We all have been following the rapid growth of cryptocurrency and the creation of lucrative trading platforms. Cryptocurrency has earned the scrutiny of regulators and criminal prosecutors not for run-of-the-mill fraud schemes, but for compliance with applicable anti-money laundering laws and regulations.
Late in 2020, the Justice Department and the Commodities Futures Trade Commission (CFTC) slammed BitMEx and its principals with a coordinated criminal and civil prosecution. As the cryptocurrency markets continue to expand and new trading platforms started, DOJ, the CFTC and the SEC can be expected to exercise increasing oversight and enforcement.
In the criminal case, the Southern District of New York returned an indictment of Arthur Hayes, Benjamin Delo, Samuel Reed and Greg Dwyer, charging them with violating the Bank Secrecy Act (BSA) and conspiracy to violate the BSA by failing to implement and maintain an adequate anti-money laundering program at the Bitcoin Mercantile Exchange (BitMEX).
BitMExs platform has received more than $11 billion in bitcoin deposits and collected more than $1 billion in fees, while servicing a large number of United States-based customers.
BitMEX touted itself as the worlds largest cryptocurrency derivatives platform with billions of dollars of trading volume each day. Much of this volume involved US customers trading activity.
The defendants created an entity that was a purported off-shore crypto exchange and ignored all applicable AML laws and regulations. BitMEX was established to trade in futures contracts and derivatives tied to the value of cryptocurrencies, including Bitcoin. BitMEX accepted Bitcoin to margin and leverage up to 100 times leverage on certain products.
Since its inception in 2014, BitMEX solicited and served customers in the United States, and even continued to do so after allegedly withdrawing in 2015 from the United States market. While continuing to operate in the United States, BitMEX did not maintain an AML compliance program and a customer identification program otherwise known as a Know Your Customer (KYC) program.
BitMEX organized under the Seychelles laws but did not maintain any physical presence on the islands. The BitMEX principals did so to circumvent and avoid BSA and AML regulations.
Hayes, Delo and Reed statrt5ed BitMEX in 2014 and Dwyer was hired as its first employee in 2015. Because BitMEX solicited and served United States customers, BitMEX was required to register with the CFTC and to establish and maintain an AML compliance program.
In 2015, BitMEX knew (or learned) that they were subject to US laws because they served US customers. Each of the defendants knew they served US customers who continued to access the trading platform until 2018. BitMEX had policies designed to prevent US customers from using the exchange but those policies were not enforced or easily circumvented. The defendants took steps to justify avoiding AML requirements by, for example, incorporating in the Seychelles under the belief that the regulatory requirements in the Seychelles would not impose any regulatory burdens.
In a parallel civil action, the CFTC filed a civil enforcement action in federal court in New York charging five entities and three individuals with operating an unregistered trading platform and a number of specific regulatory requirements, including failing to implement required AML procedures.
The CFTC charged the three company owners, Arthur Hayes, Ben Delo and Samuel Reed, who operate BitMEX through a complex set of corporate entities, five of which were included in the civil complaint.
BitMEX failed to register as required under CFTC rules and to maintain an appropriate BSA and AML compliance program. The CFTC is seeking disgorgement of ill-gotten gain, civil monetary penalties and restitution.
