By Amy Castor
3 min read
The Financial Conduct Authority, the U.K.’s financial watchdog, has warned that it suspects Bitmex, the popular Hong Kong-based bitcoin derivatives trading platform, of illegally promoting itself to U.K. citizens, and allowing them to trade.
“We believe this firm has been providing financial services or products in the UK without our authorisation,” the statement, apparently published Tuesday, read. It went on to caution the public to be “especially wary” in dealing with the firm.
Any company that offers financial products to U.K. citizens needs to register with the FCA. “However, some firms act without our authorisation and some knowingly run investment scams,” the agency said.
It went on to say Bitmex is actively targeting the country’s citizens: “Based upon information we hold, we believe it is carrying on regulated activities which require authorisation.”
Bitmex said late Wednesday that it's trying to resolve the matter: "We are working closely with our advisors to assess the situation," a spokesperson told Decrypt. "There is nothing more we can add at this time.”
All FCA-registered firms are listed on the Financial Services Register. Bitmex is not on the list.
Anyone who deals with a company that is not FCA-registered loses access to the country’s Financial Ombudsman Service, which has the power to resolve trading disputes.
The FCA notice comes hours after the agency issued a similar, but mistaken warning about Kraken, a crypto trading platform based in San Francisco. However, the agency removed the warning. The link now points to a blank page.
“They made a mistake and fixed it,” Kraken CEO Jesse Powell told Decrypt via email. “Seems like it might have been some scams pretending to be Kraken got reported.” Kraken operates legally in the U.K. through FCA-registered London-based Crypto Facilities.
The Bitmex warning comes less than two months after the FCA announced a tough new set of rules for cryptocurrency businesses. As of Jan. 10, the regulatory body now monitors anti-money laundering and counter terrorist financing for crypto assets activities.
According to an official announcement at the time, the FCA said: “We will proactively supervise firms’ compliance with the new regulations, and will take swift action where firms fall short of desired standards and cause risks to market integrity.”
Bitmex is a peer-to-peer trading platform that allows traders to take positions against one another on crypto futures and swaps. The platform settles exclusively in bitcoin.
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Founded in 2014, by Arthur Hayes, Ben Delo and Sam Reed, Bitmex is owned and operated by HDR Global Trading Limited, which is registered in the Seychelles—a region known for being light on corporate regulation.
The platform offers up to 100x leverage on its bitcoin perpetual swap product, which means that even a small movement in the price of bitcoin can result in a total loss.
Hayes has jokingly referred to retail investors—Bitmex’s primary customers—as “degenerate gamblers.”
Bitmex’s terms of service does not list the U.K. as a restricted country, though it does list the U.S.
[This story was updated to include a response from Bitmex.]
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