Compliance

“We will not provide any product or service to any entities that are the subject of sanctions or connected to sanctioned jurisdictions. We continuously strengthen our compliance programme to maintain the highest standards of compliance; this remains a top priority.”

We are committed to complying with Laws (including applicable financial crime compliance laws and regulations such as those related to anti money laundering, anti-bribery and corruption) in all jurisdictions in which our Group operates. We recognise compliance with applicable legal and regulatory requirements are critical components of the success of our business and risk management.

With the support from the Board and a highly experienced and independent leadership team, we have made substantial investments in its compliance programme, and will continue to do so as part of our efforts to continuously enhance the programme capabilities. 

Government initiatives against financial crime are becoming more effective and the controls used by crypto industry participants have improved, however bad actors continue to evolve to become increasingly sophisticated. 

In order to meet this challenge and be at the forefront of the fight against financial crime, we have adopted a ‘three lines of defense’ model with the aim to reduce the risk that our products and services are used by bad actors, or be used to circumvent sanctions or terrorism financing regulations. We are committed to continuously improving our compliance programme and its effectiveness as risks evolve and industry best practices develop.

Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT)

The virtual currency industry is rapidly evolving with regulators and international policymakers, such as the Financial Action Task Force, adapting to these developments.   

BitMEX remains committed to operating in line with AML/CFT regulatory requirements and international best practices to prevent money laundering and terrorism financing, even where regulations may be absent or are still in development. 

We have implemented a risk-based global AML/CFT compliance program designed to comply with AML, CFT, and sanctions laws and regulations in the locations in which we operate.  This includes:

• Designation of a Chief Compliance Officer for oversight and implementation of the company compliance programme

• Risk-based approach to managing our programme, customers, and product risk

• Written AML/CTF policies, procedures, and a system of internal controls designed to enable ongoing compliance with relevant AML laws, regulations, and industry best practices

• A Know Your Customer (KYC) program designed to identify and verify all customers and beneficial owners where required, including a prohibition on the provision of products or services to customers that cannot satisfy our KYC requirements

• Procedures to conduct Enhanced Customer Due Diligence and additional surveillance on customers or related parties where they present an increased risk of money laundering or terrorism financing

• Risk-based measures, tools and systems for monitoring customer transactions and trades to detect activity that may be unusual or suspicious

• Identification and reporting of suspicious activity to appropriate regulatory authorities in accordance with relevant laws

• Cooperation with authorities and their requests for information to the fullest extent permitted by the law

• Regular training for all relevant staff

• Independent audit and compliance testing to review the effectiveness and compliance of the company with the AML program and relevant regulations

• Prohibition to conduct business with entities sanctioned by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), United Nations Security Council, European Union, United Kingdom, Switzerland, Italy, and any lists applicable for the locations where we operate

• Record keeping and reporting requirements 

• Implementing industry leading practices to secure the virtual assets of our customers or the company to limit risk exposure

• Scheduled reviews and reporting of the AML program and key controls by Senior Management and the Board

• Any relevant additional local requirements

Customer Account Information (Know Your Customer) 

BitMEX has an established KYC programme that requires all customers to complete identification and verification before they can access any account services.  This includes defined policies and procedures outlining the standards that are applied to all retail and corporate customers. The standards are based on FATF guidance and industry best practices whilst accommodating non-face to face onboarding. The KYC process includes customer identification, verification, proof of location, video verification, screening against relevant lists, and risk assessment.  

Corporate customers are onboarded via submission of supporting documentation and identification of all beneficial owners or controlling related parties that have 25% or more effective ownership, along with details of responsible officers who will be accessing the platform.  

We have established a range of automated, semi-automated, and manual controls for ongoing monitoring to ensure the information we have obtained during the KYC process is consistent with trading activity. Where this differs BitMEX may reach out to customers for further information as required. 

Sanctions Compliance

Our Sanctions Compliance Program is designed to comply with sanctions requirements outlined by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), European Union, United Kingdom, Singapore, Canada, Switzerland, Italy, and the United Nations Security Council. This includes established policies and procedures, governance oversight, customer and transaction screening, ongoing monitoring, and training.

BitMEX explicitly prohibits Sanctioned Jurisdictions customers from accessing the platform via the Terms of Service, which also incorporates our Restricted Jurisdiction Policy.  We use third party vendors for sanctions screening along with the use of geoblocking controls. 

Anti-Bribery and Corruption Compliance

BitMEX is committed to doing our business in a fair, open, honest, and transparent manner.  We take a zero-tolerance approach to all forms of bribery and corruption.

Our Anti-Bribery and Corruption Compliance Programme prohibits offering, paying, or promising to pay anything of value to any third parties with whom we do business with in order to influence their actions or decisions, or to secure any other improper advantage in order to retain or obtain business. We also ensure we make and keep records that accurately and fairly reflect the transactions on BitMEX, and maintain an adequate system of internal accounting control.

