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BitMEX owners face criminal charges

02 Oct 2020 : 15:09
2 min read
  • BitMEX owners accused of violating federal Bank Secrecy Act
  • Lack of Anti-Money Laundering (AML) practices
  • One of the owners has been arrested

History of BitMEX

In 2014, Arthur Hayes alongside Benjamin Delo, Samuel Reed and Gregory Dwyer, founded BitMEX. Their main focus was on crypto-derivatives and the exchange only allowed deposit/withdrawals in Bitcoin. The exchange became very popular upon the introduction of perpetual contracts (futures that do not expire). Since then, the words crypto-derivatives and BitMEX went hand in hand and the exchange has been processing over $1.5B worth of trades per day for some time now.


The crypto-space has lacked regulations for the past few years as it was a novel asset-class. BitMEX only welcomed crypto (Bitcoin in particular) deposit and withdrawals in order to not have to deal with the difficulties associated with onboarding fiat to a derivatives exchange.

Criminal Charges

US prosecutors have come out and said that BitMEX has made itself a haven for hackers and illegal transactions. For those reasons, the owners of the exchange are facing criminal charges with one of them arrested in Massachusetts, Mr. Reed. They have been accused of violating the federal Bank Secrecy Act and conspiring to violate that law by “willfully failing to establish, implement, and maintain an adequate anti-money laundering (“AML”) program”.

The Commodity Futures Trading Commission (CFTC) has announced civil enforcement action filed with the U.S. District Court against BitMEX, its owners and companies that own the exchange for operating an unregistered platform as well as violating multiple CFTC regulations.

A Changed BitMEX

Over the past year, BitMEX has ironically become more regulation-friendly after spending the year working to implement KYC (Know-Your-Customer) practices as well as punishing fraudulent activities on the exchange such as spoofing.

News Market Effect

The news was perceived as bearish by the market but the main reason behind the retracement is the exchange outflows. As customers became wary about their funds staying on the exchange and naturally wanting to seek cover, opened positions had to be closed in order to withdraw funds. The amount of open positions that were closed exceeded $120,000,000 until now with $200,000,000+ worth of Bitcoin leaving the platform.

About Author

Karim Abuzeineh

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Co-Founder of Cryptonary Karim has entered the crypto industry in 2017, went through the ups and downs of the market and dedicated himself to increase his skillset and knowledge in both Fundamental & Technical analysis through the bear cycle. He is bullish.

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