A recent warning from the U.K.’s Financial Conduct Authority (FCA) makes it fairly clear that BitMEX hasn’t been playing by the regulator’s rules. A track record of questionable conduct and silence from the cryptocurrency exchange isn’t helping to change any minds.
On March 3, the FCA issued warnings regarding both BitMEX and Kraken. Kraken’s warning was later withdrawn, but BitMEX’s still stands. The exchange has been labeled as an “unauthorized firm” by the regulator, specifically for offering services in the U.K. without having received prior authorization. They explained:
“However, some firms act without our authorisation and some knowingly run investment scams. This firm is not authorised by us and is targeting people in the UK. Based upon information we hold, we believe it is carrying on regulated activities which require authorisation.”
While Kraken was quick to dispute their warning, BitMEX has been relatively quiet on the matter. When asked for comment, BitMEX told another outlet: “We are working closely with our advisors to assess the situation. There is nothing more we can add at this time.”
This isn’t the first time BitMEX has been under fire from a regulator for offering unregistered services. In July, 2019, the U.S. Commodity Futures Trading Commission (CFTC) began an investigation into the exchange. In that instance, the CFTC was concerned Americans might have been allowed to trade on the exchange before it had registered with the regulator.
Commenting on that possibility, BitMEX CEO Arthur Hayes noted that the exchange had not allowed Americans to start trading, but through the use of VPNs, there was always a possibility that their geoblocking had been circumvented.
The FCA’s warning is more stern though, and perhaps harder for BitMEX to explain away. While not only inferring that BitMEX may be running a scam, it flat out accuses the exchange of targeting U.K. residents, which is a bigger accusation than merely having some U.K. customers circumventing geoblocking.
There’s plenty of evidence on the FCA’s side as well. The Advertising Standards Authority (ASA), the U.K’s advertising regulator, warned BitMEX about misleading advertising in August. The ad in question didn’t reveal the potential risks in crypto investment, instead highlighting how “easy” it is to get rich by putting your money into an exchange like BitMEX.
The exchange has also been known to mishandle player data in the past. In November, we learned that BitMEX’s user emails were made public, leaving their customers open to potential phishing attacks.
BitMex has solidly joined the ranks of exchanges like Binance and Kraken, who all have been critical of the regulatory friendly Bitcoin SV (BSV), but have had their own scandals uncovered over time. In January, 2020, BitMEX Research released a report implying BSV may be nothing more than a pump and dump scam.
Their research might be more believable if the ASA hadn’t first accused them of misleading their own customers with get rich quick advertising, and now the FCA makes it clear they aren’t even welcome in the U.K. The exchange might want to get their own operations in line with regulators and stop swindling customers.
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