However, Bitcoin’s resilience in the crypto markets is once again being put to the test as a result of the US CFTC charging Bitmex and its owners with illegally operating a crypto derivatives trading platform and anti-money laundering violations.
In particular, the Commodity Futures Trading Commission (CFTC) is charging the three owners of Bitmex – Arthur Hayes, Ben Delo and Samuel Reed – along with the five business entities that own Bitmex – 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 needed to root out illegal trading activities and remove bad actors who break the law.
…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.
Federal Charges of Violating the Bank Secrecy Act
Furthermore, Mr. Hayes, Mr. Delo, and Mr. Reed, are also facing federal charges of violating the Bank Secrecy Act and conspiracy to violate the Bank Secrecy Act.
All three have been indicted by the US Department of Justice under the US Attorney’s office of the Southern District of New York alongside a fourth defendant, Gregory Dwyer. Each of the two federal charges mentioned carries a maximum penalty of five years in prison.
FBI Assistant Director William F. Sweeney Jr explained that the defendants violate the Bank Secrecy Act by failing to implement US anti-money laundering requirements.
As we allege here today, the four defendants, through their company’s BitMEX crypto-currency trading platform, willfully violated the Bank Secrecy Act by evading U.S. anti-money laundering requirements.
One defendant went as far as to brag the company incorporated in a jurisdiction outside the U.S. because bribing regulators in that jurisdiction cost just ‘a coconut.’
Thanks to the diligent work of our agents, analysts, and partners with the CFTC, they will soon learn the price of their alleged crimes will not be paid with tropical fruit, but rather could result in fines, restitution, and federal prison time.
Bitmex Vows to Fight the Charges
A spokesperson of the parent company of Bitmex released a statement indicating that all the accused will fight the charges.
We strongly disagree with the U.S. government’s heavy-handed decision to bring these charges, and intend to defend the allegations vigorously.
From our early days as a start-up, we have always sought to comply with applicable U.S. laws, as those laws were understood at the time and based on available guidance.
Bitcoin Could Lose its 65 Day Run Above $10k
At the time of writing, Crypto twitter is abuzz with potential repercussions of the charges against Bitmex and its owners from the CFTC and the Department of Justice. Since the news broke, Bitcoin has fallen hard from comfortable levels above $10,900 to a local low of $10,434. This means the $10,400 area is serving as Bitcoin’s current support as the story continues to unfold.
The fear and anxiety surrounding the news of the charges against Bitmex could result in continual panic selling by investors. A continually weak Bitcoin will ultimately lead to the $10k level being broken as witnessed in early September. What remains to be seen is whether this support zone will hold once again or whether Bitcoin will drop down to four-digit levels.
Bitmex Traders Withdraw their Funds from Bitmex
Furthermore, crypto traders are aware of the risks of still having their funds on Bitmex and some have resorted to withdrawing their Bitcoin from the exchange as seen in the following tweet.