Know-your-customer (KYC) policies are one of the compliance programs essential for cryptocurrency exchanges, primarily for curbing money laundering. The BitMEX exchange isn’t known for effectively enforcing KYC measures before users can trade cryptocurrency. This may have contributed to the recent charges brought against the exchange of United States government agencies, including the Department of Justice.
However, the KYC-free days will come to an end soon. The exchange is making changes to hasten the timeline for customers’ verification.
BitMEX Shortens ID Verification Deadline
BitMEX announced new changes to accelerate the identity verification program of every trader on the platform. Instead of February 2021, the customers now have to complete their ID verification before November 5, 2020. According to the announcement on Wednesday, the change applies to all individual and corporate users on the exchange. Traders have to comply with the verification program to continue trading on BitMEX.
As reported, individual and corporate traders on the platform won’t be able to open or increase their existing positions after the deadline. Additionally, BitMEX plans to disable withdrawal service for unverified users after December 4, 2020. Hence, these traders can’t withdraw from their position unless they complete their identity verification.
The development may not have a huge impact on BitMEX or its users right away. While some crypto influencers may have used the platform without performing KYC verification, a significant portion of the company’s user base has already done so. For them, this will not usher in any change in operations.
Meanwhile, it’s agreeable to note that KYC policies constitute an important measure for exchanges to curb illegal transactions. By mandating ID verification, BitMEX prevents money laundering and ultimately ensures a safe trading environment.
US Authority Unseal Charges Against BitMEX Exchange
The exchange initially rolled out the mandatory customer verification program in August to enable a compliant environment for cryptocurrency trading. Shortly afterward, the Commodity Futures Trading Commission (CFTC) and Department of Justice (DOJ) unsealed charges against the exchange. Following these charges from the US authorities, implementing the ID verification announcement solution became a necessity.
Among other things, the US Commodity regulator charged the exchange for failing to register their trading platform. Furthermore, BitMEX is charged with not having adequate KYC measures, among other shortcomings.
According to our data, last night more than 23,200 BTC were withdrawn from #BitMEX addresses in a single hour (~13% of all BTC in their vaults).
— glassnode (@glassnode) October 2, 2020
The indictments erupted fear in the mind of BitMEX customers, as the exchange noted a massive outflow of Bitcoin.