Read the rest here:
- Seychelles | Culture, History, & People | Britannica - August 24th, 2021
- Seychelles - Wikipedia - August 24th, 2021
- Seychelles Maps & Facts - World Atlas - August 24th, 2021
- SEYCHELLES: Covid-19 puts a damper on waste management on the island of Perseverance - AFRIK 21 - February 11th, 2021
- Meet the American who is the first Black woman to travel to every country in the world - RADIO.COM - February 11th, 2021
- Waldorf Astoria and Canopy by Hilton to Debut in the Seychelles - Franchising.com - February 7th, 2021
- Meet the American who is the first Black woman to travel to every country in the world - Talk Radio 1210 WPHT - February 7th, 2021
- Africa in the news: Nigerian oil, COVID-19, and Uganda updates - Brookings Institution - February 7th, 2021
- Tales from the Coffeeshop: A gift for splitting hairs and spinning gestures - Cyprus Mail - February 7th, 2021
- How travelers help to protect the Outer Islands of the Seychelles - CNN - February 4th, 2021
- Air Seychelles would be ahead of schedule on transformation plan if 2020 was a normal year: CEO | CAPA - CAPA - Centre for Aviation - February 4th, 2021
- KuCoin CEO Reflects on 2020 and Looks to the Future - PRNewswire - February 4th, 2021
- Israel and Greece in talks to allow reciprocal visits for vaccinated tourists - Ynetnews - February 4th, 2021
- Vaccinated tourists can now visit the Seychelles without quarantining - Euronews - January 23rd, 2021
- Everything You Need To Know Before Visiting The Amazing Seychelles - TravelAwaits - January 23rd, 2021
- Got the vaccine? Then you can now hit the beach in Seychelles - Time Out - January 23rd, 2021
- Why Romania is a better post-lockdown holiday option than the Seychelles - Telegraph.co.uk - January 23rd, 2021
- Ambassador for United States to the Republic of Seychelles bids Farewell - Office of the President of the Republic of Seychelles - January 23rd, 2021
- More contributions to the Covid-19 Relief Fund - News - Office of the President of the Republic of Seychelles - January 23rd, 2021
- 3 islands in the Seychelles you must see - IOL - December 28th, 2020
- What Happened To Air New Zealands Boeing 767s? - Simple Flying - December 28th, 2020
- Top 10 Nature Images of 2020: Wildflowers, Coastal Scenes, and Ancient Treasures - The Pew Charitable Trusts - December 28th, 2020
- Year in Review: Africa's 2020 elections - Africanews English - December 28th, 2020
- His View: That's our boy, shredding values to the bitter end - Moscow-Pullman Daily News - December 28th, 2020
- Seychelles, Longtime Home of BitMEX, Is Bending to US Pressure on KYC - Yahoo Finance - December 21st, 2020
- Seychelles and San Jose among routes axed by BA - Daily Business - December 21st, 2020
- Cabinet Business - 16th December 2020 - News - Office of the President of the Republic of Seychelles - December 21st, 2020
- President meets with Seychellois Community in the UAE - Office of the President of the Republic of Seychelles - December 21st, 2020
- Seychelles Promoted in the First Virtual Gulf Travel Show - FTNnews.com - December 21st, 2020
- Figure of the week: Africas visa openness continues to improve - Brookings Institution - December 21st, 2020
- India needs more than Quad to secure the Indo-Pacific - The Times of India Blog - December 21st, 2020
- Upset in Seychelles presidential election as incumbent loses - The Associated Press - October 28th, 2020
- Seychelles is likely to maintain its record of free and fair elections in upcoming polls - The Conversation CA - October 28th, 2020
- Seychelles Travel Advisory Updates - October 19th, 2020
- Trade the US Election 'Game of the Throne' Volatility - FX Empire - October 19th, 2020
- Wedding Bells in the Seychelles Islands Read more Skip - eTurboNews | Trends | Travel News - September 5th, 2020
- President Faure meets with the Red Cross Society of Seychelles - Office of the President of the Republic of Seychelles - September 5th, 2020
- President Appoints new Chief Executive Officer of the Seychelles Fishing Authority - Office of the President of the Republic of Seychelles - September 5th, 2020
- Region cautiously reopens its doors - The Southern Times - September 5th, 2020
- FJ Book Club: A haunting debut thriller brimming with excess - Fashion Journal - August 10th, 2020
- President Faure visits Agency for Social Protection - News - Office of the President of the Republic of Seychelles - August 10th, 2020
