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BitMEX Co-Founders Slapped with $30 Million Fine

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The Commodity Futures Trading Commission (CFTC) announced on Thursday that a New York court entered a consent order against all three co-founders of crypto derivatives exchange BitMEX, Arthur Hayes, Benjamin Delo and Samuel Reed.

They have been ordered to pay a total civil penalty of $30 million as each has to shell out $10 million. Also, the court enjoined all three of them from any further violations of the Commodity Exchange Act (CEA) and CFTC regulations.

“This is another example of the Commission taking decisive action where appropriate to ensure that digital asset derivatives trading platforms comply with the Commodity Exchange Act and Commission regulations,” CFTC’s Chair, Rostin Behnam said.

Operating without Licenses

The CFTC moved against BitMEX and its three co-founders in October 2020 for conducting business in the United States without any license.

The exchange, under the control of its co-founders, offers trading services to the US residents without obtaining CFTC’s approval to operate as a Designated Contract Market (DCM) or a Swap Execution Facility (SEF). Further, it operated as a Futures Commission Merchant (FCM) without registration and failed to implement customer information program (CIP) and  know-your-customer (KYC 
Know Your Customer (KYC)

Know Your Customer (KYC) is the process via which the broker is verifying the true identity of its clients in order to comply with multiple regulations. KYC is used to assess the suitability of customers when it comes to anti-money laundering regulations, any type of financial fraud and determining whether they are potentially risky for the brokerage.In particular, KYC guidelines in financial services mandate that individuals make a cohesive effort to verify the identity, suitability, and risks involved with maintaining a business relationship. KYC processes are also utilized by companies for the purpose of ensuring their proposed customers, agents, consultants, or distributors are anti-bribery compliant. In an age of identity theft and myriad hacking, KYC has become a major emphasis by regulators.As such, banks, insurers, export creditors and other financial institutions are increasingly demanding that customers provide detailed due diligence information. These regulations had initially been imposed only on the financial institutions, having now extended to the non-financial industry, fintech, virtual assets dealers, and many non-profit organizations.Regulators Taking No Chances with Identities Regulated brokers in the retail industry are very stringent when applying appropriate KYC verifications after financial watchdogs worldwide have become stricter in monitoring their compliance with the procedure in recent years. Not only brokers use KYC, the procedure is also widely used by banks, and any financial companies that provide insurance or credit and require appropriate due diligence. Most major jurisdictions in the financial space mandate KYC requirements as well as all regulated brokers.The vast majority of these countries have adopted KYC standards as mandatory only during the past two decades. This has helped curb illicit behavior and has become a fixture of the industry.

Know Your Customer (KYC) is the process via which the broker is verifying the true identity of its clients in order to comply with multiple regulations. KYC is used to assess the suitability of customers when it comes to anti-money laundering regulations, any type of financial fraud and determining whether they are potentially risky for the brokerage.In particular, KYC guidelines in financial services mandate that individuals make a cohesive effort to verify the identity, suitability, and risks involved with maintaining a business relationship. KYC processes are also utilized by companies for the purpose of ensuring their proposed customers, agents, consultants, or distributors are anti-bribery compliant. In an age of identity theft and myriad hacking, KYC has become a major emphasis by regulators.As such, banks, insurers, export creditors and other financial institutions are increasingly demanding that customers provide detailed due diligence information. These regulations had initially been imposed only on the financial institutions, having now extended to the non-financial industry, fintech, virtual assets dealers, and many non-profit organizations.Regulators Taking No Chances with Identities Regulated brokers in the retail industry are very stringent when applying appropriate KYC verifications after financial watchdogs worldwide have become stricter in monitoring their compliance with the procedure in recent years. Not only brokers use KYC, the procedure is also widely used by banks, and any financial companies that provide insurance or credit and require appropriate due diligence. Most major jurisdictions in the financial space mandate KYC requirements as well as all regulated brokers.The vast majority of these countries have adopted KYC standards as mandatory only during the past two decades. This has helped curb illicit behavior and has become a fixture of the industry.
Read this Term
) procedures, along with  anti-money laundering (AML 
Anti-Money Laundering (AML)

