Crypto-company Bitmex moves into Crypto Valley

The crypto exchange Bitmex recently had to pay a fine of $100 million in the USA due to violations of money laundering regulations. Bitmex has now opened a head office in Zug, and the branch manager asserts that the focus is on regulation.

The jerseys of Italian Serie A teams used to be emblazoned with the logos of major Italian corporations such as Barilla (AS Roma), Pirelli (Inter) or Mediolanum (AC Milan). But everything is more international today; pasta and tyres are no longer advertised, with many teams in the current season sporting the logos of crypto companies on their football shirts. The main sponsor of AS Roma is the blockchain network Digitalbits, whose logo also adorns the sleeves of Inter players. At Inter, the main sponsor this year is Socios.com, also a crypto company. And AC Milan has recently promoted the Bitmex crypto exchange.

This development shows that cryptocurrencies and trading platforms have arrived in the centre of society, although their risks still deter many people. The multi-year contract with AC Milan is a milestone for the crypto exchange Bitmex, as this is its first major sponsorship in Europe. Bitmex belongs to a company registered in the Seychelles, and the trading platform was founded by Arthur Hayes, Ben Delo and Samuel Reed in 2014. They are now "the official Cryptocurrency Trading Partner of the Rossoneri," as Bitmex proudly announced this summer.

Fingers burned in the USA
The company has also recently announced its expansion into Crypto Valley in Switzerland, and the first European branch, called BXM Link AG, headquartered in Zug, has been operational for two weeks. Although the company currently employs only three to four people in home office in Zug and Zurich, Bitmex Link CEO Ivo Sauter says that it plans to build up around 50 jobs by the end of the year in order to be able to "quickly" grow to around 100 people afterwards. "We are currently still looking for suitable office space," says the Zurich native, who previously spent around 20 years working in the banking, stock exchange and crypto environment. "We will invest heavily in the expansion of Bitmex Link in Switzerland in the coming months and years, because we see great growth potential here in the long term."

Milan's Rafael Leão celebrates after a goal. In the background, Bitmex advertising is running on the ribbon.
Photo: Matteo Bazzi
Bitmex-Link-CEO Ivo Sauter.                   Photo: PD

The creation of the Zug branch is justified by the good regulatory environment in Switzerland and the existence of “Crypto Valley”, which has a strong appeal. Bitmex has recently had problems with regulators, especially in the US: in 2019, the U.S. Commodity Futures Trading Commission (CFTC) launched an investigation into Bitmex for illegally operating a cryptocurrency trading platform and violating money laundering regulations.

This led to an indictment against the company and the founders, with the company finally reaching a settlement with the U.S. authorities in August 2021 by agreeing to pay $100 million and to comply with all anti-money laundering regulations. The criminal charges against the three founders are still pending, however, and Bitmex closed its San Francisco headquarters three months after the agreement. At almost the same time, the company announced that it would expand into Switzerland.

Focus on regulation
Is the establishment of the Zug branch a kind of escape move? CEO Sauter did not want to comment on the fines or the ongoing proceedings. He stresses, however, that Bitmex clearly focuses on regulation, and that they are working closely together with the authorities. "With its progressive legislation, Switzerland offers us the opportunity to offer our services under clear conditions," says the 44-year-old.

The fact that Bitmex is becoming more professional can also be seen in the fact that the company appointed the head of the Stuttgart Stock Exchange, Alexander Höptner, as CEO of the parent company a year ago. "We are convinced that only those crypto trading venues that can quickly become fully regulated will prevail," Höptner recently told the "NZZ am Sonntag". This will be the decisive competitive advantage in the future.

Bitmex will not initially operate an exchange on the Swiss market, but will offer brokerage services or, in other words, trading in cryptocurrencies. Further activities are conceivable later. In order to offer brokerage, Bitmex requires a licence from the self-regulatory organization VQF, which the company expects to receive by the spring. A full-fledged brokerage licence from the financial market supervisory authority Finma is to be added later. "As we intend to expand our range of services soon, we plan to apply for a Finma license by the end of the year," says Sauter.

With the current offer, Bitmex wants to address both private and business customers in Switzerland. This makes Bitmex a direct competitor of established crypto service providers such as Bitcoin Suisse or Crypto Finance, which have been operating in Zug for years. Isn't Bitmex a little late here? Ivo Sauter doesn't believe that: "The cake is getting bigger and bigger, and there's enough for everyone."