- Seychelles Telecommunications Market Share,Trends, and Growth Opportunities to 2025-Analysis of Seychelles Mobile, Fixed Telephone and Broadband... - August 8th, 2020
- Anantara to debut in the Seychelles with rebrand of iconic Maia Luxury Resort & Spa - Travel Daily News International - August 7th, 2020
- President Faure thanks the Leader of Government Business in the sixth National Assembly - Office of the President of the Republic of Seychelles - August 7th, 2020
- President Faure proclaims the dissolution of the National Assembly - Office of the President of the Republic of Seychelles - August 7th, 2020
- Under the Radar Beaches from the Seychelles to Saint-Tropez - Luxury Travel Magazine - August 4th, 2020
- President Faure attends ceremony to mark the 10th anniversary of the Office of the Auditor General - Office of the President of the Republic of... - August 3rd, 2020
- The economic substance exemption: escaping the claws of the Cayman tax - Lexology - July 31st, 2020
- Cabinet Business - Wednesday 29 July 2020 - News - Office of the President of the Republic of Seychelles - July 31st, 2020
- Expedition removes 25 tons of waste from remote Aldabra Atoll - UNESCO.org - July 31st, 2020
- Covid-19 Hits Spanish Fishing Fleet in the Seychelles - Euro Weekly News - July 31st, 2020
- Seychelles Is Welcoming Commercial Flights In August, And Here's What You Need To Know - TheTravel - July 31st, 2020
- New guidelines aim to support mangrove restoration in the Western Indian Ocean - UN Environment - July 30th, 2020
- Rescue operation fails to find any sign of Bribie Island couple after boat sinks in stormy seas off African coast - ABC News - July 29th, 2020
- Kangaroo, blue macaws among animals rescued in Assam - The Hindu - July 29th, 2020
- With these rules, Seychelles will reopen to travellers from 1 August - Cond Nast Traveller India - July 28th, 2020
- Interview Ambassador of the Kingdom of the Netherlands to Kenya, Somalia and the Seychelles, H.E. Frans Makken - The Netherlands and You - July 28th, 2020
- President Faure receives members of the Seychelles Bible Society - Office of the President of the Republic of Seychelles - July 27th, 2020
- President Faure receives delegation from Seventh-Day Adventist Church of Seychelles - Office of the President of the Republic of Seychelles - July 27th, 2020
- Etihad passengers flying to these nine countries may need Covid-19 tests - The National - July 25th, 2020
- Coronavirus: Abu Dhabi couple spent 15 weeks in the Seychelles after flights were grounded - The National - July 25th, 2020
- How, and Where, Covid-19 Is Spreading in Africa - Direct Relief - July 24th, 2020
- How, and Where, Covid-19 Is Spreading in Africa - World - ReliefWeb - July 24th, 2020
- Ray of light for region's economies - The Southern Times - July 24th, 2020
- THE 10 BEST Seychelles Luxury Resorts - Jul 2020 (with ... - July 22nd, 2020
- Secrets of One of the Most Private Islands in the Seychelles - Luxury Travel Magazine - July 22nd, 2020
- Cabinet Business - Wednesday 15th July 2020 - News - Office of the President of the Republic of Seychelles - July 21st, 2020
- Have we gone batty? - The Borneo Post - July 18th, 2020
- Tuna Spanish breathe after a month stranded in the Seychelles by the Covid-19 - Wire News Fax - July 18th, 2020
- Claim that coconut oil is worse for biodiversity than palm oil sparks furious debate - Science Magazine - July 18th, 2020
- A Review of OverBit - A Seychelles-based Crypto Margin Trading Platform in Forex and Metals Using Bitcoin - bitcoinke.io - July 18th, 2020
- How the Seychelles Islands came to have its name - Face2Face Africa - July 18th, 2020
- Commercial flights to be welcomed to Seychelles in August 2020 - Travel Daily News International - July 14th, 2020
- Tourism as an Agent of Recovery in Post-COVID-19 Southern Africa - Future Directions International - July 14th, 2020
- British Family Of Four Relocates To Tiny Island In The Seychelles - Scuba Diver Magazine - June 30th, 2020
- ECOVIEWS: Tortoises of all sizes roam the globe - Gadsden Times - June 30th, 2020
- Which countries are open for summer travel? Here's the list - CNBC - June 30th, 2020
- Here's how much it costs to buy out an entire luxury hotel during the pandemic - CNBC - June 30th, 2020
- Four Kids and It = one winning family movie - Boston Herald - June 30th, 2020
- USS Carney Concludes Time as FDNF-E Asset with 6th Fleet - SEAPOWER Magazine Online - June 30th, 2020