Anti-money laundering (AML) is a term that describes laws, processes, and regulations that are intended to prevent illegally obtained funds from being disguised as income gained through legitimate means. The fundamental purpose of the AML laws is to help safeguard, detect, and report suspicious activity including the predicate offenses to money laundering and terrorist financing, such as securities fraud and market manipulation.Most exchanges have AML measures that include identity verification (Know-Your-Customer checks) and bots that monitor for suspicious trading activity.AML Laws at WorkAML laws take explicit aim at corruption, tax evasion, market manipulation, and the trade of illegal goods. Much of their emphasis also looks to bring to light the efforts individuals or entities utilize to conceal these crimes.Essentially, AML procedures are intended to make it harder for criminals to “hide the loot.” Often, money launderers attempt to disguise their illicitly-obtained funds by funneling it through a legitimate cash business, like a regulated cryptocurrency exchange. Therefore, it is up to the businesses to ensure that they aren’t unwillingly part of a money-laundering scheme.One of the most prevalent issues to combat is laundering, which involves running money through a legitimate cash-based business owned by the criminal organization or its associates. A supposedly legitimate business can then deposit the money, which the criminals can subsequently withdraw.Launderers can also target foreign accounts to make deposits it, depositing cash below several regulatory thresholds that fail to garner suspicion. In the US for example, many transfers or cash payments under $10,000 are unlikely to draw the attention of regulatory authorities.Additionally, money launderers can move cash into dishonest brokers who are willing to ignore existing regulations in return for large commissions.

Anti-money laundering (AML) is a term that describes laws, processes, and regulations that are intended to prevent illegally obtained funds from being disguised as income gained through legitimate means. The fundamental purpose of the AML laws is to help safeguard, detect, and report suspicious activity including the predicate offenses to money laundering and terrorist financing, such as securities fraud and market manipulation.Most exchanges have AML measures that include identity verification (Know-Your-Customer checks) and bots that monitor for suspicious trading activity.AML Laws at WorkAML laws take explicit aim at corruption, tax evasion, market manipulation, and the trade of illegal goods. Much of their emphasis also looks to bring to light the efforts individuals or entities utilize to conceal these crimes.Essentially, AML procedures are intended to make it harder for criminals to “hide the loot.” Often, money launderers attempt to disguise their illicitly-obtained funds by funneling it through a legitimate cash business, like a regulated cryptocurrency exchange. Therefore, it is up to the businesses to ensure that they aren’t unwillingly part of a money-laundering scheme.One of the most prevalent issues to combat is laundering, which involves running money through a legitimate cash-based business owned by the criminal organization or its associates. A supposedly legitimate business can then deposit the money, which the criminals can subsequently withdraw.Launderers can also target foreign accounts to make deposits it, depositing cash below several regulatory thresholds that fail to garner suspicion. In the US for example, many transfers or cash payments under $10,000 are unlikely to draw the attention of regulatory authorities.Additionally, money launderers can move cash into dishonest brokers who are willing to ignore existing regulations in return for large commissions.
Read this Term
) measures.

BitMEX already settled with the US regulator earlier, paying a monetary penalty of $100 million.

Additionally, the CFTC filed criminal charges against the three BitMEX co-founders and one of its employees for the violation of the Bank Secrecy Act and conspiracy to commit offences. Moreover, all the three co-founders entered a guilty plea and are now awaiting sentencing.

“Individuals who control cryptocurrency derivatives trading platforms conducting business in the U.S. must ensure that their platform complies with applicable federal commodities laws, including CFTC registration and regulatory requirements such as Know-Your-Customer and Anti-Money Laundering regulations,” Gretchen Lowe, CFTC’s Acting Director of Enforcement, said.

