Delphi Daily

The charges heard round the world (at least in crypto). Yesterday, the Department of Justice and CFTC filed joint charges against BitMEX and its owners and operators for running a trading platform without CFTC approval and for failing to implement know-your-customer (KYC)/ anti-money laundering (AML) procedures or a customer information program.

At the crux of the indictment was the Bank Secrecy Act (BSA) which essentially requires institutions to document users who conduct more than $10,000 in transactions on a given day. Additionally, it requires institutions to report any suspicious activity happening on their platform to regulators.

Before speculating on what this means for DeFi and crypto writ large it should be noted what is and is not unique about the BitMEX situation. BitMex markets itself as the world’s largest cryptocurrency derivatives platform with billions of dollars in volume. Within the space it is known for offering up to 100x leverage on trades with little to no formal KYC checks. In fact, their holding company rebranded to The 100x Group this past July. This is of concern for regulators who are trying to protect consumers.

Next is the issue of domicile for their customer base. BitMEX started to turn away U.S. users in 2015 though even a cursory analysis (or twitter search) would reveal that U.S. citizens have always been using the service. These reasons created a perfect storm for BitMEX. What is not unique to BitMEX is that t

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