Exchanges

Bittrex customers were using fake names like Donald Duck and Elvis to trade, and now the exchange has to leave New York

The BitLicense gods giveth, and they taketh away!

A day after the New York Department of Financial Services issued its 19th BitLicense to crypto exchange Bitstamp, the agency has denied the application of a U.S.-based exchange operator, Bittrex.

Furthermore, the NYDFS said the firm must stop its operations in New York State effective April 11, as per a note from the agency addressed to Bittrex chief executive officer Bill Shihara. 

In the brutal take-down letter, which is worth the read, the NYDFS rips into the exchange for a lack of due diligence around vetting customers and the tokens that trade on its venue.

“Bittrex’s customer identification program, know your customer, and customer due diligence are seriously deficient as evidenced by the findings of the Department’s examiners during their review of sample transactions,” the note read. 

It gets even more brutal. The NYDFS said a number of transactions on the platform were conducted by traders who did not provide tax information, names, or birthdates. Some traders, which Bittrex claims never conducted any actual trades, even used fake names, including Donald Duck, Elvis Presley, and other “clearly false names.”

As for its token due diligence, the NYDFS said its review of 15 tokens that trade on its venue failed to meet its own 2018 listing guidelines. 

“In some cases…the token applicants had refused to complete their applications,” the note reads. 

Ouch!

Based in Seattle, Bittrex sees more than $50 million worth of crypto exchange hands on its platform every day, facilitating the trading of over 200 tokens. It also operates an over-the-counter trading desk. 

The firm has 14 days to confirm to regulators that it has shut down its New York-based operations, according to the NYDFS.

After the NYDFS denial, Bittrex released a statement addressing the agency’s claims.

“First, and foremost, we adamantly disagree with NYDFS’ claims and allegations in regard to our anti-money laundering (AML) and compliance practices,” the firm said. “Corporate responsibility is in our DNA and our commitment to regulatory and compliance guidelines is second to none.”