{"id":134976,"date":"2020-12-16T20:55:00","date_gmt":"2020-12-16T17:55:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/us-authorities-eager-to-deter-citizens-from-unregistered-crypto-exchanges\/"},"modified":"2020-12-16T20:55:00","modified_gmt":"2020-12-16T17:55:00","slug":"us-authorities-eager-to-deter-citizens-from-unregistered-crypto-exchanges","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/us-authorities-eager-to-deter-citizens-from-unregistered-crypto-exchanges\/","title":{"rendered":"# US authorities eager to deter citizens from unregistered crypto exchanges"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a2f16967ce51\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a2f16967ce51\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/us-authorities-eager-to-deter-citizens-from-unregistered-crypto-exchanges\/#G20_nations_are_clamping_down\" >G20 nations are clamping down<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/us-authorities-eager-to-deter-citizens-from-unregistered-crypto-exchanges\/#Why_use_unregistered_exchanges\" >Why use unregistered exchanges?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/us-authorities-eager-to-deter-citizens-from-unregistered-crypto-exchanges\/#What_can_exchanges_do\" >What can exchanges do?<\/a><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong># US authorities eager to deter citizens from unregistered crypto exchanges <\/strong>&#8221;<br \/>\n<img decoding=\"async\" src=\"https:\/\/images.cointelegraph.com\/images\/840_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjAtMTIvY2RjNmI1MjItMmNjMi00NTQxLThiZDQtMjRkYjhiZGJjNTEwLmpwZw==.jpg\" \/><\/p>\n<div class=\"post-content\" data-v-5a136f3a>Many overseas cryptocurrency exchanges would be h<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>y to have U.S. traders as clients, but these days, American residents might as well have a sign around their necks reading \u201cDanger: high voltage!\u201d<\/p>\n<p>That\u2019s been the case since Oct. 1, at least, when the United States Commodity Futures Trading Commission filed a complaint against Seychelles-registered BitMEX for soliciting U.S. residents and thus violating the Commodity Exchange Act. <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.ballardspahr.com\/-\/media\/files\/cftc-bitmex-complaint.pdf\">According<\/a> to the complaint: \u201cBitMEX has never been registered with the CFTC in any capacity and has not complied with the laws and regulations.\u201d This poses a serious problem for the U.S. regulators that try to keep tabs on money laundering, manipulative trading and other illegal activities. <\/p>\n<p>The complaint was viewed by some as a turning point in U.S. crypto enforcement. According to law firm Ballard Spahr LLC, it <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.jdsupra.com\/legalnews\/cftc-and-doj-charge-bitmex-and-58197\">demonstrated<\/a> that \u201cthe CFTC continues to actively pursue trading platforms and exchanges that solicit orders in the United States without proper registration.\u201d The rule had been on the books for many years, but its enforcement had been spotty. <\/p>\n<p>Some viewed the BitMEX complaint as more of a one-off action \u2014 not likely to have lasting repercussions in the larger cryptoverse. The firm hadn\u2019t exactly been a model of compliance \u2014 though it did have some controls on U.S. IP addresses. (Unfortunately, these were easy to get around.) \u201cBitMEX is an illegal casino whose executives are frequently caught bragging about ripping off their customers. No doubt, the authorities have been on them for a long time, just looking for something that\u2019ll stick,\u201d <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/mailchi.mp\/fa90df63e394\/hot-off-the-press-qe-episode-12649552?e=b823f33612\">wrote<\/a> Mati Greenspan, founder of analytics firm Quantum Economics, in his daily <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">news<\/a>letter. But others believe that offshore crypto exchanges already seem to be changing their ways. Jesse Spiro, global head of policy at Chainalysis, told Cointelegraph:<\/p>\n<blockquote><p>\u201cUnregistered foreign exchanges soliciting U.S. customers used to be more common. [&#8230;] Many international exchanges didn\u2019t care where their customers came from, but more recently exchanges have shut down service to U.S. customers given the threat of U.S. regulatory action.\u201d <\/p><\/blockquote>\n<p>Some U.S. players say this circumstance is only part and parcel of continued ambiguity and uncertainty regarding crypto regulation. Ripple CEO Brad Garlinghouse, for instance, recently said that his firm was losing potential U.S.