The Commodity Futures Trading Commission (CFTC) announced on Thursday that a New York court entered a consent order against all three co-founders of crypto derivatives exchange BitMEX, Arthur Hayes, Benjamin Delo and Samuel Reed.

They have been ordered to pay a total civil penalty of $30 million as each has to shell out $10 million. Also, the court enjoined all three of them from any further violations of the Commodity Exchange Act (CEA) and CFTC regulations.

“This is another example of the Commission taking decisive action where appropriate to ensure that digital asset derivatives trading platforms comply with the Commodity Exchange Act and Commission regulations,” CFTC’s Chair, Rostin Behnam said.

Operating without Licenses

The CFTC moved against BitMEX and its three co-founders in October 2020 for conducting business in the United States without any license.

The exchange, under the control of its co-founders, offers trading services to the US residents without obtaining CFTC’s approval to operate as a Designated Contract Market (DCM) or a Swap Execution Facility (SEF). Further, it operated as a Futures Commission Merchant (FCM) without registration and failed to implement customer information program (CIP) and  know-your-customer (KYC 
Know Your Customer (KYC)

Know Your Customer (KYC) is the process via which the broker is verifying the true identity of its clients in order to comply with multiple regulations. KYC is used to assess the suitability of customers when it comes to anti-money laundering regulations, any type of financial fraud and determining whether they are potentially risky for the brokerage.In particular, KYC guidelines in financial services mandate that individuals make a cohesive effort to verify the identity, suitability, and risks involved with maintaining a business relationship. KYC processes are also utilized by companies for the purpose of ensuring their proposed customers, agents, consultants, or distributors are anti-bribery compliant. In an age of identity theft and myriad hacking, KYC has become a major emphasis by regulators.As such, banks, insurers, export creditors and other financial institutions are increasingly demanding that customers provide detailed due diligence information. These regulations had initially been imposed only on the financial institutions, having now extended to the non-financial industry, fintech, virtual assets dealers, and many non-profit organizations.Regulators Taking No Chances with Identities Regulated brokers in the retail industry are very stringent when applying appropriate KYC verifications after financial watchdogs worldwide have become stricter in monitoring their compliance with the procedure in recent years. Not only brokers use KYC, the procedure is also widely used by banks, and any financial companies that provide insurance or credit and require appropriate due diligence. Most major jurisdictions in the financial space mandate KYC requirements as well as all regulated brokers.The vast majority of these countries have adopted KYC standards as mandatory only during the past two decades. This has helped curb illicit behavior and has become a fixture of the industry.

Know Your Customer (KYC) is the process via which the broker is verifying the true identity of its clients in order to comply with multiple regulations. KYC is used to assess the suitability of customers when it comes to anti-money laundering regulations, any type of financial fraud and determining whether they are potentially risky for the brokerage.In particular, KYC guidelines in financial services mandate that individuals make a cohesive effort to verify the identity, suitability, and risks involved with maintaining a business relationship. KYC processes are also utilized by companies for the purpose of ensuring their proposed customers, agents, consultants, or distributors are anti-bribery compliant. In an age of identity theft and myriad hacking, KYC has become a major emphasis by regulators.As such, banks, insurers, export creditors and other financial institutions are increasingly demanding that customers provide detailed due diligence information. These regulations had initially been imposed only on the financial institutions, having now extended to the non-financial industry, fintech, virtual assets dealers, and many non-profit organizations.Regulators Taking No Chances with Identities Regulated brokers in the retail industry are very stringent when applying appropriate KYC verifications after financial watchdogs worldwide have become stricter in monitoring their compliance with the procedure in recent years. Not only brokers use KYC, the procedure is also widely used by banks, and any financial companies that provide insurance or credit and require appropriate due diligence. Most major jurisdictions in the financial space mandate KYC requirements as well as all regulated brokers.The vast majority of these countries have adopted KYC standards as mandatory only during the past two decades. This has helped curb illicit behavior and has become a fixture of the industry.
Read this Term
) procedures, along with  anti-money laundering (AML 
Anti-Money Laundering (AML)

