https://www.bloomberg.com/news/arti...nders-and-executives-are-indicted-in-new-york By Chris Dolmetsch , Olga Kharif , and Dave Liedtka October 1, 2020, 8:55 AM PDT Updated on October 1, 2020, 12:17 PM PDT Crypto-derivatives pioneer invented perpetual Bitcoin futures Bitcoin falls abruptly on news, after 50% rise since December Founders of the pioneering crypto-derivatives exchange BitMEX were charged with skirting U.S. laws preventing money laundering and hit with civil sanctions as well, abruptly sending the price of Bitcoin down. Arthur Hayes, Benjamin Delo and Samuel Reed were indicted in New York, where federal prosecutors claim the digital-asset exchange served American customers while flouting U.S. banking laws. Hayes said the exchange was incorporated in the Seychelles because they could bribe authorities there for the cost of “just a coconut,” according to the indictment, unsealed Thursday. Arthur Hayes Photographer: Michael Nagle/Bloomberg “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,” FBI Assistant Director William F. Sweeney Jr. said in a statement. The Commodity Futures Trading Commission brought a parallel civil action. It’s a black eye for the second-largest cryptocurrency-derivatives exchange, which invented perpetual Bitcoin futures that were easy for retail investors to understand. BitMEX grew popular for letting investors leverage their bets by a factor of 100. Bitcoin, the largest cryptocurrency, erased gains made earlier Thursday and fell as much as 2.4% to $10,450 following the announcement of 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,” a spokesperson for the company said in a statement. “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.” Hayes set up BitMEX in January 2014 with Delo, an Oxford-educated computer scientist who created high-frequency trading systems for JPMorgan Chase & Co., and Reed, a programmer who specialized in designing superfast web applications. By matching buyers and sellers of futures, BitMEX makes money no matter which way cryptocurrencies move. For that reason, Hayes had learned as an equities trader for Citigroup Inc. in Hong Kong, trading derivatives was much more profitable than playing the spot markets. Bitcoin has climbed about 50% since December, continuing the volatility of recent years that saw it surge 95% in 2019 after tumbling 73% in 2018. Hayes was a tireless marketer, repeatedly promoting BitMEX on U.S. television shows, according to the indictment. In 2018 BitMEX rented three Lamborghinis to park outside a Bitcoin conference in Manhattan. Hayes “declared this ‘stunt’ a success,” based on the coverage he got, prosecutors said. Read More: Bored With Banking, This Former Citi Trader Went Full Crypto The three founders were charged with violating the Bank Secrecy Act and conspiring to violate the act, both of which carry a maximum prison term of five years. Facing the same charges is Gregory Dwyer, the exchange’s first employee and later its head of business development. Reed was arrested in Massachusetts on Thursday morning, while the rest remain at large, prosecutors said. Sean Hecker and Jenna Dabbs, attorneys for Dwyer, said in a statement they were “surprised and dismayed” by the indictment. Binance. To serve U.S. customers, it was required to register with the CFTC and establish adequate programs to ensure that its platform wasn’t used for illegal purposes such as money laundering, according to the government. Prosecutors said the executives instead chose to ignore those requirements, knowing that U.S. residents were still using the exchange and that its controls were ineffective. Bloomberg reported in July of 2019 that the CFTC was investigating BitMEX with a focus on whether it had broken those rules. — With assistance by Edward Robinson (Updates with excerpts of the indictment and background on Hayes.)
Crap exchange anyway. Refused to upgrade their engine and has daily overloads. Still surprised people even trade there. Been happier since I moved to Deribit/Binance Futures. I'm guessing more exchanges are on the chopping block. There is a reason why CZ won't fly to America. I only ever recommend people to put their daily stop (or even weekly stop) on these derivatives exchanges. But this is the price to pay to trade in the wild west. The edge is worth it at times...sometimes not..
"Hayes said the exchange was incorporated in the Seychelles because they could bribe authorities there for the cost of “just a coconut,” according to the indictment, " LOL regulated in Seychelles itself should be a red flag ! Why bribe when you can get a license for under $20,000 in place like Seychelles ! If people like Bitmex are serious about creating a world class exchange and HOPE to get US clients then they will have to comply with US laws! becasue bitcoin or fiat it is real money people are speculating on so all financial regulatory laws should apply "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.”"
Dude, wtf are you talking about? https://www.bitmex.com/app/terms You are not allowed to access or use the Services or the Trading Platform if you are located, incorporated or otherwise established in, or a citizen or resident of: (i) the United States of America,
Dude what I am saying is if people like Bitemex is serious and claim to be at par with major exchanges like CME or NYSE or LSX then they need to go through the scrutiny of those respective regulators and then people will be willing to participate The fact that Bitmex chooses to be "Regulated" is a tin pot jurisdiction goes to show the real intent! no wonder CFTC is chasing them!