BitMEX owners charged for ‘illegally operating’ crypto exchange as DeFi keeps rising – CityAM


This week CryptoCompare data shows the price of Bitcoin (BTC) moved steadily up from around $10,200 to an $11,000 high, but did not break through and ended up correcting back down to $10,500. It has since moved back up to $10,650.

Ether (ETH), the second-largest cryptocurrency by market capitalisation, started the week around $360 and moved up to $390, but as soon as the price of BTC started dropping ETH dropped to $325, before recovering. CryptoCompare data shows it’s now trading at $350.

This week the U.S. Department of Justice and the Commodity Futures Trading Commission (CFTC) have filed charges against the owners of the cryptocurrency derivatives exchange BitMEX for allegedly executing futures transactions on an illegal platform, offering illegal options, failing to implement proper know-your-customer (KYC) checks, failing to implement anti-money laundering (AML) procedures, and more.

BitMEX’s co-founder, Arthur Hayes, Ben Delo, Samuel Reed, and the exchange’s first employee Gregory Dwyer were charged with violating the Bank Secrecy Act and conspiracy to violate the act. The Department of Justice’s press release revealed Reed has already been arrested, while the other three remain at large.

According to the Wall Street Journal, BitMEX’s lawyers plan on fighting the allegations. Peter Altman and Jim Benjamin of Akin Gump Strauss Hauer & Feld LLP, attorneys of Arthur Hayes, said he worked hard to build BitMEX, and added:

From its early days as a start-up, the company sought to comply with applicable U.S. laws, as those laws were understood at the time and based on available guidance.

Johnny Lyu, the CEO of Singapore-based cryptocurrency exchange KuCoin, which last week suffered a major security breach that saw hackers steal over $280 million worth of BTC, ETH, BSV, LTC, USDT, and various ERC-20 tokens, has announced the exchange found the suspects behind the security breach and has “substantial proof at hand.”

In a follow-up, Lyu added that with supports from industry partners “ another $64 million in assets are now out of the control of the suspicious addresses,” implying the cryptocurrency exchange has slowly been recovering stolen funds while coordinating with other exchanges – likely those the hacker tried to use to launder funds.

The CEO added the cryptocurrency exchange is “coming back to full functionality,” pointing out deposits and withdrawals are now open for some tokens.

Despite the KuCoin hack and BitMEX being charged by the CFTC and DOJ, a report published by derivatives trading platform ZUBR revealed that institutional investors are betting on bitcoin’s long-term performance, and shifting towards physically-delivered futures over cash-settled ones.

The report indicated that open interest on the CME and other regulated crypto derivatives trading platforms has “remained consistently higher in comparison to their traded volumes,” indicating institutional investors are looking at BTC in the long-term. The report added that over time investors have been moving towards physically-delivered BTC contracts.

Uniswap becomes first DeFi protocol with over $2 billion locked in it

The decentralized cryptocurrency trading platform Uniswap has become the first decentralized finance (DeFi) protocol with over $2 billion worth of cryptocurrency locked in it, as investors have been moving funds to it in a bid to earn interest on their cryptocurrency holdings while earning the platform’s UNI governance token.

On Uniswap, users can provide liquidity to specific trading pairs, and are rewarded with a 0.3% fee paid by traders on the exchange for doing so. Interacting with the protocol also entitles them to rewards in the UNI token. This led to rise in total value locked on Uniswap, which now stands above $2.3 billion.

Uniswap grew so fast that the 24-hour trading volume on it surpassed that of San Francisco-based cryptocurrency exchange Coinbase.

The growth of the decentralized finance space and its protocols – including Uniswap, Maker, AAve, and Curve – has seen Ethereum’s cumulative transaction fees so far this year cross the $350 million market, more than double the aggregated total of the fees paid to move funds on the Bitcoin blockchain.

DeFi has reportedly contributed to a dramatic rise in transaction fees as users “compete to be first in line for a trade” on protocols like Uniswap. Ethereum’s median transaction fee hit a new all-time high earlier this month of $8.25, after SushiSwap’s SUSHI token was launched. SushiSwpa, it’s worth noting, is a fork of Uniswap.

The popularity of DeFi protocols has also led to some losses. This week an unknown hacker has stolen over $15 million from an unreleased DeFi project called Eminence, created by Andre Cronje, the founder of Yearn.Finance, a popular DeFi project.

The exploit allowed the hacker to mint new tokens and steal funds in the process. Cronje is a controversial developer known for not using testnets, and the smart contracts for the project were still being developed.

Crypto AM: Market View in association with Ziglu

This article was originally published on City A.M.
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