US CFTC Launches Investigation Into BitMEX Author: Ali Raza Last Updated: 16 June 2020 A cryptocurrency derivatives exchange named BitMEX is set to go under investigation. According to sources referred to by Bloomberg, the US Commodity Futures Trading Commission (CFTC) seeks to investigate the exchange. The investigation into BitMEX will be concerned with whether the exchange is offering its services to citizens of America who are engaging in trading cryptocurrencies. Based in Seychelles, the trading firm offers its clients the option to make big bets on digital assets with margins as big as 100 times. Bitcoin and other cryptocurrencies are considered as commodities by the CFTC and therefore, any firm that offers these commodities falls under the jurisdiction of the regulatory body. Efforts to get comments from BitMEX were futile. The trading firm’s spokesperson said that as company policy, HDR Global Trading Limited which owns BitMEX, does not offer any comments on media reports with regard to inquiries or investigations by government agencies or regulators. As such, the firm does not have any comment on this report. BitMEX banned from offering services to Americans BitMEX was banned from North American markets and suspicions of violations of the ban have triggered the investigation. BitMEX officials say that the firm started closing trading accounts from the United States and Canada from as far back as 2015. In 2018, the firm received a letter from Canadian regulator, the Autorité des marchés financiers (AMF) which was in relation to BitMEX’s unlicensed status in the region. To ensure that no American traders access its platform, BitMEX closes all accounts that access the exchange through American based internet protocol (IP). However, Americans can still access BitMEX through the use of a virtual private network (VPN) tool. A VPN disguises a user’s IP address and provides them with an IP address from another country altogether. Using this method means that BitMEX cannot tell if someone is accessing their exchange from America and therefore, they have no basis for closing that particular account. BitMEX has banned users in the past BitMEX has exercised its prerogative to close accounts belonging to individuals they suspect to be from America. One such famous case in the crypto world is that of popular analyst and trader, Tony Vays. The firm said that Vays was an American citizen who provided them with fake identification details. The exchange liquidated all positions held by Vays and closed his account. The trader responded to the action taken by BitMEX by saying that his account had been wrongfully closed. He said that he is not in fact an American citizen and therefore, there is no reason why his account should be closed. What is for certain is that BitMEX, one of the best cryptocurrency exchanges in the industry, does indeed follow through on its mandate to close American accounts.