It’s crucial to understand that accusations against BitMEX in a recent breach are based on a complex of rules, rather than a specific incident.
Any business in the world that services (or may service) U.S. clients and develops and markets itself in the U.S. may fall under these rules. The popular DeFi project Uniswap is no exception. Its developers claim that they cannot check the client’s country or perform AML according to the U.S. laws since “it’s a smart contract.” Does it hold DeFi exchanges free from liability? It probably doesn’t.
Although the DOJ investigates Uniswap, this doesn’t mean it will arrest smart contracts. However, there are always people who develop software, app store apps or do marketing. The U.S. laws can make these people liable.
In the worst-case scenario, we’ll be left with a "stripped down" smart contract that we might use directly. In practice, 99% of current users will ditch it in the absence of applications and marketing. We witnessed this happening with decentralized trading exchange platform EtherDelta, whose creator and website administrator got heavily fined.
The feasibility of new cases is an open question. The BitMEX exchange has been the most prominent and most unregulated in recent years. Others were either smaller or more controllable. Most exchanges play by the rules of the existing financial system. They yield money for the state and raise no concerns for U.S. monetary control. The BitMEX case may have been aggravated by the company’s intention to sneak out of the U.S. jurisdiction to the Seychelles and compromise with the local authorities. Don’t be misled: The U.S. authorities are always on the alert.
It’s of utmost importance that the DOJ and Commodity Futures Trading Commissiion came after private individuals. They were not charged with terrorism, yet the sentence matched one suitable for a criminal, rather than an administrative offense as it was in the TON case. Individuals in BitMEX management now face up to five years in jail.
Global banks often find themselves in the middle of an AML scandal. They have to pay their fines, yet there are no individual top managers among the defendants. As Orwell wrote, “All are equal, but some are more equal than others.” Looks like it’s the banks that are "more equal" now.
