Cryptocurrency analyst Tone Vays had his BitMEX trading account terminated on Monday, as reported here at Coin Rivet, but will the New York resident face a ‘disgorgement’ order, which could mean returning all capital he has earned through affiliate links.
Vays claims to have had more than 900 affiliate links on BitMEX, accounting for half of his income. In light of his account being terminated, Vays explained on Twitter how prices for all of his services will now rise.
Disgorgement is an equitable remedy designed to deter future violations of security laws. If a US citizen takes referral fees for sending investors to an unregistered futures broker, like BitMEX, they may have to pay ‘disgorgement’.
"Disgorgement" is a legal remedy where someone has to pay back money they made illegally: they're "disgorged" of their ill-gotten gains.
For example, if a US citizen takes referral fees for sending investors to an unsanctioned futures broker, they may have to pay "disgorgement."
— Jake Chervinsky (@jchervinsky) November 13, 2018
The BitMEX terms of service asserts: “Residents of the United States of America are prohibited from holding positions or entering into contracts at BitMEX. If it is determined that any BitMEX trading participant has given false representations as to their location or place of residence, BitMEX reserves the right to close any of their accounts immediately and to liquidate any open positions.”
Tone Vays openly spoke out about a trade he made on BitMEX, posting this on Twitter alongside a referral link: “Short 1 $BTCUSD at 5x Leverage for March 2019 Expiry. Full account Liquidation at $7,650 (above last swing high) -> Take Profit at $5k, Lower Stop Loss at at $5,750.
10% Off Affiliate Shill –> https://www.bitmex.com/register/”.
Just got my @BitMEXdotcom account terminated on suspicion of being a US Citizen. Anyone else find the timing of this odd?
The 900+ affiliates that accounted for half my income r gone going forward.
After #Unconfiscatable Conf expect prices on all services offered by me to rise. https://t.co/6bShmcdBEF
— Tone Vays [@Bitcoin] (@ToneVays) November 12, 2018
The controversial figure, who also hosts his own YouTube live streams, often advertises VPN services on his website and streams, meaning that he is consciously convincing people to trade on BitMEX and breach their terms of service.
To advertise an unregulated futures exchange to users across the world, including the United States, is potentially in breach of Securities Law. However, disgorgement payments are not only demanded of those who violate securities regulations. Anyone profiting from illegal or unethical activities may be civilly required to disgorge their profits, leaving Vays in a precarious position.