CFTC Opens Probe Into BitMEX Over U.S. Trader Accounts

The U.S. Commodity Futures Trading Commission (CFTC) has launched an investigation into whether BitMEX has allowed U.S. users to trade on its platform, Bloomberg reports. This probe is ongoing and will last a few months. The report also clarifies that CFTC investigations often don’t unearth any misconduct or illegal activities. 

Founded in 2014, BitMEX, which posted a stunning $1 trillion in trading volume over the past year, is wildly popular for unregulated margin trading. Bitcoin traders looking to test their luck and reap large profits can long or short bitcoin with up to 100 times leverage. The CFTC has classified bitcoin as a commodity, so to service U.S. customers, the platform would need to register with the CFTC to become a fully-regulated entity.

At the outset of 2019, the Hong Kong- and San Francisco-headquartered exchange began sweeping U.S. citizens and residents of Quebec, Canada, off of its platform. This came alongside a wider housekeeping effort to bar its services to citizens in jurisdictions that might embroil BitMEX in regulatory trouble. If you register an account with an IP address from a restricted area, your account will be disbanded, though some traders use VPNs and the Tor browser to circumvent these restrictions.

A BitMEX spokesperson told Bloomberg that it “as a matter of company policy, does not comment on any media reports about inquiries or investigations by government agencies or regulators.”

The investigation is the latest in a wider trend of U.S. regulators ramping up their scrutiny of cryptocurrency companies and exchanges looking to avoid this scrutiny. Throughout recent months, the New York Attorney General (NYAG) has launched into court proceedings to further its own investigation of Bitfinex, one of the industry’s largest exchanges, best known as the sister company to the stablecoin tether. Over the course of its investigation, the NYAG reportedly discovered that Bitfinex has been serving New York clients — something it said it wasn’t doing and something it can’t do without the requisite BitLicense.

Last month, Binance announced that it would be closing all U.S. customer accounts by the end of the year as well, and it hopes to launch a regulated exchange for U.S. users in the near future.

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