This is big news. What is interesting about this to me is that unlike many crypocurrency exchanges, bitmex only deals in derivatives. What this means for them is that you can only deposit BTC, and only take out BTC. So they do not give anyone USD, and they do not deposit or withdraw money from anyone's bank.<p>It is also, by far, the best way to gain leverage in cryptocurrency products, with lower fees, great security, and even a wonderful blog and transparency.<p>I'm interested to what extent the government believes the BSA needs to apply to this, since a different area of the government (IRS) decided BTC was not even a currency. Of course, all of the relevant governing bodies (of which there are <i>many</i> in the US) can all choose their own designations, which may result in apparent inconsistencies, but I wonder to what extent they were warned about this beforehand.<p>What is also interesting is that Bitmex did not allow US residents to use their exchange via blocking US IP addresses and asking for country of residence, aside from perhaps the first few months. Some US residents would use a VPN and use it instead, but they (the client) would have to lie to Bitmex in doing so. It appears that's what the argument here is - that they did a poor job, knowingly so, of stopping US residents from using their services. BitMex was, over time, implementing tougher KYC, but currently it's not required by all of their clients for a few more months.
>"‘Seychelles is cheaper to bribe than [the United States]’ and when asked how much he had to pay Seychelles to register BitMEX there, he said ‘a coconut.’"<p>In government regulated finance, our counsel had very good advice: Don't provoke the regulators.
BitMEX is the best, most reputable, and most secure crypto derivatives exchange. Their fees are -0.025% (maker) and 0.075% (taker), practically the lowest on the market.<p>They have never been hacked. They actively work to track and stop hacked proceeds from being deposited on their platform; and they do a better job at it than most regulated exchanges. (The complaint alleges <i>one</i> instance of a miss; but just look at the FinCEN leaks to understand how it's impossible to get everything).<p>3 of the founders live in jurisdictions w/o extradition treaties to the USA, so I hope they will be able to continue operating the best bitcoin exchange.
The video of the debate between the founder of BitMEX and skeptic economist Nouriel Roubini [1], whose 2019 report [2] 'exposed' BitMEX and inspired the gov investigation into the company:<p><a href="https://www.youtube.com/watch?v=qlZukhN_C6c&feature=youtu.be" rel="nofollow">https://www.youtube.com/watch?v=qlZukhN_C6c&feature=youtu.be</a><p>Quite fascinating in retrospect. Very testy debate and lots of weaselling work by Author Hayes (BitMEX) to evade direct answers.<p>That said, like any gov takedown, I'm not entirely sold that there isn't a world where BitMEX was providing a positive development to the industry. One that today simply fits poorly in the current US legislative frameworks [3] or entrenched companies. Of course, ideally it will be within a a more mature structure with better basic oversight and competition (technically Roubini is filling this role ATM) it has a better chance of existing, assuming it doesn't get neutered.<p>[1] <a href="https://en.wikipedia.org/wiki/Nouriel_Roubini" rel="nofollow">https://en.wikipedia.org/wiki/Nouriel_Roubini</a><p>[2] <a href="https://www.bloomberg.com/news/articles/2019-07-17/nouriel-roubini-ramps-up-campaign-against-crypto-exchange-bitmex" rel="nofollow">https://www.bloomberg.com/news/articles/2019-07-17/nouriel-r...</a><p>[3] Albeit as much as the infrastructure financial 'efficiency optimization' really provides long term value to society instead of just swiping a piece during the elaborate processes created by law and entrenched business.
Huobi, OkCoin, Binance and many others do the identical thing (synthetic USD products - they literally copied Bitmex's business model) and have the same or more volume as Bitmex.<p>I'm guessing nobody is going after them because they have China's protection or what? Or did they go through some special regulatory process inside the US?
One of BitMEX’s security features at one point (if memory serves) was that one (or more) of the principals had to review/approve withdrawals daily. That is likely difficult for them to do from prison or while being detained pending trial or extradition. BitMEX is probably not a great place to have assets that you need access to any time soon right now.
Interesting timing as BitMEX just announced in late August 2020 that they will be enforcing KYC/AML measures early next year.<p>I wonder who was trying to get the jump on who, both here and there.
Why doesn't/hasn't some American three letter agency simply seized the bitmex.com domain?<p>Or will it be seized once they are charged in absentia I imagine?
Virtual money is everywhere, there seem to be many computer games, online gambling systems and on and offline card trading systems, vouchers and points systems. All of which can be traded without any heavy KYC/AML. It would be interesting to know where the line is drawn as Bitmex only trades in Bitcoin for Bitcoin.
>REED allowed a friend of his who he knew resided in the United States to continue to access BitMEX's platform up to and including at least in or about October 2018.<p>How could they possibly know this?
BitMEX only operates with cryptocurrencies. Not a single US dollar ever passed through it. US citizens were explicitly disallowed to use the service, and the US was blocked by IP. Why it even happened?
I think the World Police BS that America engages needs to stop. That said, these guys have made it really really hard for regulators NOT to act.<p>You can't just put "No Americans (no proof needed)" on a US based website with a lot of US citizen clients dealing in synthetic USD products that's 110% non compliant with almost any US law and expect a nice outcome. Not with those sort of assets and market share.
People have the right to use their money how they want without any outside interference.<p>If people want to play with their money on BitMex they should be able to instead of using VPN's to disguise themselves and do it illegally.<p>But apparently you are only permitted to spend your USD in the manner approved by the U.S. Gov and once the US goes to a digital currency, this whole law enforcement will be 1000x easier as every single transaction can be traced and immediately frozen.