The crypto exchange made it simpler for criminals to transfer money covertly by disregarding anti-money laundering regulations.
OKX Crypto Exchange Disregarded America’s Regulations
OKX, one of the biggest cryptocurrency platforms in the world, has acknowledged violating US regulations regarding financial crimes. The crypto exchange pleaded guilty to operating without the required license and disregarding anti-money laundering (AML) regulations.
Consequently, the exchange will settle fines totaling more than $504 million. OKX has been in operation since 2017. It lets users exchange cryptocurrencies like Ethereum and Bitcoin for fiat or other digital assets.
However, the platform disregarded American regulations, enabling criminals to use its platform to transfer illicit funds. Also, there were allegations that OKX lacked robust security methods to authenticate users for years.
Hence, it was simple for Americans to register accounts without entering accurate information. The business didn’t disclose questionable transactions, a crucial obligation under US law.
Therefore, over $5 billion in fraudulent transactions were processed through the platform.
The Crypto Exchange Encouraged US Users to Ignore Security Measures
According to OKX’s official statement, trading on its platform was prohibited for US consumers. Behind the scenes, though, the business actively looked for American users.
US authorities claimed that the crypto firm also suggested security bypass measures. When US clients signed up, OKX employees told them to provide false information.
Also, the exchange permitted US consumers to trade via third-party brokers to conceal their location and identity further. These brokers were exempt from disclosing their clients’ true identities.
Also read:This action made it almost impossible to monitor who performed the transactions. In addition, some users continued to use VPNs to gain entry to the platform despite OKX’s policy of barring US customers according to their IP addresses.
Additionally, the business promoted its services in the United States by employing American marketers to publicize its platform and sponsored events such as the Tribeca Film Festival.
OKX’s Financial Penalties and Guilty Plea
OKX’s $504 million in fines include a criminal penalty of $84.4 million and a forfeiture of $420.3 million. Due to its cooperation with authorities and the implementation of policy adjustments, OKX’s fine was reduced by 25%.
The crypto exchange will retain a compliance consultant until 2027 as part of the agreement. This consultant will ensure it complies with regulations and prevent US users from unauthorized access to its platform.
Citadel Securities to Become Liquidity Provider for Crypto Exchanges
Meanwhile, famous market maker Citadel Securities has revealed its plans to become a liquidity provider for big crypto exchanges. The company aims to provide this service for several of the biggest cryptocurrency exchanges in the market, including Binance, Coinbase, and Crypto.com.
Citadel intends to establish market-making teams outside the United States in its first phase. However, how the US regulatory landscape develops over the coming months will determine how much Citadel remains an active market maker.
Citadel Securities will be prepared to offer liquidity for cryptocurrencies like any other asset class once there are clear crypto regulations in the United States.
Citadel Securities’ Previous Crypto Involvement
Citadel Securities hasn’t entirely avoided cryptocurrency in recent years, as shown by its June 2023 EDX Markets launch in collaboration with brokerage powerhouses Charles Schwab and Fidelity Investments. Citadel Securities even partnered with Terraform Labs before its sudden collapse.
Do Kwon, the former CEO of Terraform, claimed that Citadel Securities deliberately shorted the USTC (TerraClassicUSD) stablecoin until it lost its USD peg. Kwon maintained that algorithmic instability did not cause the downfall of stablecoin.
However, Citadel Securities responded that it didn’t contribute to USTC’s depeg as it only participated in two test deals totaling about $0.13. Ken Griffin established the hedge fund Citadel in 1990, and it became one of the world’s biggest, with over $63 billion in assets under management.
Citadel Securities, a 2002-founded subsidiary of the hedge fund, currently serves more than 1,600 institutional clients, including the world’s biggest central banks and sovereign wealth managers.
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