BitMEX’s Crypto Derivatives Exchange Now Has All Users As ‘Fully Verified’ Traders

BitMEX’s Crypto Derivatives Exchange Now Has All Users As ‘Fully Verified’ Traders

Cryptocurrency exchange BitMEX says all the users on its platform are now completely verified.

Last year, the company was having issues with U.S. regulators. As a result, the firm set out to make sure it completes its customer verification program to stay off regulators’ scrutiny.

The BitMEX User verification program was introduced on 28 August 2020. It required BitMEX users to follow a four-step verification process similar to the verification of IDs on several cryptocurrency exchanges.

The verification process takes only five minutes to complete the entire process. Users were asked to upload the proof of address and IDs, take selfies, and provide answers to multiple-choice questions before they can complete the registration.

The user verification deadline was on December 9th, as only verified users are allowed to make transactions, including deposits and withdrawals on the platform.

After the December 9th verification deadline, more than $100 billion worth of transactions have been exchanged, as the firm confirmed that 100% of its users are now completely verified.

BitMEX said that with the completion of the verification exercise, the Seychelles-based company had become one of the world’s biggest derivatives exchanges with a completely verified user-base.

In 2019, the Commodity Futures Trading Commission (CFTC) started investigating BitMEX to determine whether U.S. traders are using its platform.

Then last year October, the regulatory body filed a case against BitMEX for allowing users who are not fully registered to trade on its platform.

After the case, the exchange decided to employ a new compliance chief and shaken up its executive team.

“We’re pleased to confirm that our User Verification Programme has been successfully implemented,” the company stated in its blog.

A major milestone for BitMEX

Chief Compliance Officer of 100x Group Malcolm Wright commented on the development. He said BitMEX is now one of the few non-US-based crypto derivatives that have implemented the know-your-customer (KYC) policy for users to complete their transactions.

He said the achievement is a notable one because of the time and effort it takes to develop a vigorous compliance function that will meet international standards.

Chief executive Officer of the 100x Group Alexander Höptner also commented on the development. According to him, the user verification completion is a major milestone towards what the company hopes to achieve in the future. 100x Group is the holding structure for BitMEX.

He further revealed that it would help BitMEX become a high-performance platform with open-interest and top-level liquidity. Höptner says it places the company in an excellent position to increase both the institutional and retail investors.

It will further give users the chance to boldly trade crypto derivatives without sacrificing performance, liquidity, or security.

BitMEX’s technology has been regarded as the best in class because of its top tier product innovation, Wright added. As all users on the platform are completely verified, the company has shown its commitment to maintaining the legal requirements to operate in any international environment, he stated.

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Author: Ali Raza

BitMEX & Founders Sued Again for Market Manipulation, Racketeering, and Money-Laundering

BitMEX legal woes appear to be far from over after another lawsuit was filed against the crypto derivatives exchange. The lawsuit filed in a California court by a Romania resident Păun Gabriel-Razvan claims that BitMEX parent company, HDR Global Trading Limited, and its founders engaged in illegal activities, including market manipulation, racketeering, and money-laundering.

With the company’s former CEO Arthur Hayes still at large, it has been a couple of rough months for BitMEX since the DoJ and CFTC initiated lawsuits against the firm. The trend is now picking on an individual scale as more people seek to sue BitMEX for ‘alleged’ manipulation tactics through the exchange’s internal trading desk.

The New Lawsuit Against BitMEX

The lawsuit by Păun Gabriel-Razvan comes barely a month since a Moscow based resident filed a similar complaint by the name Dmitry Dolgov. Interestingly, both plaintiffs are being represented by the same counsel who goes by Pavel Pogodin; this attorney works at Consensus Law. The latest filing claims that BitMEX facilitated illegal finance activities by skipping crucial KYC and AML practices hence,

“Hackers, tax evaders, money launderers, smugglers, drug dealers all flocked to BitMEX flooding the platform with hot money,”

It goes to highlight that BitMEX directly benefited from market manipulation through its internal trading desk, giving the following example;

“A money launderer (Defendant) would open two exchange accounts – a helper account on one or more exchanges used by BitMEX to calculate its index price (Coinbase Pro, Kraken, and BitStamp) and a winner account on BitMEX.”

The court filing details,

“The money launderer would then enter into a large leveraged derivatives position on BitMEX and immediately execute market orders from the helper account with maximum slippage to move the index price in a favorable direction.”

