Crypto-Exchange BitMEX to Freeze Accounts in the U.S, Quebec to avoid Legal Penalties


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BitMEX is going through regulatory pressure and to avoid issues with the SEC the Hong-Kong based exchange has been shutting down users from US and Canada, as reported by South China Morning Post Jan 15, 2019.

A global regulatory crackdown

BitMEX, the Hong Kong-based exchange known for being a leading bitcoin futures exchange and for occupying the most expensive offices in Cheung Kong Center for $600,000 a month, is reportedly closing accounts in the US and Quebec amidst increasing regulatory pressure notes the report.

The news comes amidst moves from several governments to impose a worldwide regulatory crackdown on unlicensed cryptocurrency trading platforms.

BitMEX had already identified a few countries that are ‘restricted jurisdictions’ such as North Korea, Iran, Syria, Cuba, Sudan and Sevastopol in the Crimea and started notifying users in since the last quarter of 2018. Meanwhile, the company is waiting for the approval for the company’s Seychelles registration which is still under the securities regulator’s scrutiny.

Closing down accounts in Quebec

Last year, BitMEX received a letter from the Quebec’s financial regulator, the Autorité des marchés financiers (AMF), requesting the company to close all accounts linked to Quebec citizens, with the excuse that the exchange was not licensed to offer trading services which according to an AMF official all accounts linked to customers in Quebec were immediately closed by the company.

AMF’s director of media relations stated.

“BitMEX is not registered with the AMF and is therefore not authorised to have activities in the province of Quebec. We informed this company that its activities were illegal.”


Closing down accounts in the US

What lead BitMEX to close accounts in the US remains uncertain, though it could be speculated that company is trying to avoid penalties that can come from the Securities Exchange Commission (SEC), who are increasing sanctions on digital assets trading platforms and intermediaries dealing with bitcoin.

As per the report, it is unclear if BitMEX is registered with the SEC, but the latest actions taken by the SEC against companies dealing with digital assets must have been a cause for alarm to the company.

Back in November 2018, the SEC fined Zachary Coburn, the founder of EtherDelta for running an unregistered securities exchange and charging him with a $388,000 fine.

Also in 2018, the SEC discussed and released a “regulatory sandbox” specifically designed for virtual asset trading platforms who are seeking legitimate licensing for their operations. It is indicative that future licensing regimes could begin to grant licenses to operators offering futures trading contracts, derivatives and leverage. Up until now, BitMex hasn’t made any comments on this matter.

A negative impact on the company

According to the South China Morning Post, US users accounted for about one-seventh of the BitMEX’s total number of users.

According to the company’s website, overall trading volume on the exchange in the past one year stood at $965 billion. BitMEX’s revealed data on its website as of January 11, trading volume over the last 30-day period stood at $58.41 billion. Though that is nothing compared to when 1 million bitcoins worth over $8 billion were traded over a 24-hour period toward the end of July 2018.

While Asia accounts for the largest sum of BitMEX’s revenue, US are also one of its major markets and the company decision may have a profound effect in BitMEX business growth.