Things To Know About The BitMEX Lawsuit— Implications To DeFi
On Thursday, BitMEX, one of the world’s largest cryptocurrency derivatives exchanges, has been charged with illegally operating in the U.S. and evading rules designed to stop money laundering and violating the federal Bank Secrecy Act. While BitMEX wasn’t formally located in the U.S., CFTC claims that the company both seeks U.S. customers and performs a significant chunk of its business in the U.S. For years, BitMEX has already been fighting off lawsuits, and the CFTC is merely the latest in a series of legal lawsuits aimed at the firm.
Re: The BitMEX News
Several U.S. authorities provided BitMEX with both criminal and civil cases charges in a shocking note. Together with the Department of Justice ( DOJ), the Commodity Futures Trading Commission ( CFTC) has filed criminal charges accusing four BitMEX owners and executives of bypassing laws intended to combat money laundering and breaching the Federal Bank Secrecy Act. The prosecution said BitMEX gradually deemed itself a tool for money laundering, involving charges that it was used to launder cryptocurrency hack revenues and that Iranian customers traded on its website.
From at least the summer of last year, the CFTC was rumored to have been investigating BitMEX. The civil proceedings, which seem to be the CFTC’s top priority, cover the platform as an unauthorized dealer of derivatives providing enormous leverage and targeting U.S. retail clients. The criminal trial charges the defendants with violations of the Bank Secrecy Act. These charges saw the issuance of criminal charges for Hayes, Delo, Reed, and Dwyer. Reed was placed under arrest in Massachusetts, but the study from the Southern District defines the other three at large.
A statement clarifying its stance was issued by BitMEX. In addition to guaranteeing its users that the platform operates as usual, such as withdrawals, and that all funds are stable, the company stated: “We strongly disagree with the U.S government’s heavy-handed decision to bring these charges.” Bitcoin (BTC) dropped just a bit percent and the entire crypto market softened around the announcement. The enforcement actions against BitMEX is somewhat a turning point in the crypto industry as “the implications of this will be massive,” noted Larry Cermak, Director of Research at The Block. “Some large foreign exchanges still allow US customers to use the exchange without KYC and VPN. That will change VERY quickly.”
Arthur Hayes or Arthur Hayes?
While a lot of people find it glorious how the spoof Arthur profile (@Crypto_Bitlord) was aggressively trash talking people on Twitter, and it’s not unbelievable if the real Arthur (@CryptoHayes) would say such thing, a notable crypto news outlet was bamboozled and accidentally wrote a piece of his tweet and included it in the article.
The Major Takeaway
Either just a spoof or the real one, Cointelegraph was spot on that the same broad language that is being applied to take down BitMEX for weak AML and KYC policies could be extended to several DeFi Tokens, Crypto Exchanges, ERC-20, ICOs, DApps, and more. Though a lot of users believe that the US overreach has happened repeatedly in the past and hasn’t stopped any bull runs, this move unto BitMEX is unprecedented, and there has not been active as aggressive and broad as this. As it is likely that a DEX or lending protocol could help someone launder money, although lawsuits took almost 6 years to file charges against BitMEX and its not even a raid or any shut-down, this should still be a gut check for any decentralized protocol out there.
