He announced that he filed a lawsuit against the US cryptocurrency exchange BitMEX. BitMEX founders were charged with violating banking law, while exchange co-founder Samuel Reed was arrested by law enforcement. Other founders continue to be sought after.
The fact that such a lawsuit was filed against BitMEX, one of the largest cryptocurrency exchanges, led to a sharp drop in the Bitcoin price. BTC, which fell from $ 10,900 to $ 10,400, is currently being traded at $ 10,500. So what do we know about the BitMEX case, which caused a drop in the Bitcoin price and shocked the cryptocurrency community?
An Overview of the BitMEX Case
- The Southern New York District Attorney’s Office and the FBI filed a lawsuit against BitMEX founders Arthur Hayes, Samuel Reed, Benjamin Delo. Gregory Dwyer, who was the first employee of BitMEX, is among those who have been sued. While Samuel Reed is arrested by the police, the search for other names continues.
- The Commodity Futures Contracts Commission (CFTC) requested the suspension of BitMEX’s activities on the grounds that it was operating without the necessary approvals.
- It was alleged that BitMEX “deliberately failed to overthrow anti-money laundering laws” and broke the banking law called BSA.
- It has been claimed that a total of 11 billion dollars has been invested in BitMEX, which was established in 2014, but BitMEX did not carry out these transactions in AML standards.
- CFTC announced that the exchange has generated more than $ 1 billion in revenue since 2014, thanks to transaction fees.
Why Exactly Is A Lawsuit Filed Against The Stock Exchange?
- BitMEX, which has a daily trading volume of billions of dollars, is thought to have achieved a total volume of trillions of dollars thanks to derivative transactions since its establishment.
- 85 thousand BitMEX users residing in the USA also contributed to this volume in the exchange.
- Problem; It was because the company did not comply with relevant AML / KYC laws, so it did not have the right to serve customers residing in the US. The company was blocking US-based IP addresses for this. However, US customers could access the stock market with a simple VPN procedure.
- BitMEX’s company registration officially appears in the Seychelles. The reason for the company to take its headquarters in Seychelles is that the regulations there are more flexible.
- FBI Deputy Director William F. Sweeney Jr. BitMEX CEO Arthur Hayes, allegedly claimed by BitMEX, said regulators in the Seychelles “could be bribed even with coconuts”, talking about how comfortable the company was there.
- Although BitMEX was registered in the Seychelles, it served US investors and did so without complying with AML / KYC standards.
They Delete American Accounts Wholesale
- Each BitMEX founder is considered to be in violation of BSA law. Violation of this law can result in prison sentences of up to five years.
- There are also some claims that the founders of the stock exchange may have laundered money during this process.
- Hayes, Delo, and Reed trio are said to be aware of and condone by US customers illegally using the exchange.
- It is stated that this trio makes it easy for US customers to use BitMEX.
- Beyond all this; It has been announced that BitMEX has deleted many different account slips. Although it is not known how many accounts were deleted by the exchange in what period of time, the case documents mention the accounts deleted in December 2018.
- American lawyer Stephen Palley says the money laundering allegations about BitMEX are “pretty serious.”
Can Transactions be Made with BitMEX, Will the Stock Market Close?
- According to Nic Carter, BitMEX (so to speak) had 193,000 Bitcoins in its vaults. Their total value was around $ 2 billion.
- After it was learned that the US was suing BitMEX, a flock of people started to withdraw their money from the stock market.
- BitMEX regularly approves withdrawal requests in accordance with the regulations of the exchange. For this, money withdrawal is made on the basis of UTC. That’s why BitMEX approved many users’ withdrawal requests last night. However, in order to cope with the large amount of withdrawal demand, the stock exchange will be trading at a different time than usual today.
- Research firm Coin Metrics announced that BitMEX users have withdrawn 37,000 Bitcoins from the stock market after the CFTC announcement. One third of these Bitcoins withdrawn from BitMEX were transferred to Binance and Huobi. According to the information shared by Lowstrife, after the lawsuit was announced, the amount of open positions in the stock market decreased by almost 115 million dollars. As of October 2, the amount of Bitcoin in BitMEX wallets is thought to vary between 135 thousand and 170 thousand.
- According to Whale Panda, it seems that the exchange can still be used actively, as the withdrawals are completed without any problems.
- Meanwhile, BitMEX announced in a statement released yesterday that it will fight legally against these allegations brought forward by the American state.