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US Derivatives Traders Are Easily Bypassing Blocks on Offshore Exchanges: Report

U.S.-based traders are able to use virtual private networks designed to mask the country where they are based. Or they simply lie about where they are from.

Jul 30, 2021 at 11:26 a.m. UTC
Updated Sep 14, 2021 at 1:33 p.m. UTC

U.S. crypto traders are able to easily bypass blocks on overseas derivatives platforms, new research has found.

  • American crypto traders are getting round measures that are supposed to block them from using offshore exchanges such as FTX and Binance, the Wall Street Journal reported Friday, citing research by data firm Inca Digital.
  • U.S.-based traders are able to use virtual private networks designed to mask the country where they are based. Or they simply lie about where they are from.
  • Inca's technology is used by the Commodity Futures Trading Commission (CFTC), the body that regulates derivatives trading in the U.S. Offshore exchanges operate outside of the CFTC's purview and can avoid some of the rules relating to investor protection and market manipulation.
  • The research was conducted by scanning Twitter for exultant tweets about successful trades and so on.
  • Inca found 2,000 such tweets, of which 372 belonged to Americans. It is likely this represents only a tiny proportion of the total number, the Journal said.
  • Of the 372, 240 were using FTX, prompting the Hong Kong-based exchange to say it will tighten its procedures to block U.S. users.
  • Until this week, FTX users were able to gain entry-level access with a daily withdrawal limit of $9,000 without needing to provide identification documents.

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