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BitMEX operator hires chief compliance officer amid US criminal charges

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The operator of crypto derivatives exchange BitMEX, 100x Group, has hired a seasoned Anti-Money Laundering (AML) specialist, Malcolm Wright, as its chief compliance officer.

In an announcement on Oct. 12, the 100x emphasized Wright’s profile as the current chairman of the Advisory Council and AML Working Group at Global Digital Finance, and as a speaker covering key topics that include the Financial Action Task Force’s Recommendations for Virtual Asset Service Providers.

100X Group had last week reshuffled its top leadership, removing BitMEX’s co-founders Arthur Hayes, Samuel Reed and Ben Delo from executive roles. Hayes, Reed and Delo were all charged in a civil enforcement action from the United States Commodity Futures Trading Commission for operating an unregistered trading platform in the U.S. and violating AML regulations. 

The Department of Justice has, in parallel, pressed criminal charges against the co-founders, as well as their colleague, Geoff Dwyer, who has subsequently taken a leave of absence from his role as head of business development.

Without explicit reference to the recent charges, 100x Group has officially said that “Malcolm’s appointment is a noteworthy milestone for us as we move towards completion of our User Verification Programme and further enhance our compliance function.”

Wright’s LinkedIn profile indicates he has spent almost two and a half years at Global Finance, in parallel to his roles as an advisory board member for London-based Commercial Passport KYC and as associate fellow at the Royal United Services Institute, which contributes to policy debates on financial crimes. He is also the founder of the Financial Crime Compliance advisory and a former chief compliance officer at Diginex and EQUOS.

100x Group faces a steep challenge in rehabilitating the exchange’s image. Commentators claim the charges against the BitMEX team have cast their shadow on the wider industry and could trigger a regulatory backlash against the crypto space. 



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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.