BitMEX Co-founders Slammed a Lump Sum Fine of $30M

The founders of cryptocurrency exchange BitMEX, have been fined a cumulative sum of $30 million by a US district court. The three founders which go by the names Arthur Hayes, Benjamin Delo, and Samuel Reed have been in a long legal battle with the Commodity Futures Trading Commission (CFTC) since October 1st, 2020. 

The commission had filed a lawsuit against them and their firm on allegations bothering on operating a cryptocurrency trading business without having in place the proper programs and permits required by the agency.

Having heard from both sides over the period, the court gave a verdict on the case this week mandating the three individuals to pay a civil penalty of $10 million each having found them guilty of flouting certain sections of the Commodity Exchange Act and the CFTC directives between a timeframe of November 2014 and October 2020.

The charges leveled against BitMEX include not having the required Know-Your-Customer (KYC) program which is necessary for the purpose of gathering relevant information about each customer and not having an industry-regulated Anti-Money Laundering (AML) program which helps to prevent financial crimes in the form of money laundering. They were also accused of running the exchange under the guise of a Futures Commission Merchant even though it was deficient in the required licenses needed to function as one.

Carline D. Pham, the CFTC Commissioner, in a statement mentioned that her organization is bent on ensuring that anyone who does business on the wrong side of laid down laws and regulations stands the risk of being prosecuted.

Who Should Be The Authorized Crypto Watchdog?

In recent times, there has been an ongoing debate as to which agency should oversee the regulation of the emerging cryptocurrency industry as the conversation is torn between either the Commodity Futures Trading Commission (CFTC), the Securities and Exchange Commission (SEC), or the United States Treasury.

Addressing this issue, the former chairman of the Commodity Futures Trading Commission (CFTC), J. Christopher Giancarlo mentioned in an interview that the CFTC should be responsible for overseeing the crypto sector as the commission currently regulates derivatives while the SEC is known for regulating securities which are capital formation instruments.