CFTC by to Binance Even though the lawsuit filed against it causes many new investors to be nervous, those who have been in this market for a long time are relatively relieved because they have faced many similar lawsuits.
When we examine the 2020 Bitmex case, which draws attention with its similarity to the Binance case, we will see that the results are not as bad as expected for the market.
What Were the Claims in the Bitmex Case?
On October 1, 2020, the CFTC filed a lawsuit against Bitmex and its three founders, accusing them of treating US clients’ funds as illegal and engaging them in trading Bitcoin, Ether, and LTC in derivatives markets. One leg of the case was directed by the FBI, and an executive of Bitmex was arrested.
The CFTC argues that Bitmex offered leveraged cryptocurrency derivatives trading to retail and institutional customers in the US from November 2014 to October 1, 2020, that US customers traded directly through BitMEX’s user interfaces, and that BitMEX made certain transactions. He said that he found that he was acting as a counterparty, therefore Bitmex violated the laws of DCM, SEF and CEA.
The charges were generally as follows:
“To provide derivatives trading opportunities to its customers without registering with the CFTC,
Acting as a counterparty in leveraged Bitcoin, Ether and LTC transactions,
Failure to comply with KYC, CIP and AML procedures for the prevention of terrorist financing and money laundering.”
Did Bitcoin Drop After Bitmex Litigation?
Bitmex was in the first place in the derivatives market volume at the time of the lawsuit. Therefore, the effect of the lawsuit on the market caused concern, but after the hearing of the lawsuit, there was only a 2% drop in Bitcoin.
Are the Claims in the Bitmex Case Similar to the Binance Case?
When we examine the claims in the Bitmex case, we see that the claims against Binance are very similar.
CFTC claims that Binance offers crypto currency derivatives trading such as Bitcoin Ether and LTC to US citizens without the necessary registration, does not comply with KYC and AML rules, ignores the rules for the prevention of terrorist financing, evades taxes and acts as an intermediary. As can be seen, the allegations are exactly the same as the Bitmex case.
In its lawsuit against Bitmex, the CFTC claimed that 15% of the platform’s earnings came from US investors, and now it has made a similar claim to Binance, claiming that 16% of Binance’s commission income comes from US users.
When we examine the documents related to the Bitmex case, we see that it is very similar to the Binance case. In fact, this similarity makes us think that the petitions at such a point may have been copied and pasted from this case.
So What Happened As A Result Of The Bitmex Case?
About 10 months after the lawsuit was filed, Bitmex and its subsidiaries were fined $100 million. Bitmex is banned from violating CFTC laws again. While Bitmex was the most popular derivative Bitcoin exchange at that time, it fell to the 5th place and Binance took the remaining seat.
The effect of the lawsuit on the markets was also not as expected. 2 months after the lawsuit against Bitmex (as the time has come) the “mega bull” started.
I think the impact of the Binance case will be no different. While I don’t expect a mega bull 2 months from now, I don’t think the lawsuit against Binance will have any impact on Binance’s future.
Even if the CFTC is right as a result of this lawsuit, Binance can continue on its way by paying a certain amount of fine and making the arrangements that the CFTC wants.
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