On the morning of Oct. 1, U.S. government officials in New York charged four senior Bitmax teams, known for the Hong Kong-based “Wild Card” exchange. Despite this, Crypto Exchange still continues to operate its services.
Bitmax is one of the largest crypto exchanges in the world and has a reputation for being infamous for being “light” about its customers and its ID processes – at least until mid-August this year. Additionally, users are allowed a higher withdrawal limit without any low KYC.
After some research, it is clear that the company operates a complex international corporate structure. It promotes its registration in the Seychelles with offices in Hong Kong and New York. However, from a legal point of view, this could potentially lead to disp controversy. The company has often been in the top five exchanges internationally.
How serious is this charge?
U.S. Under the law, it is customary in the United States to impose an “undue” charge on warrants to obtain international extraditions. Once defendants enter the U.S., the charge will be removed with the addition of additional charges. The reason for the move is that not every country recognizes these complex U.S. laws – especially in relation to money laundering and financial crimes. Extradition can be obtained on lenient laws, once the charges are amended, after each person arrives in the United States.
If one reads between the lines, the papers issued by the authorities indicate that more stringent charges may be levied, including violations of international sanctions. The rumor mill in New York suggests that federal authorities believe that Bitmax could be a “jumping-point point” for countries like Iran and North Korea to move beyond the status quo. If that’s the case, enabling them to do so comes with a massive cost. Violation of international sanctions is a major issue, especially as far as U.S.
Market response
During the day the news spread, the price of Bitcoin (BTC) fell, and many users began withdrawing from the exchange. Some experts tried to calm the market because people were convinced that Bitmax is not going anywhere (with the belief that it is too big to fail).
Adding to this, a spokesperson for HDR Global Trading Ltd. – one of the Bitmax companies quoted by the New York Times:
“We strongly disagree with the decision of the US government to bring these allegations and intend to vigorously defend the allegations.”
Regardless of how true that is, if one were to look at the timing of the statement, Bitmax could try to make the market easier than taking a stand on their situation.
Related: 3 reasons why CFTC action against Bitmax cannot break the price of Bitcoin
The future of Bitmax
The reality of the situation is that if convicted, the exchange’s assets will be used mostly to compensate victims of money laundering and other crimes. This means freezing accounts, suspending trade, and generally blacklisting the company, as well as selling international assets to compensate victims.
At the time of writing, one of the four defendants, Samuel Reid, was arrested by authorities in connection with a rent. The other three remain unaccounted for.
The opinions, ideas and opinions expressed herein are those of the author alone and do not reflect or represent the views and opinions of the Sectelgraph.
Kal Evans Is an international technical lawyer from London who has studied financial markets at Yale University and has experience working with some of the best companies in Silicon Valley. In 2016, Clay left the top-10 California law firm to start Grisham International – a legal services and compliance company that is now based in the U.S. And has office fees in the United Kingdom.