-based customers for its XRP-related services because of the regulatory muddle. He thus claimed that even though the firm is based in San Francisco, 95% of its customers are overseas.<\/p>\n<p>Laush pointed out that there may be truth in that statement: \u201cRipple\u2019s CEO has a point. It is very difficult to be AML-compliant in the United States. That is why Ripple might not want to be in the field of U.S. regulation.\u201d Meanwhile, Wagster acknowledged that U.S. law hadn\u2019t kept pace with the rapid evolution of blockchain <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/technology\/\" data-internallinksmanager029f6b8e52c=\"4\" title=\"Technology\" target=\"_blank\" rel=\"noopener\">technology<\/a>: \u201cThe seminal case governing whether a cryptocurrency is a security was decided 80 years ago, and it will likely be at least several more years before a combination of case law and regulations allow for bright-line rules.\u201d <\/p>\n<p>However, Spiro believes that the U.S. regulators have upped their <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/game\/\" data-internallinksmanager029f6b8e52c=\"7\" title=\"Game\" target=\"_blank\" rel=\"noopener\">game<\/a>: \u201cIn <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/general\/\" data-internallinksmanager029f6b8e52c=\"3\" title=\"General\" target=\"_blank\" rel=\"noopener\">general<\/a>, U.S. regulators have become more knowledgeable regarding virtual assets, the vendors in the space, and how to analyze blockchains. They\u2019re enforcing regulations more consistently now.\u201d Meanwhile, Wagster added: <\/p>\n<blockquote><p>\u201cU.S. regulators have not shied away from using long arm jurisdiction to go after exchanges and protocols allowing investments or participation by U.S. residents, and I expect such enforcement actions to continue.\u201d<\/p><\/blockquote>\n<h2><span class=\"ez-toc-section\" id=\"G20_nations_are_clamping_down\"><\/span>G20 nations are clamping down<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>It isn\u2019t only the U.S. that is turning up the heat on unregulated exchanges lately. John Jefferies, chief financial analyst at blockchain intelligence firm CipherTrace, told Cointelegraph, \u201cMost G20 countries are cracking down, and I expect increased enforcement actions globally in 2021.\u201d He also added his thoughts regarding the BitMEX case:<\/p>\n<blockquote><p>\u201cIt reflects the stance of the Treasury Department, which is that exchanges must register with FinCEN and abide by U.S. anti-money laundering (AML) regulations if they do business with U.S. persons.\u201d<\/p><\/blockquote>\n<p>In Europe, \u201cthe same thing is happening,\u201d agreed Dmitri Laush, CEO of GetID, an identity verification solution provider. \u201cFor example, online exchange aggregator Bestchange was recently blocked because of a Russian court decision \u2014 the authority assumed that the aggregator is involved in fraudulent schemes,\u201d he told Cointelegraph.<\/p>\n<p>But isn\u2019t it difficult for an overseas exchange \u2014 many of them quite small \u2014 to really know whether a customer is a U.S resident or Estonian resident, for example? Shouldn\u2019t this be treated more like a matter of \u201cbuyer beware\u201d? <\/p>\n<p>\u201cIt\u2019s not difficult at all for exchanges to determine if their users are U.S. residents; they just have to ask and require documentary proof,\u201d John Wagster, an attorney at Frost Brown Todd LLC, told Cointelegraph. He further explained, \u201cU.S. regulatory agencies claim jurisdiction over investments by U.S. residents anywhere in the world those residents invest.\u201d<\/p>\n<p>\u201cIt is very easy if you have a proper KYC provider,\u201d added Laush, \u201cProper identity verification can also recognize if the ID document is genuine or fake, so there is no chance that a person can pretend that he or she is not from the U.S.\u201d<\/p>\n<p>That said, it can sometimes be problematic for non-U.S. residents to prove that they are not U.S. citizens &#8212; simply because many people around the world lack IDs. Foreign exchanges, for their part, often say things aren\u2019t so simple. Binance CEO Changpeng Zhao recently <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.bloomberg.com\/news\/articles\/2020-11-13\/largest-crypto-exchange-s-ceo-speaks-out-on-regulation-trends?utm_source=twitter&amp;utm_medium=social&amp;utm_content=crypto&amp;utm_campaign=socialflow-organic&amp;sref=2NXlthj2\">told<\/a> Bloomberg that his exchange must get \u201csmarter about the way we block\u201d U.S. residents from trading on Binance\u2019s platform, adding: \u201cWe do continually try to improve our blocking.