According to Pogodin, who spoke to the Block, his client lost 247.94 BTC as a result of these malpractices. They are now seeking 3 times compensation, translating to around $12.8 million as per prevailing market prices. The suit also seeks punitive damages worth $50 million per California’s law coupled with attorney fees, costs, and interest on the defrauded Bitcoins. Pogodin further noted that more lawsuits against BitMEX would probably follow as more ‘victims’ are coming forward.

BitMEX to Fight the Issue in Court

However, BitMEX appears unbothered by Pogodin’s lawsuits against the firm, according to a spokesperson who shared sentiments with the Block. The spokesperson said that they will pursue the issue through litigation and are optimistic that the courts will rule in the favor,

“As we’ve said before, regrettably, Mr. Pogodin operates just like a patent troll, filing ‘copy and paste’ complaints against us based on rehashed information culled from the internet.”

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Author: Edwin Munyui

BitMex Onboards Eventus Systems For Trade Surveillance & Risk Management

BitMEX, one of Bitcoin’s top crypto exchanges, has partnered with the blockchain compliance centered firm Eventus Systems to make its platform AML compliant. Eventus Systems would also help in trade surveillance and risk management.

The partnership enables the crypto exchange step to become more compliant, keep an eye on fraudulent transactions, and monitor any unauthorized trading activity.

Malcolm Wright, chief compliance officer at 100x Group, BitMEX’s parent company, commented on their association with Eventus Systems and how it would help the digital asset exchange, he said,

“The selection of Eventus to support our critical trade surveillance and AML functions is an important part of our plans to mature our compliance capabilities, with a vision of leading the industry on best practice crypto-asset compliance.”

BitMEX trying to Mend its Ways After CFTC Charges

BitMEX exchange was recently in hot water after the financial watchdog CFTC filed a civil lawsuit against the exchange for money laundering and illegally operating in the US, just one month ago.

The exchange also has dealt with the U.S. Attorney for the District of New York filing of a criminal indictment against the owners Arthur Hayes, Ben Delo, and Samuel Reed for violating the Bank Secrecy Act. The feds went on arrest the BitMEX CTO Samuel Reed.

While the BitMEX exchange is acting fast to mend its issues, it is yet to be seen whether it can bounce back to its glory days after several civil lawsuits and the indictment against the owners.

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Author: Silvia A

BitMEX Now Former CTO, Samuel Reed, Released On A $5 Million Unsecured Bond

Troubled BitMEX exchange executive Samuel Reed released on a $5 million bond paid to the district of Massachusetts court following his arrest on October 1. According to a document first shared by The Block, the court approved the unsecured bond payment on October 3rd on condition that Samuel Reed will show up to court and accept to serve a sentence if convicted.

The U.S Department of Justice (DoJ) charged BitMEX executives on October 1 due to allowing unlicensed trading to Americans and violating the anti-money laundering and know your customer rules and measures set in place. Founders of BitMEX, Arthur Hayes, Samuel Reed, and Benjamin Delo have all been charged with breaking the Banking Secrecy Act, carrying a maximum jail term of five years. Reed was arrested in Massachusetts earlier this month charged with

“willfully failing to establish, implement, and maintain an adequate anti-money laundering (‘AML’) program at the Bitcoin Mercantile Exchange or ‘BitMEX.’”

This was the second arrest amongst the company executives with the head of business development, Gregory Dwyer, also charged and arrested.

Reed’s $5 million bond payment will be secured with a $500,000 cash payment. Reed and his wife’s passports have also been confiscated by the authorities to mitigate flight risk.

The U.S Commodities and Futures Trading Commission (CTFC) has also filed a civil lawsuit against the three founders in the Southern District Court in New York on the AML/KYC breaches on the exchange.

In an attempt to please customers and halt the hammering exodus from the exchange, HDR Global, wholly owner of the BitMEX exchange, announced the three executives charged would step back from their respective roles. Arthur Hayes and Samuel Reed have stepped back from their respective roles as CEO and CTO, respectively.

Despite the charges, 100x Group chairman David Wong said, “it will be business as usual” for the exchange aiming to provide the best features and “maintain the highest standards of corporate governance.”

