Deal requires cryptocurrency exchange to block U.S. residents from using trading platform
One of the world’s largest cryptocurrency exchanges has agreed to pay $100 million to resolve a regulatory lawsuit over its failure to follow U.S. rules while allowing Americans to access its trading platform.
BitMEX, which offers leveraged trading in bitcoin and other cryptocurrency derivatives, had been sued by the Commodity Futures Trading Commission last year. Three of the company’s co-founders were named as defendants in that lawsuit, while they were also separately indicted on a charge of failing to use an effective anti-money-laundering program. They have pleaded not guilty to criminal charges, and Tuesday’s civil settlement doesn’t resolve their cases.
BitMEX, which was incorporated in the Seychelles, neither admitted nor denied the allegations but has also agreed to prevent U.S. residents from using its trading services, the CFTC said in a press release Tuesday. BitMEX was one of several overseas exchanges, many of them based in Asia, that became popular with traders globally who wanted to bet on cryptocurrency derivatives.
But from 2014 through 2020, BitMEX collected only an email address from users and didn’t verify traders’ identities, according to the Financial Crimes Enforcement Network, a bureau of the Treasury Department. That failure exposed the exchange to risks such as dealing with money launderers, terrorist financiers, and ransomware attackers, according to FinCEN.
BitMEX conducted at least $209 million of transactions with known darknet markets, according to FinCEN, which typically facilitate dealing in illegal drugs, computer-hacking software and counterfeit goods.