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BitMEX is a typical case of harvesting users through high-leverage trading without regulatory protection and facilitating illegal trading, ultimately being sanctioned by regulators for violations.
Founded in 2014, BitMEX focuses on cryptocurrency perpetual contract trading with leverage of up to 100 times, where a 1% price fluctuation is enough to wipe out investors. It has long avoided implementing KYC (Know Your Customer) and AML (Anti-Money Laundering) mechanisms, allowing registration and trading with just an email, and has become a channel for terrorists and hackers to launder money, even providing trading services to users from Iran who are under U.S. sanctions. Additionally, there was an incident where 400 bitcoins were sold in a short period, leading to a price drop of over 85% on the platform, and restrictions on withdrawals for some accounts caused significant losses for investors. It claims not to serve users from the U.S. and U.K., but merely screening IP addresses allows users to easily circumvent this with a VPN, resulting in substantial profits from U.S. user trading.
In October 2020, the U.S. CFTC charged it with illegal operations, violating the Bank Secrecy Act, with the CTO arrested, and former CEO Hayes and other executives briefly going into hiding. Subsequently, Hayes and others pleaded guilty, needing to pay a $10 million fine, with Hayes sentenced to two years of probation and six months of home confinement. The platform also reached a settlement with the U.S. Treasury, admitting to failing to report nearly 600 suspicious transactions involving over $200 million in suspicious trading.
After the charges were revealed, the platform's open contract volume dropped by 11%, leading to a mass exodus of users. Although the platform later rushed to implement KYC verification for all users and introduced a compliance team for rectification, its market share was significantly eroded by competitors, and the previous lack of regulatory oversight allowed for abnormal market conditions and illegal trading operations, causing irreparable losses for numerous global investors.
Founded in 2014, BitMEX focuses on cryptocurrency perpetual contract trading with leverage of up to 100 times, where a 1% price fluctuation is enough to wipe out investors. It has long avoided implementing KYC (Know Your Customer) and AML (Anti-Money Laundering) mechanisms, allowing registration and trading with just an email, and has become a channel for terrorists and hackers to launder money, even providing trading services to users from Iran who are under U.S. sanctions. Additionally, there was an incident where 400 bitcoins were sold in a short period, leading to a price drop of over 85% on the platform, and restrictions on withdrawals for some accounts caused significant losses for investors. It claims not to serve users from the U.S. and U.K., but merely screening IP addresses allows users to easily circumvent this with a VPN, resulting in substantial profits from U.S. user trading.
In October 2020, the U.S. CFTC charged it with illegal operations, violating the Bank Secrecy Act, with the CTO arrested, and former CEO Hayes and other executives briefly going into hiding. Subsequently, Hayes and others pleaded guilty, needing to pay a $10 million fine, with Hayes sentenced to two years of probation and six months of home confinement. The platform also reached a settlement with the U.S. Treasury, admitting to failing to report nearly 600 suspicious transactions involving over $200 million in suspicious trading.
After the charges were revealed, the platform's open contract volume dropped by 11%, leading to a mass exodus of users. Although the platform later rushed to implement KYC verification for all users and introduced a compliance team for rectification, its market share was significantly eroded by competitors, and the previous lack of regulatory oversight allowed for abnormal market conditions and illegal trading operations, causing irreparable losses for numerous global investors.
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