A federal judge has ordered the three co-founders of BitMEX to pay a total of $30 million for operating an illegal cryptocurrency derivatives platform and violating money laundering regulations, the Commodity Futures Trading Commission (CFTC) said in a statement Thursday.
The U.S. District Court for the Southern District of New York ordered the platform's founders - Arthur Hayes, Benjamin Delo and Samuel Reed - to each pay a $10 million fine in connection with the CFTC's allegations that they illegally transacted with U.S. customers. The order followed the conclusion of a related Justice Department case in February in which the three pleaded guilty to violating bank secrecy laws by operating the crypto spot and derivatives trading platform without proper anti-money laundering controls.
In connection with this plea, they are awaiting sentencing "in the coming weeks," according to the CFTC.
In 2020, the U.S. derivatives regulator had first penalized the company and its founders for "unlawfully accepting orders and funds from U.S. customers to trade cryptocurrencies, including derivatives on Bitcoin, Ether, and Litecoin." The penalties imposed this week stem from that CFTC action, in which the company had previously agreed to pay the agency and the Financial Crimes Enforcement Network (FinCEN) $100 million.
"This is another example of the Commission taking decisive action to ensure that trading platforms for derivatives involving digital assets comply with the Commodity Exchange Act and Commission rules," CFTC Chairman Rostin Behnam said in a statement.
Caroline Pham, who was recently sworn in as one of the agency's new commissioners, said these latest orders "underscore the CFTC's leadership in bringing digital assets into the regulatory framework so that important protections apply to customers and market participants."
The CFTC said the co-founders "failed to implement and enforce effective controls to prevent or detect BitMEX's unlawful conduct."
A spokesman for Hayes declined to comment. Lawyers for the other co-founders could not immediately be reached for comment.
BitMEX spokesman Taylor Bossung said the company is aware of the developments but will not comment on legal matters in which the company is not directly involved.
"We are focused on launching the BitMEX spot exchange in the coming weeks and continuing to build out the platform to serve our customers," Bossung said.
Update (May 5, 2022, 20:40 UTC): Updates an earlier breaking news story about the federal judge's order.
Update (May 5, 2022, 23:15 UTC): Adds a comment from Caroline Pham.