U.S. Commodity Futures Trading Commission (CFTC)

Report: Illicit Crypto Addresses Received $14 Billion in 2021, Only 0.15% of Transaction Volume Associated With Crime

07/01/2022 by Idelto Editor

According to the latest data from Chainalysis, the total cryptocurrency value received by illicit addresses grew to a new all-time high of $14 billion in 2021. Although the new all-time high is almost twice the $7.8 billion that was recorded in 2020, it represents just 0.15% of the 2021 cryptocurrency transaction volume.

Percentage of Funds Sent to Illicit Addresses Falling

The value of cryptocurrency-related crimes recorded in 2021 surged to a new all-time high of $14 billion, a figure that is almost double the $7.8 billion which was received by so-called illicit addresses in the year 2020. Nevertheless, this increase in the value of funds transferred to illicit addresses is still much lower than the average growth of the crypto economy, the latest Chainalysis data has shown.

In a recent blog post breaking down the crypto economy’s 2021 transaction volume of $15.8 trillion, the blockchain analysis firm Chainalysis asserts that the growth in value of funds transferred to illicit addresses is not an indication that the space is now dominated by criminals. Rather, this growth may be a hint of just how far the crypto economy has expanded in 12 months.

To illustrate, the blog post points to the 567% growth in crypto transaction volume which the analysis firm is linking to the rising adoption of cryptocurrencies. Chainalysis also offers its viewpoint on the growing gap between illicit activity volume and legitimate volume:

In fact, with the growth of legitimate cryptocurrency usage far outpacing the growth of criminal usage, illicit activity’s share of cryptocurrency transaction volume has never been lower.

Crypto Crime Impedes Adoption

To support its position that illicit activity’s share of cryptocurrency transaction volume is on the wane, Chainalysis points to the data which shows that crime-related addresses only accounted for 0.15% of 2021 volumes. This figure is lower than the 0.62% recorded in 2020 and the 3.37% that was recorded in 2019.

Despite noting the low proportion of criminal crypto transfers relative to the overall transaction volumes, Chainalysis still concedes the “criminal abuse of cryptocurrency creates huge impediments for continued adoption.” The post argues that such abuse often “heightens the likelihood of restrictions being imposed by governments, and worst of all victimizes innocent people around the world.”

The blog post also suggested that law enforcement agencies are becoming more adept at combating cryptocurrency-based crimes. It cites the indictment of several crypto investment scams by the U.S. Commodity Futures Trading Commission (CFTC) as well as OFAC’s sanctioning of two Russia-based cryptocurrency platforms.

What are your thoughts on this story? Tell us what you think in the comments section below.

Bitmex Fast-Tracks KYC Program as Regulators Tighten Screws on Anti-Money Laundering Rules

22/10/2020 by Idelto Editor

Bitmex said Wednesday that it is fast-tracking its user verification program in order to comply with regulatory requirements. Users must now be fully verified by Nov. 5, 2020 “to continue trading on the platform,” it said.

In a statement, the crypto derivatives exchange stated that “unverified users will not be able to open new positions” after this date. They will also “not be able to withdraw funds from their Bitmex account without completing verification” beginning Dec. 4.

The accelerated verification means Bitmex’s mandatory know-your-customer (KYC) process – first announced Aug. 28, 2020 – will now close three months earlier than originally scheduled. Initially, it was slated to end February 2021.

Bitmex may have been pressured into action by the charges it faces in the U.S. The exchange was recently charged by the U.S. Commodity Futures Trading Commission (CFTC) for operating illegally and for “failing to implement required anti-money laundering procedures.”

At the same time, the Department of Justice (DoJ) indicted former chief executive officer Arthur Hayes and his leadership team for “violating the Bank Secrecy Act and conspiring to violate the Bank Secrecy Act.”

“Recent events have underscored the requirement for market operators to implement robust and compliant KYC programme,” Bitmex said.

As part of the exchange’s KYC procedures, individual users are prompted to upload a photo ID and proof of address, take a selfie, and answer several questions that relate to the source of their funds and their trading experience. Bitmex says this takes approximately five minutes to complete, and more than 50% of its users have since completed the process.

By Nov. 5, Bitmex customers will need to have completed verification in order to open a new position or to increase an existing position. Existing open positions can be maintained or reduced by unverified users, although pending orders that would increase a position will be cancelled, it said.

After Dec. 4, “if there are remaining open positions on unverified accounts, we will review these…and communicate directly to users holding these to facilitate an orderly closing of these positions.”

Crypto exchanges are under pressure to implement stringent KYC procedures, as regulators around the world seek to align with anti-money laundering recommendations from the Financial Action Task Force (FATF).

What do you think about Bitmex’s accelerated KYC processes? Let us know in the comments section below.

The post Bitmex Fast-Tracks KYC Program as Regulators Tighten Screws on Anti-Money Laundering Rules appeared first on Bitcoin News.

Bitmex CEO Hayes Steps Down Following U.S. Criminal Charges

08/10/2020 by Idelto Editor

Arthur Hayes, chief executive officer of bitcoin derivatives exchange Bitmex, is stepping down from his position a week after U.S. prosecutors filed criminal charges against him. Hayes is leaving together with other top executives who are facing similar charges.

Bitmex CEO Hayes Steps Down Following U.S. Criminal Charges — Bitmex CEO Arthur Hayes.

