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BitMEX founder and ex-CTO out on $5M bail bond until court appearance

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BitMEX’s co-founder and former chief technical officer, Samuel Reed, has signed a $5 million unsecured appearance bond for his release from custody pending court proceedings. 

Reed had been arrested by the United States Department of Justice in Massachusetts on Oct. 1 for flouting money laundering rules in violation of the Bank Secrecy Act, as well as illegally offering derivatives trading to U.S. retail customers. 

Reed’s fellow co-founders and colleagues, Arthur Hayes, Ben Delo, and Gregory Dwyer, all indicted with the same charges, remain “at large,” according to the DoJ.

According to the court documents, which were approved on Oct. 1, Reed’s $5 million bond will be forfeited if he fails to appear in court, or does not surrender to serve any sentence the court may impose. Under the terms of the defendant’s agreement, Reed has deposited $500,000 in cash with the court.

In the DoJ charges, Reed, Hayes, Delo, and Dwyer were accused of operating a “purportedly ‘off-shore’ crypto exchange,  while willfully failing to implement and maintain even basic anti-money laundering policies.” In so doing, they allegedly allowed BitMEX to operate as “a platform in the shadows of the financial markets.”

Alongside the DoJ’s charges, the U.S. Commodity Futures Trading Commission filed a civil enforcement action in the Southern District of New York against Reed, Hayes, Delo, and several BitMEX-affiliated corporate entities.

Yesterday, one of these entities, BitMEX operator 100x Group, announced that the three co-founders would no longer hold executive roles and reshuffled staff to replace them with immediate effect. Dwyer, who was implicated in the DoJ’s action, but not the CFTC’s, will be taking a leave of absence from his role as head of business development.

Following news of the charges, some crypto commentators have criticized BitMEX for hurting the industry’s reputation as a whole and potentially hardening regulators’ stance towards the sector.



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Regulation

New York authorizes first Yen stablecoin operator in the US

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New York has given the first authorization to a stablecoin backed by the Japanese Yen to operate in the U.S.

Per a Dec. 29 announcement, the New York Department of Financial Services has granted Japanese firm GMO-Z.com a charter to handle U.S.D. and Yen-backed stablecoins in New York. 

Given New York’s status as a global center, the NYDFS is the most prominent state financial regulator in the U.S. It is also one of the most aggressive. A pass to operate in New York often opens up the rest of the country. 

GMO’s charter is as a limited liability trust company rather than a full bank, the principle difference being in authorization to handle deposits. While a stablecoin operator typically needs the ability to hold reserves of the pegged asset, GMO’s charter limits its rights to hold other kinds of deposits not central to its ability “to issue, administer, and redeem” its stablecoins. 

The right to issue such non-depository charters has been a bone of contention between state regulators like the NYDFS and national banking regulators in the U.S. 

GMO president and CEO Ken Nakamura said: “We’re breaking ground with our move to issue the first regulated JPY-pegged stablecoin, which many see as a safe haven asset.” 

The NYDFS recently made changes to its famous BitLicense, including a conditional format that buddies up newly licensed firms with existing licensees. The first conditional BitLicense went to PayPal, facilitating the launch of its new crypto services earlier this fall with the help of longstanding licensee Paxos.