WASHINGTON, Aug 10 (Reuters) – BitMEX, one of the world's largest virtual currency derivatives exchanges, has agreed to pay up to $100 million to settle U.S. charges of unlawfully accepting customer funds to trade cryptocurrencies when it was not registered to do so as well as failure to conduct customer due diligence.
The U.S. Commodity Futures Trading Commission (CFTC) and the Financial Crimes Enforcement Network (FinCEN) unit of the U.S. Treasury Department on Tuesday alleged that for six years, BitMEX sold cryptocurrency derivatives to U.S. customers without properly registering with U.S. authorities.
U.S. authorities on Tuesday said BitMEX also failed to implement and maintain proper compliance programs to identify customers and prevent money laundering. The exchange also failed to report suspicious activity, they said.
CFTC Acting Chairman Rostin Behnam said the case reinforces that the digital assets world needs to "take seriously its responsibilites in the regulated financial industry."
Cryptocurrencies reached a record capitalization of $2 trillion in April as more investors stocked their portfolios with digital tokens, but oversight of the market remains patchy.
The five companies charged with operating BitMEX agreed to pay $80 million to settle the charges, with another $20 million suspended pending reviews. BitMEX, which did not admit or deny the findings, said it has made a series of moves to boost its compliance.
"Comprehensive user verification, robust compliance, and anti-money laundering capabilities are not only hallmarks of our business – they are drivers of our long-term success," Alexander Höptner, chief executive officer of BitMEX, said in a statement.
The Department of Justice in October charged Arthur Hayes, Samuel Reed and Benjamin Delo, who together founded BitMEX in 2014, and Gregory Dwyer, its first employee and later head of business development, with violating the federal Bank Secrecy Act and conspiring to violate that law.
A spokesperson for the cofounders, who were not party to Tuesday's deal, said they looked forward to defending themselves in court.
"As their defense will show, from the company’s earliest days, the co-founders sought to comply with applicable law as it developed over time," the spokesperson said in a statement.
Dwyer could not be reached for comment.
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