Money makes the world go round, but regulations are what separate the legitimate from the illicit, providing a framework that assures safety, fairness and transparency.
Every industry views regulation as a necessary, albeit occasionally bothersome, element of doing business: the rules are indispensable for ensuring consumer protection and creating a level playing field.
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And yet the world of cryptocurrencies has a compliance problem, as indicated by the recent scandals involving major exchanges like BitMEX and OKEx. It’s time for change.Scandals Continue to Plague Major Exchanges
Many of the industry’s high-profile trading platforms have fallen foul of regulators over the years. One recent example was high-leverage derivatives platform BitMEX.
Earlier this month, the U.S. Commodity Futures Trading Commission (CFTC) charged the company’s owners with operating an unregistered trading platform and violating multiple CFTC regulations.
Its executives – including CEO Arthur Hayes – were also accused of violating the Bank Secrecy Act.
OKEx and KuCoin haven’t fared much better; the former moved to suspend cryptocurrency withdrawals after its founder was arrested by police.
Apparently because the man in question, Xu Mingxing, is one of the platform’s private key holders and thus essential to the transaction authorization process.
Imagine a bank telling users they couldn’t withdraw cash because their CEO had been detained! Unsurprisingly, the value of OKEx’s native exchange token plummeted as a result.
Singaporean exchange KuCoin, meanwhile, recently lost over $200 million worth of customer funds in a sophisticated hack, yet another blow for the industry’s reputation.
Evidently, clearer and more robust regulation could have prevented the first two scandals. Frauds perpetrated upo...