The company announced on Thursday that Hayes and chief technical officer Samuel Reed – the latter who was arrested by the U.S. Department of Justice (DoJ) recently – have stepped back from all executive management responsibilities with immediate effect. Greg Dwyer, head of business development, is also taking a leave of absence.

Vivien Khoo, chief operating officer of 100x Group, Bitmex’s parent company, takes over as interim CEO while commercial director Ben Radclyffe assumes increased client relationship responsibilities and oversight of financial products.

“These changes to our executive leadership mean we can focus on our core business of offering superior trading opportunities for all our clients…whilst maintaining the highest standards of corporate governance,” David Wong, chairman of 100x Group, said in a statement.

“We have an exceptional senior leadership team who are well placed to continue the growth and development of the 100x Group, including completion of the Bitmex user verification programme,” Wong added.

Bitmex was last week charged by the U.S. Commodity Futures Trading Commission (CFTC) for operating illegally and for breaching anti-money laundering rules. At the same time, the DoJ indicted Hayes and his leadership team for “violating the Bank Secrecy Act and conspiring to violate the Bank Secrecy Act.”

More than 37,000 bitcoin, worth around $387 million, left the exchange just 24 hours after the charges were announced, as fretful investors sought to secure their funds.

What do you think about Arthur Hayes stepping down as Bitmex CEO? Share your view in the comments section below!

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The CFTC Files Complaint Against Crypto Trading Company

26/09/2020 by Idelto Editor

The United States Commodity Futures Trading Commission (CFTC) on Thursday, September 24, filed a complaint against crypto dealing Paxforex for allegedly soliciting or accepting business from US customers without relevant registration.

According to a report, the CFTC wants a U.S. court to stop Paxforex from continuing with the “unlawful acts and practices,” as well as to compel the company to comply with the relevant laws. Furthermore, the commodity regulator wants the court to stop the defendant “from engaging in any commodity-related activity.”

In a complaint submitted to the Texas Southern District Court, the CFTC argues that from March 2018 to present, Paxforex violated the law by:

“Soliciting or accepting orders from non-eligible contract participants (“non-ECPs”), not conducted on or subject to the rules of any Commission-regulated exchange, for the purchase or sale of gold, silver, ethereum (ETH), litecoin (LTC), and bitcoin (BTC) on a leveraged, margined or financed basis that does not result in the actual delivery of the commodities to the customer.”

Furthermore, the CFTC states that by not registering as a futures commission merchant (FCM) with the Commission, the trading company, which “accepts money, securities, or property (or extends credit in lieu thereof) in the form of bitcoin, is in violation of Section 4d(a)(1) of the Act, 7 U.S.C. § 6d(a)(1) (2018).”

On its website, Paxforex claims owners of the company have extensive experience in forex, stocks, options, and CFDs markets as traders and dealers. This experience was gained when the founders worked in managerial positions with the largest brokers, who are now our major competitors.”

In the meantime, the CFTC is asking the court to impose civil monetary penalties and remedial ancillary relief, including trading and registration bans, restitution, rescission, pre-judgment, and post-judgment interest.

What do you think of the charges against Paxforex? Tell what you think in the comments section below.

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South African Man Charged in U.S. Court for Fraud Involving $28 Million in Bitcoin and Forex

05/09/2020 by Idelto Editor

A South African man has been charged with fraud in the Maryland District Court for allegedly scamming $28 million from over 1,000 investors.

Dennis Jali, a former resident of Maryland, targeted church-going African immigrants, promising them guaranteed returns on his supposed bitcoin (BTC) and foreign currency investment pool.

In a press statement, the U.S. Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) said it jointly charged Jali and two accomplices for orchestrating the “Ponzi scheme”.

Arley Ray Johnson and John Frimpong, both of Maryland, fraudently solicited money from investors, who contributed $28 million to three companies – 1st Million LLC, Smart Partners LLC, and Access to Assets LLC, it said.

The duo compelled participants to trade in BTC and forex through pooled trading accounts controlled by Jali, added the statement. The alleged scheme operated from 2017 to 2020, drawing in more than 1,000 investors.

Investors were led to sign “secure contracts” that promised guaranteed returns of up to 30% per month. The conspirators allegedly told investors that their funds would be fully restored at the end of the pool participation term.

Johnson and Frimpong also touted Jali as a brilliant career trader who had made 1,700% in returns in a previous investment fund. The South African claimed in his online promotional videos that he had returned over 400% in gains within six weeks and that “my wife has never worked a day in her life.”

However, the trio did not invest any of the money in bitcoin or foreign currency, according to the CFTC charge. Instead, they turned the scheme into a Ponzi, using $18 million to pay selected investors, creating the illusion of profitability. Jali and his co-conspirators allegedly used $7 million of the pool money to buy luxury cars and fund other expensive lifestyles.

The CFTC charge is seeking full restitution to defrauded investors, disgorgement of ill-gotten gains, civil monetary penalties and permanent trading bans for the three. The SEC also named Access to Assets as a relief defendant, “seeking the return of proceeds of the alleged fraud to which it had no legitimate claim.”

Jali fled the United States in May 2019 after being indicted by the U.S. Attorney for the District of Maryland but has since been arrested in South Africa, on federal charges of conspiracy, wire fraud, securities fraud, and money laundering.

What do you think about Dennis Jali’s alleged Ponzi scheme? Let us know in the comments section below.

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