Risk & Compliance

BitMEX Fined $100M in Latest Crypto Crackdown

U.S. regulators alleged the exchange traded digital assets without verifying customer identities and implementing an anti-money laundering program.
Matthew HellerAugust 11, 2021

Cryptocurrency exchange BitMEX has agreed to pay $100 million to settle charges that it traded digital assets without verifying customer identities and implementing an anti-money laundering program.

The agreement announced on Tuesday covers a lawsuit that the U.S. Commodity Futures Trading Commission brought against BitMEX and its founders and an enforcement action brought by the Financial Crimes Enforcement Network.

According to the CFTC, BitMEX, which has multiple locations around the world, had to comply with U.S. rules because it offered American retail and institutional customers the ability to trade crypto derivatives through its website.

“BitMEX’s rapid growth into one of the largest futures commission merchants offering convertible virtual currency derivatives without a commensurate anti-money laundering program put the U.S. financial system at meaningful risk,” FinCEN’s Deputy Director AnnaLou Tirol said in a news release.

“It is critical that platforms build in financial integrity from the start, so that financial innovation and opportunity are protected from vulnerabilities and exploitation,” she added.

The case was FinCEN’s first against a futures commission merchant and, according to The Verge, is “just the latest example of the U.S. government’s growing focus on regulating cryptocurrencies.”

BitMEX is one of several overseas exchanges, many of them based in Asia, that have become popular with traders who want to bet on cryptocurrency derivatives. According to FinCEN, it “allowed customers to access its platform and conduct derivative trading without appropriate customer due diligence — collecting only an email address and failing to verify customer identity.”

That failure, FINCEN said, exposed the exchange to risks such as dealing with money launderers, terrorist financiers, and ransomware attackers. BitMEX conducted at least $209 million worth of transactions with known “darknet markets” that typically facilitate dealing in illegal drugs, computer-hacking software and counterfeit goods, according to the regulator.

The $100 million settlement includes $50 million that BitMEX will pay to FinCEN.

“We are very glad to put this behind us. As crypto matures and enters a new era, we too have evolved into the largest crypto derivatives platform with a fully verified user base,” BitMEX CEO Alexander Höptner said.