The US Commodity Futures Trading Commission (CTFC) has launched an investigation against the cryptocurrency exchange BitMEX, Bloomberg reported today.
Probe on US customers
According to Bloomberg, BitMEX is not registered in the United States, and the CFTC is probing whether the Seychelles-based crypto exchange has broken the rules by giving access to US users to trade on its platform.
As the regulator considers cryptocurrencies like Bitcoin as commodities and the CFTC has jurisdiction over futures and derivatives based on them, crypto exchanges have to comply with the country’s regulation to allow US customers to trade on their platforms.
According to Bloomberg, the CFTC’s probe is currently in progress with the regulator’s complete investigations often lacking allegations of misconduct.
“HDR Global Trading Limited, owner of BitMEX, as a matter of company policy, does not comment on any media reports about inquiries or investigations by government agencies or regulators and we have no comment on this report,” a BitMEX spokeswoman said to Bloomberg.
BitMEX barring US customers amid regulatory scrutiny
CCN reported in January that BitMEX had initiated the close-down of exchange accounts of customers from the United States and the Canadian province of Quebec.
BitMEX – that had a turnover of $928 billion at the time – has pulled the plug on US and Canadian customers due to the increased regulatory scrutiny on unlicensed exchanges.
In an update to CCN’s article, a spokesperson for the cryptocurrency exchange stated that BitMEX had already banned all US traders from its trading platform in 2015 and it had closed the accounts of American and Canadian traders as part of the guidance it received from US regulators, including the CFTC.
Despite the ban, BitMEX CEO Arthur Hayes stated in an interview in January that users from banned jurisdictions like the United States can bypass the cryptocurrency exchange’s geoblock by using a VPN service.
‘Dr. Doom’ accusing BitMEX of profiting from terrorism
Economist Nouriel Roubini aka. “Dr. Doom” – who is one of the loudest critics of Bitcoin and cryptocurrencies – has accused BitMEX on making a profit by allowing terrorists and criminals to trade on its platform. Dr. Doom has also accused BitMEX of being “totally unregulated”.
“Hayes has denied this, but because BitMEX is totally unregulated, there are no independent audits of its accounts, and thus no way of knowing what happens behind the scenes,” Roubini wrote in an article on Tuesday.
Roubini – who had a debate with Hayes earlier this month in Taipei – had initiated his first attacks against the BitMEX CEO in June, stating that the crypto exchange’s newly published bitcoin derivatives volumes were fake.
How can one believe ANY of these figures when 95 percent of all bitcoin transactions on a typical exchange are fake? Fake-coins, shit-coins, fake-transactions, fake-pricing. The only true thing in crypto space is manipulation, pump n dump, front-running, wash trading, etc… https://t.co/i43cPwjFX2
— Nouriel Roubini (@Nouriel) June 26, 2019
While Roubini’s criticism is highly subjective and often fueled by anger – in light of the CFTC’s investigations against BitMEX – some of his accusations against the crypto exchange could be legitimate especially on the unregulated nature of the Seychelles-based service.
No wonder crypto gangsters set up shop in that cesspool island of government corruption. Ditto for the Seychelles where @BitMEXdotcom racket is domiciled. Cheaper to bribe officials in those island nations. But why is the @ecb allowing such scams in a Eurozone member state? https://t.co/q73CjloEhm
— Nouriel Roubini (@Nouriel) July 18, 2019