Transaction Monitoring

BitMEX has established on-chain monitoring capabilities to monitor the deposit and withdrawal activity of all customers. This is managed by a team of dedicated investigators who have extensive money laundering, terrorism financing, and sanctions investigation experience.  We will continue to enhance these capabilities as industry and technology solutions advance. 

Where appropriate, we adopt a range of measures on relevant accounts, including but not limited to, requesting additional information from the customer, adjusting KYC requirements, restricting the offering of products or services, or initiating closure of the account. We have established procedures in place to notify relevant authorities, where regulations require us to do so.

Cooperation with Law Enforcement & Regulatory Bodies

We have a dedicated function responsible for cooperating with external regulatory authorities and law enforcement agencies and are committed to cooperating with those requests, where permitted.

Travel Rule Compliance

In June 2019, the Financial Action Task Force published the interpretative Note to Recommendation 15 on New Technologies and the guidance for a Risk-Based Approach: Virtual Assets and Virtual Asset Service Providers (VASPs).  This guidance subjects VASPs to similar compliance requirements as those applicable to financial institutions, including the Travel Rule.  The Travel Rule relates to the exchange of information on originator and beneficiary for any funds transfers, including virtual assets, carried out on behalf of an originator with the view of making funds available to a beneficiary.  Required information has to be transmitted immediately and securely. 

The intention of the recommendation is to strengthen the fight against financial crime by enabling VASPs, regulators and law enforcement to have greater visibility of parties to crypto transfers by reducing the associated pseudo-anonymity. 

We have implemented Travel Rule solutions to meet applicable regulatory requirements, and will continue to enhance our controls relating to the Travel Rule.  This will ensure our compliance with developing Travel Rule regulations around the world and reduce the impact to our customers in depositing and withdrawing funds.

Ensuring a Fair and Orderly Trading Venue

Trust and transparency are important to BitMEX because BitMEX believes that every customer deserves safe, secure, and fair markets.  Under the BitMEX Terms of Service, customers are prohibited from being involved in or initiating any form of market manipulation.

In February 2022, BitMEX announced it was a founding member of the Crypto Market Integrity Coalition, an industry-defining group focused on cultivating a fair virtual asset marketplace to combat market abuse and manipulation and promote public and regulatory confidence in the new asset class. We are proud of this membership and will continue to pursue participation in initiatives that support the advancement of the industry. 

Market Surveillance

Surveillance is undertaken by BitMEX on all trading activities to detect and mitigate any abusive behaviors. If BitMEX discovers any potential market abuse by our customers, BitMEX will take further actions, including but not limited to, enquiries, warnings, and may ultimately lead to banning of accounts in severe or repetitive cases.

BitMEX considers the following non-exhaustive list of behaviors as possible indicators of market abuse:

• Insider Dealing: A type of trading that occurs on the basis of inside information. This information is of a precise nature about any product being traded which has not been made public, and its disclosure would significantly affect the prices.

• Accommodation Trades: A type of trading in which one person accommodates another by entering into a non-competitive purchase or sale order. Accommodation trades often happen when two persons are participating in off-market trading e.g. pre-arranged trades.

• Price and Volume Manipulation: A type of trading which gives a false impression of a price move or the liquidity of any product being traded. A few common examples are wash trades, spoofing, layering, and quote stuffing.

• Dissemination of False and Misleading Information: When a person tries to move the price of a product in a particular direction by giving false information using electronic or other media.

Responsible Selling and Marketing

We believe that treating customers fairly and adopting a responsible approach to selling our products or marketing our services is key to an enduring customer relationship. Not only is such an approach in line with our core values and culture, but it is also critical to developing a sustainable business. Our approach includes prohibiting unfair or deceptive selling or marketing acts or practices.

Coin Listing Principles

We aim to only offer products, services, and access to virtual assets in order to enable our customers to safely purchase, sell, swap, or store assets in a safe and secure environment.  This includes subjecting the listing of all virtual assets to a thorough due diligence process to assess the integrity and sustainability of the related crypto initiative or project, protect our customers against scams, and make sure we respect all applicable laws and regulations.  

This evaluation considers various compliance risks, such as sanctions risks and any association with illicit activity, including money laundering and terrorist financing risks, as well as consumer protection considerations. We expect every coin listing applicant to comply with the following coin listing principles at all times:

• Social responsibility: For BitMEX, contributing to a better global society is important. We, therefore, refrain from listing the products of companies that are involved in immoral business activities.

• Fairness: BitMEX is building a global marketplace that is fair and provides equal access to all. Issuers must treat their token holders in keeping with this goal.

• Compliance: As BitMEX works with regulators globally to be fully compliant, we expect issuers never to engage in any prohibited activities.

• Quality: The quality of the BitMEX ecosystem is key. This must be reflected in the instruments listed on BitMEX as well as in the issuers of these instruments.