Anti-money laundering (AML) is a term that describes laws, processes, and regulations that are intended to prevent illegally obtained funds from being disguised as income gained through legitimate means. The fundamental purpose of the AML laws is to help safeguard, detect, and report suspicious activity including the predicate offenses to money laundering and terrorist financing, such as securities fraud and market manipulation.Most exchanges have AML measures that include identity verification (Know-Your-Customer checks) and bots that monitor for suspicious trading activity.AML Laws at WorkAML laws take explicit aim at corruption, tax evasion, market manipulation, and the trade of illegal goods. Much of their emphasis also looks to bring to light the efforts individuals or entities utilize to conceal these crimes.Essentially, AML procedures are intended to make it harder for criminals to “hide the loot.” Often, money launderers attempt to disguise their illicitly-obtained funds by funneling it through a legitimate cash business, like a regulated cryptocurrency exchange. Therefore, it is up to the businesses to ensure that they aren’t unwillingly part of a money-laundering scheme.One of the most prevalent issues to combat is laundering, which involves running money through a legitimate cash-based business owned by the criminal organization or its associates. A supposedly legitimate business can then deposit the money, which the criminals can subsequently withdraw.Launderers can also target foreign accounts to make deposits it, depositing cash below several regulatory thresholds that fail to garner suspicion. In the US for example, many transfers or cash payments under $10,000 are unlikely to draw the attention of regulatory authorities.Additionally, money launderers can move cash into dishonest brokers who are willing to ignore existing regulations in return for large commissions.

Anti-money laundering (AML) is a term that describes laws, processes, and regulations that are intended to prevent illegally obtained funds from being disguised as income gained through legitimate means. The fundamental purpose of the AML laws is to help safeguard, detect, and report suspicious activity including the predicate offenses to money laundering and terrorist financing, such as securities fraud and market manipulation.Most exchanges have AML measures that include identity verification (Know-Your-Customer checks) and bots that monitor for suspicious trading activity.AML Laws at WorkAML laws take explicit aim at corruption, tax evasion, market manipulation, and the trade of illegal goods. Much of their emphasis also looks to bring to light the efforts individuals or entities utilize to conceal these crimes.Essentially, AML procedures are intended to make it harder for criminals to “hide the loot.” Often, money launderers attempt to disguise their illicitly-obtained funds by funneling it through a legitimate cash business, like a regulated cryptocurrency exchange. Therefore, it is up to the businesses to ensure that they aren’t unwillingly part of a money-laundering scheme.One of the most prevalent issues to combat is laundering, which involves running money through a legitimate cash-based business owned by the criminal organization or its associates. A supposedly legitimate business can then deposit the money, which the criminals can subsequently withdraw.Launderers can also target foreign accounts to make deposits it, depositing cash below several regulatory thresholds that fail to garner suspicion. In the US for example, many transfers or cash payments under $10,000 are unlikely to draw the attention of regulatory authorities.Additionally, money launderers can move cash into dishonest brokers who are willing to ignore existing regulations in return for large commissions.
Read this Term
) measures.

BitMEX already settled with the US regulator earlier, paying a monetary penalty of $100 million.

Additionally, the CFTC filed criminal charges against the three BitMEX co-founders and one of its employees for the violation of the Bank Secrecy Act and conspiracy to commit offences. Moreover, all the three co-founders entered a guilty plea and are now awaiting sentencing.

“Individuals who control cryptocurrency derivatives trading platforms conducting business in the U.S. must ensure that their platform complies with applicable federal commodities laws, including CFTC registration and regulatory requirements such as Know-Your-Customer and Anti-Money Laundering regulations,” Gretchen Lowe, CFTC’s Acting Director of Enforcement, said.

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