BitMEX Pleads Guilty to Bank Secrecy Act Violations

The company admitted to failing to establish an adequate anti-money laundering (AML) program.

By: Pedro Solimano Loading...

BitMEX Pleads Guilty to Bank Secrecy Act Violations

BitMEX, once among the largest crypto derivatives exchanges, pleaded guilty to violating the U.S. Bank Secrecy Act.

On July 10, the U.S. Attorney’s Office of the Southern District of New York announced that BitMEX admitted to willfully failing to establish, implement, and maintain an adequate anti-money laundering (AML) program overseeing its exchange.

The announcement said that BitMEX only mandated tax credentials for its users and sidestepped regulations to stem the flow of money to and from illicit entities in a bid to increase business revenue.

“[BitMEX] operated in the United States without any meaningful anti-money laundering program, as required by federal law,” said U.S. Attorney Damian Williams. “BitMEX opened itself up as a vehicle for large-scale money laundering and sanctions evasion schemes, posing a serious threat to the integrity of the financial system.”

The charges carry a maximum sentence of five years in prison and monetary fines. U.S. District Judge John G. Koeltl was assigned the case and will determine BitMEX's sentencing.

BitMEX was founded in 2014 and quickly became one of the top crypto derivatives trading platforms owing to the allure of offering up to 100x leverage to traders.

BitMEX runs afoul of the law

The plea is the latest in a series of encounters between BitMEX and the U.S. legal system.

In October 2020, the CFTC filed charges against BitMEX and its owners, including CEO, Arthur Hayes, for operating a trading platform without the agency’s approval and failing to implement the proper know-your-customer (KYC) procedure required under U.S. laws.

Less than one year later, the CFTC ordered the company to pay $100 million in penalties for its unlawful activities.

In February 2022, BitMEX’s founders, Arthur Hayes and Ben Delo pleaded guilty to knowingly operating a crypto trading platform that eluded U.S. finance laws from 2015 through 2020. Hayes and Delo each paid $10 million in fines as part of the agreement.

In August 2022, BitMEX’s first employee, Gregory Dwyer, also pleaded guilty to violating AML laws, as did the company’s third founder, Samuel Reed.

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