Also Read: ‌DOJ’s First-of-its-Kind Crypto Framework Targets Decentralized, P2P Platforms & Privacy

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Author: Lujan Odera

After CFTC Files Charges, Chainalysis Labels BitMEX Crypto Exchange as a ‘High Risk’

BitMEX is set to be classified as a ‘high risk’ exchange by crypto intelligence firm Chainalysis; barely a week since its officials, including CEO Arthur Hayes, were indicted by the U.S Commodity Futures Trading Commission (CFTC).

Chainalysis advised its clientele, which includes government agencies, financial institutions, and crypto exchanges that it would consider BitMEX a ‘high risk’ label as of October 13 onwards.

This risk classification update on BitMEX means that Chainalysis clients who leverage the platform’s ‘KYT’ monitoring tool will be able to see both historical and future trigger alerts from the now haunted crypto derivatives exchange. Chainalysis shared the client advisory email with TheBlock,

“Any transfers from October 1st and later should be considered high risk. Compliance teams should also look back at older transfers, but given this change may trigger alerts on thousands of older transfers, it is reasonable to do that incrementally,”

However, a Chainalysis spokesperson said that the company’s clients could opt for their own risk tolerance levels and adjust accordingly. That said, they were keen to highlight it is their duty as a crypto intelligence firm to protect its clients, hence the consideration of ‘high risk’ based on criminal charges filed against a specific firm or its ownership/leadership.

Meanwhile, Arthur Hayes remains at large as BitMEX’s parent firm, HDR Global Trading Ltd, vows to take on the government against the recently filed charges. The accused are being pursued on grounds of violating KYC/AML rules and running an unregistered trading service. While it might be early to predict the future of BitMEX, the exchange is already taking a hard hit on its business. In fact, brutal skeptics like LMAX Group CEO, David Mercer, are of the opinion that recent developments will ultimately affect BitMEX’s going concern,

“I can’t see any significant institution wanting to continue to trade there.”

Also Read: ‘Warning Shot’ for DeFi: Here’s Why BitMEX Charges are ‘Incredible Bearish’ for this Burgeoning Sector

More Reading: After Targeting BitMEX, SEC Takes On John McAfee, Who Made Over $23M From Fraudulent ICO Promotions

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Author: Edwin Munyui

‘Warning Shot’ for DeFi: BitMEX Charges are ‘Incredible Bearish’ for this Burgeoning Sector

Prosecutors in the United States filed criminal charges against BitMEX, accusing it of violating the federal Bank Secrecy Act.

The CFTC has been investigating one of the biggest derivatives exchanges for some years now. Still, the effect of this news on the prices of digital currencies is expected to be bearish but only in the short term.

It will actually be bullish in both medium and long term and “likely be a boon for other regulated futures exchanges that offer significant leverage. Gambling is gambling,” said Bill Barhydt, co-founder & CEO at Abra.

But while regulation will help the market at large, it may not be such a good thing for the decentralized finance (DeFi) sector.

Time for DeFi Providers to Wake Up

According to Barhydt, it is actually a “warning shot” for DeFi service providers who think registrations don’t apply to them, “That’s pure nonsense. Lawyer up now.”

With the DOJ talking about the BitMEX co-funders to “soon learn the price of alleged crimes,” which will be paid in “fines, restitution, and federal prison time,” — it’s time for DeFi providers to wake up.

“DeFi services are not sufficiently decentralized today to have no central off switch. That means the companies behind them are at risk. Oracles are another problem…Set your alarms for the moment of truth,” Barhydt said.

As we saw only recently during the KuCoin hack, several crypto projects froze the stolen funds, putting a big question mark on the decentralized nature of them all, which wasn’t even the first time.

Given that DeFi has the highest beta, “flight to safety” is another reason why the BitMEX incident is not bullish for DeFi, said trader and economist Alex Kruger.

Moreover, while the authorities are going after managers individually over the criminal allegations, for the market, smart contract creators and promoters won’t be far fetched, regardless if it is even true, he added. And what the market thinks matters.

A Small Winter for DeFi

Over the past few months, the DeFi sector grew immensely, from about $1 billion in mid-June to $14.6 billion earlier this week, as per Debank.

For the past few weeks, DeFi tokens have been cooling down, with yields significantly lower than they were a month ago.

While the impact of the news on the price of Bitcoin and altcoin might be over, we could see “relative weakness across DeFi.”

