A day after US Treasury Secretary Steven Mnuchin warned regulatory crackdown on illicit bitcoin trades, crypto derivatives exchange BitMEX received terrible news.
According to a source cited by Bloomberg, the Seychelles-based firm is under probe for allegedly offering services to US citizens. The Commodity Trading Futures Commission (CFTC), which regulates and licenses derivatives firms in the US, treats cryptocurrencies as commodities. That allows it the right to supervise firms that offer crypto derivatives as part of their services.
BitMEX falls out of the jurisdiction of the CFTC. But if the firm discreetly engages with US customers, then CFTC has a right to take appropriate action against it. The exchange so far has not commented on the said allegations. Efforts of Bloomberg to extract a comment out of them also fell on deaf ears.
Roubini Attacks BitMex
As the silence grows, it is Nouriel Roubini who is doing the talk. The noted economist, who recently debated BitMEX co-founder & CEO Arthur Hayes, effortlessly accused the company of engaging in illicit financial activities. During the debate, Roubini called Hayes “scammer” for offering hefty margin trading services to non-accredited investors. He also alleged that some students in New York lost their loan money to BitMEX.
Soon after the news of CFTC probing Hayes’ business broke, Roubini went on a tweeting spree. The New York University professor expressed satisfaction with the investigation but claimed offering services to Americans was just one of the crimes BiMEX had committed.
Crimes probed by @CFTC are a fraction of sleaze going on in BitMEX:
U.S. Regulator Probing Crypto Exchange BitMEX Over Client Trades. Trading platform known for 100x leverage futures contract. Probe comes as regulators ramp up scrutiny of crypto sectorhttps://t.co/X0JDU5Ge46
— Nouriel Roubini (@Nouriel) July 19, 2019
“You indeed poked this nest, and it will come to haunt you,” Roubini tweeted to Hayes. “You will move from your gilded mansions in the Seychelles and HK to the jail cave where you will soon belong.”
BitMEX Facilitated Terrorist Financing, Money Laundering
In a separate post, Roubini had accused BitMEX of facilitating money laundering and terrorist financing operations. The economist said the exchange had prior knowledge of those transactions, but it did nothing about it. Instead, it focused on earning income from commissions.
“As if that were not enough, BitMEX also has an internal for-profit trading desk (supposedly for the purpose of market making) that has been accused of front running its own clients,” Roubini added. “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.
Hayes has not responded to any of these accusations as of this press time.