Covering the Cryptocurrency Loophole

Gone are the days when all the major sectors were relatively sparse, and as a result of it, looked more organized in their operation. Today’s landscape is one of high-voltage competition and small margins of error. One of the biggest reasons behind the influx of industry players has been the rise of untapped markets. In the previous days, market opportunities were limited, but today there is not really an end to them, something we can put down to the emergence of technology. Technology hasn’t just expanded the existing sectors, but it has also gone on to discover new ones, creating an atmosphere that seemed to have a spot for everyone out there. While this is hugely accommodating, it also becomes an administration nightmare as the need for better management of a given sector becomes more evident with every step of growth. In their bid to run these sectors more efficiently and justly manner, nationally-governed regulatory bodies come up with certain regulations, which if violated, can lead to all sorts of repercussions. The entry of new tech-driven sectors does complicate things a little, but with the recent case of BitMEX, the regulators have set an example for other companies, regardless of whichever sector they belong to.

BitMEX, a cryptocurrency exchange platform, have reached upon an agreement to pay up $100 million to settle the charges concerning illegal trades and violations of anti-money laundering laws. US Commodity Futures Trading Commission (CTFC) and the Department of Justice had accused the company of operating outside U.S, and “unlawfully accepting orders and funds from U.S, customers to trade cryptocurrencies including derivatives on bitcoin, ether, and litecoin.”

Financial Crimes Enforcement Network (FinCEN), on the other hand, stated that BitMEX “willfully failed to comply with its obligations under the Bank Secrecy Act (BSA).”

FinCEN also puts BitMEX on the hot seat for exposing other financial institutions to preventable risk as the company, in its attempt to attract more traders, deemed email to be the only requisite to access their services between 2014 and 2020.

Nevertheless, BitMEX has straight up refused to substantiate any claims made by the regulatory bodies.  The company is also yet to address the criminal charges against their founders, so it remains to be seen the size of goodwill expense that they might have to bear due to this case. For now, alongside their $100 million penalty, BitMEX is ordered to hire a consultant who will be taking the task of studying the company’s financial transactions, and reviewing their policies and methods.

The cryptocurrency industry had emerged as a loophole for traders to earn money through unscrupulous activities, but as it looks like, the regulators are closing in, and they are closing in fast.

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