As seen in the past 24 hours, the cryptos lost 4% to 12% compared to the DeFi ones, which are down 10% to 25%.

As we reported, a small DeFi winter has also been expected.

“Most DeFi bluechips trade like classic bubbles bursting,” said trader Qiao Wang who sees it more like the spring 2013 bubble, meaning this won’t be a multi-year nuclear winter, because of the strong and improving fundamentals, total market cap of these tokens still small, and more brrrr likely to come next year.

“2021 will be great, IMO,” he added.

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Author: AnTy

A ‘Big’ Positive Step Towards the Bitcoin ETF Approval

In terms of the price of Bitcoin, criminal charges on the popular cryptocurrency derivatives exchange BitMEX may be bearish, but the same isn’t true for the overall market.

Just like it is bullish in the long term, this could help in getting the much-desired Bitcoin exchange-traded fund (ETF) an approval.

“Assume the CFTC & DOJ bring Bitmex down. The absence of Bitmex may then result in US exchanges and OTC desks becoming markets of “significant size,” sharply increasing the odds of the SEC approving an ETF,” said trader and economist Alex Kruger.

These past few weeks, several attempts at a Bitcoin ETF have been made to no avail as every single one of them has been rejected by the agency over the grounds of manipulation.

But the crypt community hasn’t let go of the hope for approval eventually. An ETF holds so much importance for the community because it is expected to bring a large number of inflows in the market, as such, pushing the prices higher. “A parallel demand curve shift.”

An ETF would be the “opportunity of a lifetime” that would allow retail to front-turn the institutions for once. Former macro hedge fund manager and a Bitcoin proponent, Raoul Pal expect “every” pension plans and family offices to allocate some of their money to it — billions of dollars pouring into it.

A Cue from CFTC

Seychelles incorporated exchange is known for its 100x leverage, and according to Bill Barhydt, co-founder, and CEO of Abra, it has been the key reason we don’t have a US Bitcoin ETF.

“Their market is easily manipulated by large traders. Not a valid reason for no ETF imo. Just a fact,” he said.

Although it may not be sufficient for an ETF approval, it is a big step towards that, for sure.

Adding to the expectation is the statement from Chairman Heath P. Tarbert, giving a hint of what’s to come, in which he said digital assets hold “great promise” not only for the derivatives markets but also the US economy.

“For the United States to be a global leader in this space, it is imperative that we root out illegal activity like that alleged in this case. New and innovative financial products can flourish only if there is market integrity. We can’t allow bad actors that break the law to gain an advantage over exchanges that are doing the right thing by complying with our rules,” Tarbert said.

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Author: AnTy

LINK Price Not Ready to Rebound, While Chainlink’s Proof of Reserve to Audit $1 Bln WBTC

Yesterday, the crypto market took a hit on the news of BitMEX facing criminal charges. Chainlink (LINK) was one of the top cryptos that reacted the most violently, losing 15.3% of its value.

At the time of writing, LINK has been trading at $8.95 while managing just about $270 million in ‘real’ volume in the past 24 hours.

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“Chainlink traders have been hurt more than most top 100 blockchain traders over the past 30 days, and our MVRV metric is indicating that a buy-low opportunity has arisen,” noted data provider Santiment.

“While the average BTC and ETH trader is break-even in this time, LINK trader returns are at -20% in this time span. The sentiment is low, FUD is rampant, and a rebound is more likely than not under these conditions,” it added.

Chainlink Traders Show Signs of FUD
Source: Santiment

Holders’ distribution chart also reveals that the Chainlink whales, the non-exchange addresses, have also been selling some of their stash. Earlier this month, they were busy accumulating LINK, and now the signs of distress have them unwinding their position.

Addresses holding 100k to 10 million LINK have declined by over 3.5% in a fortnight.

While LINK price might be cooling off since hitting its peak in mid-August after a smoking rally in 2020, Chainlink continues to expand its ecosystem.

In the latest news, BitGo has announced that it will be working with Chainlink for the auditability of Wrapped Bitcoin (WBTC) reserves to scale its reliability and support the growing demand that brings nearly $1 billion BTC ($966 million to be exact) on Ethereum.

“DeFi applications can now receive definitive onchain proof about the fully backed collateralization of WBTC. This novel onchain proof of reserve is possible because of the openness of the Bitcoin network, transparency provided by BitGo, and the highly secure decentralized oracle network that Chainlink powers,” reads the official announcement.