\u201d Cointelegraph asked Binance for examples of the ways traders are trying to outmaneuver Binance\u2019s defenses, but the firm declined to comment.<\/p>\n<p>In its October complaint, the CFTC suggested BitMEX\u2019s so-called blocking efforts were half-hearted at best. \u201cAt the time [CEO Arthur] Hayes wrote that BitMEX was \u2018blocking\u2019 U.S.-based users, thousands of U.S. persons were in fact trading on BitMEX\u2019s platform,\u201d the agency noted. <\/p>\n<h2><span class=\"ez-toc-section\" id=\"Why_use_unregistered_exchanges\"><\/span>Why use unregistered exchanges?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Why would U.S. traders and investors, for their part, even want to use unregulated overseas exchanges? It\u2019s not as if they lack U.S. dollars or access to capable exchanges (e.g., Coinbase, Gemini) in their own country. \u201cAccess to more tokens, lower fees, less friction, anonymity and tax evasion are some reasons,\u201d Jefferies answered, \u201cCrypto is inherently borderless, so it can be easily transferred to offshore exchanges.\u201d <\/p>\n<p>\u201cThey may also use overseas exchanges in search of services with less or no compliance or regulatory oversight to transact with illegal entities, such as sending to a service in a high-risk jurisdiction,\u201d added Spiros. <\/p>\n<p>Many of these exchanges are only all too willing to accommodate them, suggested Wagster. \u201cA number of exchanges and protocols embrace the fact that they allow users to participate anonymously. [&#8230;] Other exchanges only accept cryptocurrency \u2014 as opposed to fiat currency \u2014 in the belief that they are not required to perform KYC on individuals paying in crypto.\u201d<\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_can_exchanges_do\"><\/span>What can exchanges do?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>In the meantime, what should overseas exchanges do? \u201cIt is not enough to put a warning on the website: \u2018We do not accept the U.S. citizens.\u2019 You need to check the identity of the trader and the source of his income,\u201d said Laush.<\/p>\n<p>\u201cOne potential approach for ensuring U.S. residents do not use the [unregistered] exchange is to ban virtual private network (VPN) access, which presents an awkward inclusion\/exclusion trade off,\u201d opined Jefferies, \u201cOverseas exchanges could forbid access to their platforms from VPNs and Tor, but doing so would disable private access by those in oppressed countries. This has caused some large exchanges to create distinct and separate U.S. operations.\u201d Wagster added, \u201cThe more reputable exchanges are very careful where and with whom they operate,\u201d and for the present: <\/p>\n<blockquote><p>\u201cEvery exchange with significant trading volume should expect to be scrutinized by U.S. regulatory agencies. Some exchanges, like Binance, set up separate entities in separate jurisdictions so they can comply with local laws wherever they are.\u201d <\/p><\/blockquote>\n<p><template data-name=\"subscription_form\" data-type=\"law_decoded\"><\/template><\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more News articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/us-authorities-eager-to-deter-citizens-from-unregistered-crypto-exchanges\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# US authorities eager to deter citizens from unregistered crypto exchanges &#8221; Many overseas cryptocurrency exchanges would be happy to have U.S. traders as clients, but these days, American residents might as well have a sign around their necks reading \u201cDanger: high voltage!\u201d That\u2019s been the case since Oct. 1, at least, when the United&#8230;<\/p>\n","protected":false},"author":1,"featured_media":134977,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/s3.cointelegraph.com\/uploads\/2020-12\/cdc6b522-2cc2-4541-8bd4-24db8bdbc510.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74993,75422,74860,70934,67874],"class_list":["post-134976","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-bitmex","tag-cftc","tag-cryptocurrency-exchange","tag-regulation","tag-united-states"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/134976","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=134976"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/134976\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/134977"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=134976"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=134976"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=134976"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}