In the recent days there have been some significant steps taken by high-level regulators as the CFTC, and then the SEC, have clamped down on alleged dodgy practices within the cryptocurrency space.
First, the CTFC charges five corporate entities and three individuals who own and run BitMEX, including the well-known CEO, Arthur Hayes. Then, this week, the U.S. Securities and Exchange Commission filed suit against John McAfee for allegedly promoting initial coin offerings (ICOs) without disclosing that the ICO issuers were paying him, a violation of U.S. securities law.
Additionally, The Justice Department reports John McAfee has been arrested in Spain for tax evasion and is awaiting extradition to the United States.
This clampdown on high-profile cryptocurrency companies and people seems to suggest a swift and sharp move by regulators, although the move has been brewing for some time. In the case of BitMEX, the charges have been under development for some time.
The CFTC alleges that since 2014 BitMEX “illegally offered leveraged retail commodity transactions, futures, options, and swaps on cryptocurrencies including bitcoin, ether, and litecoin, allowing traders to use leverage of up to 100 to 1 when entering into transactions on its platform.”
Regulators at the ready
The cryptocurrency space has been one that has tried to tow the line with regulators for some time now. Many saw Bitcoin and its associated ecosystem as a way to skirt regulation thanks to decentralisation, but things have changed somewhat.
Now, most businesses linked to cryptocurrency have tried their best to stay compliant and fall in line with often ambiguous and hard to follow rules. This has led to a few confusing instances of law breaking by some, and some more deliberate moves against regulators in other cases.
As the cryptocurrency space continues to grow and appear on the radar of the likes of the SEC and the CFTC, there will no doubt be more action taken to bring companies in line, and hopefully more clarity on rules.
But, there is another space that shows signs of disregard for regulations that could be next in the firing line.
DeFi and Defy
The booming DeFi space is another one that shows the worrying signs of regulation defiance. With the premise of decentralisation, there is a belief that some of these projects have the ability to be exempt from liability from regulators, but this will only lead to harsher crack downs.
Major loss of funds and doggy practices in the DeFi space will catch the attention of regulators more and more and could see a new wave of regulatory crackdown on the space that could cripple any of its potential.