The Commodity Futures Trading Commission is investigating whether cryptocurrency exchange BitMEX violated regulations by allowing U.S. customers to trade on the platform without its being registered with the agency, according to Bloomberg.
BitMEX, which is registered in the Seychelles and has its main office in Hong Kong, has become popular in Asia for allowing traders to use borrowed capital to make bigger bets on the price of bitcoin and other cryptocurrencies. Over the last year, around $1 trillion worth of trades have taken place on BitMEX’s exchange, according to its founder, Arthur Hayes, who was a guest The Information’s crypto conference call in March.
The CFTC has taken jurisdiction over bitcoin and ether, which regulators consider to be commodities, as well as derivatives tied to those assets such as futures and options. The agency’s reported investigation underscores that even crypto companies that say they do not allow U.S. customers are still at risk of drawing scrutiny from regulators if their platforms remain accessible through a VPN or proxy.
That could be bad news for Binance, a Malta-registered crypto exchange that has expanded aggressively over the last two years without much of a focus on complying with U.S. regulations.