BitGo has adopted Chainlink’s Proof of Reserve mechanism, which is live on testnet and soon to come on mainnet, will fully automate the auditing of BTC value custodied by BitGo.

Chainlink’s decentralized oracle will be used by WBTC Proof of reserve reference contract to check the balance of BTC custody wallets every ten minutes, and whenever a deviation is spotted, an on-chain update would be updated.

This will be beneficial for decentralized applications that use WBTC as collateral, provide Dapps additional options for protection against unexpected events, and increase the transparency in WBTC collateralization and user trust across the market.

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Author: AnTy

Bitcoin Price Crashes $450 on BitMEX CEO Arthur Hayes & Other Founders Indicted on Criminal Charges

CFTC has charged BitMEX with illegally operating a derivatives trading platform.

Back in July 2019 U.S. Commodity Futures Trading Commission (CFTC) started investigating the exchange with a focus on allowing Americans to trade on the platform while not being registered with the agency.

But as Jake Chervinsky, general counsel at Compound Finance, said the bigger news is BitMEX founder Arthur Hayes, Samuel Reed, and Benjamin Delo being indicted on charges of violating the Bank Secrecy Act, which carries a maximum prison term of five years.

Exchange’s first employee who later became the head of business development, Gregory Dwyer, was also charged and arrested this morning in Massachusetts —the rest remain at large, said the prosecutors.

The founders of BitMEX were indicted by federal prosecutors in New York for failing to comply with adequate anti-money laundering measures at the company.

“These defendants flouted (to do their part to help in driving out crime and corruption) obligation and undertook to operate a purportedly ‘off-shore’ crypto exchange while willfully failing to implement and maintain even basic anti-money laundering policies,” Acting Manhattan U.S. Attorney Audrey Strauss said.

The official press release further states that one of the defendants even bragged about the company incorporated outside the US where “bribing regulators…cost just ‘a coconut.’”

“Thanks to the diligent work of our agents, analysts, and partners with the CFTC, they will soon learn the price of their alleged crimes will not be paid with tropical fruit, but rather could result in fines, restitution, and federal prison time,” it reads.

The real question is, how fast will foreign exchanges that still allow US-based traders to use their service via VPN or without KYC. The implications of this could be huge for the cryptocurrency community.

In response to the news, bitcoin fell from above $10,900 to $10,460 within minutes and is currently trading at around $10,500. The rest of the crypto market also dropped in tandem.

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Author: AnTy

BitMEX Launches Its Full-Control Mobile App to Crypto Traders In Over 140 Countries

BitMEX launches mobile-based trading app allowing users to enjoy the crypto exchange’s features on the go. According to an announcement on Sept 1, BitMEX Mobile is available on both iOS App Store and Google Play Store.

The mobile trading app aims at improving the user experience on the exchange even when off your work desk. Additionally, its will enable swift crypto futures trading with access to all account features available on the desktop site.

Speaking on the launch of the new mobile trading app, Ben Radclyffe, commercial director of 100x, the parent company of the crypto derivatives exchange, confirmed BitMEX mobile is now available in over 140 companies after a successful test period across 28 countries earlier in the year. He further said,

“Our global audience, many of them are mobile first, so having an innate mobile application that allows them to access our product and our services should help increase our user base.”

The application offers users a host of features including direct deposits and withdrawals on their wallets and trading features including market orders, limit orders, take profits and stop losses. The BitMEX Mobile app provides an easy to configure and clear user interface allowing quick buy options by swiping the page.

The app also provides push notifications, price alerts, biometric logins and authentication as well as better security protocols. The on-the-go app however will not be as complex as the desktop version, Radclyffe said in a statement obtained by BEG. “It’s a slightly degraded experience as you can imagine,” Radclyffe on the differences between the desktop and new BitMEX Mobile app.

BitMEX currently is the fourth largest Bitcoin derivatives exchange in daily trading volume recording $1.80 billion in Bitcoin futures on Sept 1, Skew Market reports. This represents a slight $0.4 billion increase in trading volumes in BTC Futures in the past 24 hours.

BitMEX’s extended efforts to launch the Mobile app follows an announcement that new and existing users are subject to KYC requirements by February 2021 in a bid to be more compliant.

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Author: Lujan Odera