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We all have been following the rapid growth of cryptocurrency and the creation of lucrative trading platforms. Cryptocurrency has earned the scrutiny of regulators and criminal prosecutors – not for run-of-the-mill fraud schemes, but for compliance with applicable anti-money laundering laws and regulations.
Late in 2020, the Justice Department and the Commodities Futures Trade Commission (“CFTC”) slammed BitMEx and its principals with a coordinated criminal and civil prosecution. As the cryptocurrency markets continue to expand and new trading platforms started, DOJ, the CFTC and the SEC can be expected to exercise increasing oversight and enforcement.
Seychelles, Longtime Home of BitMEX, Is Bending to US Pressure on KYC
Dec 17, 2020
Coconut drink, Port Victoria, Seychelles
(EyesWideOpen/Getty Images)
The Takeaway:
Out of a list of 26 crypto exchanges domiciled in the Republic of Seychelles, approximately half have poor know-your-customer (KYC) procedures, according to blockchain tracking firm CipherTrace.
Analysis of certain Seychelles-based exchanges reveals the proportion of funds flowing to and from “high risk” sources and dark marketplaces.
In an interview with CoinDesk, the Seychelles Financial Services Authority acknowledged that the U.S. crackdown on crypto derivatives exchange BitMEX in October was a “blowup” for the island.
A former FinCEN compliance and enforcement director expects more actions from authorities investigating the Seychelles jurisdiction.