BitMEX, a Hong Kong-based bitcoin futures exchange, has reportedly pulled services from the US and the Canadian province of Quebec, according to the South China Morning Post. BitMEX's move appears to have been prompted by the exchange's growing discomfort with the regulatory attitudes of the Autorité des marchés financiers (AMF) and the Securities and Exchange Commission (SEC).
BitMEX removed its services from Quebec after the AMF, Quebec's financial market regulator, contacted the exchange at the beginning of 2018 to say that because it was not registered with the AMF, it was not authorized to have business activities in the province of Quebec. The AMF's media relations director spoke with the South China Morning Post, telling the news outlet that all BitMEX accounts linked to customers in Quebec were now closed.
BitMEX's decision to move out of the US isn't as straightforward. The SEC has increased its focus on digital token trading platforms, but it's not clear what (if any) specific issues the SEC might have with BitMEX. The South China Morning Post speculates that the SEC's concerns may be similar to that of the AMF: failure to register with the financial authority before doing business within the US. Both BitMEX and the SEC declined to comment on the move.
If that is indeed the reason for BitMEX's US exit, it wouldn't be the first time the SEC has come after unregistered exchanges.
In November 2018, the SEC brought charges against Zachary Coburn and issued a cease and desist against his unregistered crypto exchange, EtherDelta. The SEC believed that some of the ERC20 tokens bought, sold, and traded on the exchange could be classified as securities based on the July 2017 DAO Report. The report defined a security as an "investment contract … in a common enterprise with a reasonable expectation of profits to be derived from the entrepreneurial or managerial efforts of others."
As a result of the charges, Coburn agreed to pay $300,000 in disgorgement, $13,000 in prejudgment interest, and a $75,000 penalty. This was the first time the SEC took action against a digital token trading platform for acting as an unregistered national securities exchange.