BitMEX has agreed to pay up to $100 million to settle charges in the U.S. for unlawfully accepting customer funds for trading in cryptocurrencies when the company was not registered to do so, and for failing to properly provide customer due diligence.
The U.S. Commodity Futures Trading Commission (CFTC) and the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) alleged on Tuesday that BitMEX had been selling cryptocurrency derivatives to U.S. clients for the past six years without properly registering with U.S. authorities.
American authorities said Tuesday that BitMEX also did not implement and maintain enough compliance programs to identify customers, prevent money laundering and report suspicious activity.
Acting CFTC Chairman Rostin Behnam said the case reinforced the need for digital assets “to “take their responsibilities seriously in the regulated financial industry.”
Cryptocurrencies reached a record capitalization of $2 trillion in April, as more investors populated their portfolios with digital tokens, but actual monitoring of the market remains patchy.
The five companies contracted to operate BitMEX agreed to pay $80 million to settle the allegations, with a further $20 million suspended until the reviews were complete. BitMEX, which neither admitted nor denied the findings, said it had taken steps to improve compliance.
Last October, the Department indicted Arthur Hayes, Samuel Reed and Benjamin Delo, who co-founded BitMEX in 2014, and Gregory Dwyer, its first employee and head of business development, for violating the federal banking secrecy law and conspiracy to violate it.
A spokesperson for the co-founders, who were not involved in Tuesday’s deal, said they were looking forward to presenting their defense in court.
BitMEX is one of the largest virtual currency derivatives exchanges worldwide.
For more information, read the original story in Reuters.