- The U.S. Commodity Futures Trading Commission (CFTC) has filed charges against BitMEX CEO Arthur Hayes and other executives of the exchange.
- The Bitcoin price has subsequently fallen from $10,920 to $10,430.
A few hours ago, CFTC announced that it would file charges against five subsidiaries and three executives of BitMEX, the Bitcoin exchange. According to the CFTC, the players operate an unregistered trading platform and violate several guidelines. For example, BitMEX did not adequately implement all anti-money laundering (AML) and know-your-customer (KYC) requirements.
The defendants include CEO Arthur Hayes, Ben Delo and Samuel Reed, who operate BitMEX in a sophisticated network of 5 companies. The entities indicted are HDR Global Trading Limited, 100x Holding Limited, ABS Global Trading Limited, Shine Effort Inc Limited and HDR Global Services (Bermuda) Limited (BitMEX).
The Chairman of the CFTC, Heath P. Tarbert, explained that the United States of America will drive the adaptation and further development of digital assets. However, illegal activities must always be pursued and punished:
For the United States to be a global leader in this space, it is imperative that we root out illegal activity like that alleged in this case. New and innovative financial products can flourish only if there is market integrity. We can’t allow bad actors that break the law to gain an advantage over exchanges that are doing the right thing by complying with our rules.
Washington-based lawyer Stephen Palley said on Twitter that this wave of indictments is only the “tip of the iceberg” and many more details could follow. The CFTC first investigated the illegal activities of the exchange in more detail last summer, but BitMEX has been operating an illegal trading platform since 2014, according to the institution.
The CFTC further states that BitMEX has executed billions of dollars worth of transactions in digital derivatives, earning more than one billion dollars from transaction fees on the platform. In total, the exchange has a customer base of more than 85,000 people. According to Palley, CEO Arthur Hayes could face a severe penalty:
It’s worth noting that each individual BSA violation carries a penalty of up to five years in prison, and it sounds like there thousands of alleged violations here. so I would not rule out prison.
Bitcoin price drops more than $500
As a result of the discovery of these charges, the Bitcoin price has fallen by more than $500 in a short period of time, from $10,920 to $10,430 at the time of writing. Within the last 24 hours, Bitcoin has thus recorded a drop of just under 3.55%. The market capitalization has fallen from $201 billion to $193 billion.
Prominent Bitcoin researcher Vijay Boyapati said on Twitter that while these charges will have a negative short-term impact on the Bitcoin price, BTC has always recovered from such events in the long term:
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The Bitcoin market has always reacted negatively to major exchange issues or government confiscations. Historically this has always presented a great buying opportunity for Bitcoin. The Department of Justice action against BitMEX will be no different.