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Amazing article and crazy story. Arthur was one of the most entertaining speakers in cryptocurrency; not an easy feat in a gallery of magicians, rogues, and exo

Amazing article and crazy story. Arthur was one of the most entertaining speakers in cryptocurrency; not an easy feat in a gallery of magicians, rogues, and exotic financiers. I have to wonder what the court case will ultimately shake out to be about. The most interesting part of this case is how the indictment differs from BTC-E and other organizations labeled as antithetical to the free world. I think there's two reads to it: either the fraud at BitMEX was so rampant and pervasive that taking the time to indict a particular instance of villainy was not in the interest of justice, or this was something else entirely more complicated. In either case the whole thing is fascinating. I, for one, cannot wait to see the court documents as they come out. I can only imagine that there will be a great many fireworks.

jluxenberg 6y ago
I think the indictment is straightforward: BitMEX provided banking services to US customers without implementing Know Your Customer and other required anti-money-laundering safeguards. Being a "fintech" product doesn't exempt an operator from the law: KYC is the law on the US. I'm surprised there haven't been more indictments, since I'm sure other exchanges have operated fast+loose w.r.t. AML and KYC
- jstanley 6y ago
  I don't know what you think BitMEX is, but I'm pretty sure they never offered banking services.
  - jkhdigital 6y ago
    The law covers commodity futures trading services as well, which is what the indictment cites as justification for holding them to the terms of the Banking Secrecy Act. The laws around KYC and AML are written for the traditional banking system, and are a bit nonsensical when applied to crypto. BitMEX deals only in Bitcoin, so it begs the question of how one could “launder” anything through it.
    - josh2600 6y ago
      I think this is where it gets hairy: bitmex was 100% synthetic and denominated in btc. There’s no part of what they did that related to usd except that the trades were denominated in usd pricing, but all monetary flows in and out of the exchange were btc. It may be the case they the US has jurisdiction over US customers anywhere in the world even if they aren’t transacting in US dollars. I guess we’re going to find out? To be extra clear, it would be hard to call what bitmex sold a commodity futures contract because there was never a way to take delivery of the asset nor intention to do so. Their contracts were perpetual futures, which is to say: fictitious markers of value that can only ever be btc at the end of the day. This is why so many people referred to it as Arthur’s digital casino. Edit: lastly, IANAL, it could be possible that the bsa includes Bitmex perpetual futures and this is open and shut. The interesting thing to me is the btc component but maybe that doesn’t matter at all?
- smabie 6y ago
  bitmex allowed people to trade btc settled quanto derivatives contracts. That's it.

jluxenberg 6y ago

I think the indictment is straightforward: BitMEX provided banking services to US customers without implementing Know Your Customer and other required anti-money-laundering safeguards. Being a "fintech" product doesn't exempt an operator from the law: KYC is the law on the US. I'm surprised there haven't been more indictments, since I'm sure other exchanges have operated fast+loose w.r.t. AML and KYC

jstanley 6y ago
I don't know what you think BitMEX is, but I'm pretty sure they never offered banking services.
- jkhdigital 6y ago
  The law covers commodity futures trading services as well, which is what the indictment cites as justification for holding them to the terms of the Banking Secrecy Act. The laws around KYC and AML are written for the traditional banking system, and are a bit nonsensical when applied to crypto. BitMEX deals only in Bitcoin, so it begs the question of how one could “launder” anything through it.
  - josh2600 6y ago
    I think this is where it gets hairy: bitmex was 100% synthetic and denominated in btc. There’s no part of what they did that related to usd except that the trades were denominated in usd pricing, but all monetary flows in and out of the exchange were btc. It may be the case they the US has jurisdiction over US customers anywhere in the world even if they aren’t transacting in US dollars. I guess we’re going to find out? To be extra clear, it would be hard to call what bitmex sold a commodity futures contract because there was never a way to take delivery of the asset nor intention to do so. Their contracts were perpetual futures, which is to say: fictitious markers of value that can only ever be btc at the end of the day. This is why so many people referred to it as Arthur’s digital casino. Edit: lastly, IANAL, it could be possible that the bsa includes Bitmex perpetual futures and this is open and shut. The interesting thing to me is the btc component but maybe that doesn’t matter at all?
smabie 6y ago
bitmex allowed people to trade btc settled quanto derivatives contracts. That's it.