BitMEX turns to Chainalysis to resolve legal issues, or at least mitigate CFTC blow


Still facing assault in a U.S. court for allegedly facilitating money laundering, BitMex is trying to show regulators it’s trying.

On January 12, the legally besieged crypto exchange published a blog post announcing further work with blockchain analytics firm Chainalysis. BitMex said its goal was “to identify, investigate and stop illicit transactions.”

Chainalysis is known as a go-to solution for government entities looking to track crypto transactions. The company was instrumental in the Justice Department’s cryptocurrency seizures, including over $ 1 billion in Bitcoin and its ramifications from an anonymous Silk Road hacker, as well as of a terrorist financing network surrounding a crypto exchange in Idlib, Syria. It is this reputation for working with governments that BitMex is likely trying to exploit.

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The movement can be too little, too late. BitMex was already working with Chainalysis even when the Commodity Futures Trading Commission and the DoJ filed civil and criminal complaints against the crypto exchange, its affiliates, and its executives in early October. A representative from Chainalysis told TBEN that “BitMEX used to use Chainalysis Reactor, our forensic software. Now they are also integrated with Chainalysis KYT, our real-time transaction monitoring compliance solution.”

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On the same day as the blog post, BitMex saw the judge in the CFTC case approve the exchange’s request to extend the response date from Jan.15 to Feb.12. The CFTC accuses BitMex of deliberately offering sales of unregistered derivatives to US retailers. investors, which would lead to fines if proven. The DoJ’s case goes even further, alleging that the company relied on money laundering as part of its business model, which could result in jail terms for those who ran BitMex.

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There is little argument that Americans have actually accessed BitMex derivatives trading, but the CFTC case will likely hinge on the concept of due diligence in controlling user access. It appears that BitMex is using its extra time to strengthen its existing compliance measures. Just last week, the firm announced that it had verified 100% of users.

Update 17:50 UTC: TBEN added comments received after the post. BitMex had not yet responded to TBEN’s request for comment.