawals like they always have.

They continue with the withdraw. But is there anyone facing any kind of problem? Is there any possibility for the American Government to withhold funds? Contrary to what some people said, the market is quite calm. It had a small drop, but within the volatility that already existed.

[int03h]

The problem here is the siren's call of "give me your money, and I'll let you play this game". If you do this, then you have to play by the existing rules.

The solution is to shed the idea of taking people's money and creating software for real p2p trading. Operate your own trading engine and hold your own keys on your own server. Find your own trading partners (Telegram, forums, etc.) and settle trades using interchain or intrachain atomic swaps.

No risk of stolen funds, no risk of the counterparty cheating. No need for accounts or third parties.


 

In addition to the above-centralized exchanges, we also have DEXs. This year the DEXs have attracted investors and the trading volume is also impressive. After the Kucoin hack and BitMEX money laundering allegations, I believe DEXs will be the future of cryptocurrencies. We will have a healthier crypto environment, not manipulated by fake trading volumes, hacking cryptocurrencies, money laundering ...

[Darker45]

Here we go, the elements of the state are now beginning to make a move, and they proceed with a heavy hand. Crypto companies should be very wary. BitMEX will not be the last one to fall.

Of course, BitMEX will certainly defend themselves against the allegations, a good number of allegations. Well, good luck to them. It's the DOJ and the CFTC they're up against. It's going to be a very costly and long battle. Their enemies have very deep, in fact bottomless, pockets.

Ugh, just when I thought the war is over!

[jackg]

Wait isn't this the same things that the big banks just got caught doing for foreign nationals coming into the united states?

Just taking a stab in the dark here but I could probably guess the number of HSBC bankers knowingly ignoring where funds came from being arrested still stands at 0?

[tranthidung]

The problem here is the siren's call of "give me your money, and I'll let you play this game". If you do this, then you have to play by the existing rules.

The solution is to shed the idea of taking people's money and creating software for real p2p trading. Operate your own trading engine and hold your own keys on your own server. Find your own trading partners (Telegram, forums, etc.) and settle trades using interchain or intrachain atomic swaps.

No risk of stolen funds, no risk of the counterparty cheating. No need for accounts or third parties.

Purely decentralized exchanges are best for people but it requires their dedication to learn and setup before they can use purely DEX, not pseudo-DEX, I meant.

Use pseudo-DEX or CEX means you don't have control on your private keys, your accounts, and your money. Another risk is you have to fullfil KYC requirement. Under the pressure and law enforcements from governments, soon all exchanges will require mandatory KYCs on customers. More charges like this will appear and more exchanges will require KYCs. Most of national governments don't support non-KYC exchanges.

The risk of KYC is written in the excellent topic that is made by @1miau. Why KYC is extremely dangerous – and useless

The market is in Red but once again this news confirm that Bitcoin is the strongest. Bitcoin is down around 1.5% but if you look at altcoins, they are falling down from 5% to 20% (most of them are in the range of -5% to -6%). 

[bitcoinst]

The open interest (BTC) on BitMEX's bitcoin derivatives just hit a yearly low of 61,869 BTC following the announcement of the CFTC charge on the exchange.

The former yearly low was painted on the 30th of April when the open interest bottomed at 61,975 BTC.



https://twitter.com/ArcaneResearch/status/1311798602830938120