BitMEX Pleads Guilty to AML Violations

BitMEX, a Seychelles-based cryptocurrency exchange, pleaded guilty to violating the Bank Secrecy Act (BSA). The U.S. Department of Justice (DOJ) charged the exchange for not having proper Anti-Money Laundering (AML) and Know Your Customer (KYC) programs from 2015 to 2020. This lack of compliance made BitMEX a target for money laundering and sanctions evasion.

BitMEX pleads guilty to violating the Bank Secrecy Act in anti-money laundering case https://t.co/Ha2cnrxcWU

— The Block (@TheBlock__) July 10, 2024

The co-founders, Arthur Hayes, Benjamin Delo, and Samuel Reed, faced similar charges in 2022. They pleaded guilty and received probation. They also paid a $30 million civil penalty imposed by the U.S. Commodity Futures Trading Commission (CFTC).

BitMEX allowed users to trade cryptocurrencies with just an email address, bypassing proper identity checks. U.S. Attorney Damian Williams stated that this posed a serious threat to the financial system. He emphasized the importance of cryptocurrency companies following U.S. laws to operate in the market.

Furthermore, BitMEX misled a foreign bank to open an account for a shell company, Shine Effort Inc. Limited. This company was controlled by Delo, with BitMEX as the beneficial owner. False statements to the bank were part of their scheme to avoid regulatory scrutiny.

The legal issues for BitMEX began in 2020. The CFTC charged the exchange with offering illegal crypto derivative trading to U.S. customers. The DOJ also charged four employees with violating the BSA. In 2021, BitMEX agreed to pay a $100 million fine as part of the settlement. These charges align with the recent guilty plea.

The U.S. Attorney’s Office’s Illicit Finance and Money Laundering Unit is handling the prosecution. The co-founders could face up to five years in prison. U.S. District Judge John G. Koeltl of the Southern District of New York (SDNY) will determine the sentencing for BitMEX and its founders.

This case highlights the need for cryptocurrency exchanges to have strong AML and KYC measures. Non-compliance can lead to severe legal and financial consequences. BitMEX’s penalties underline the importance of maintaining financial system integrity.

In response to the DOJ’s decision, BitMEX stated that the BSA charge is not new. 

In response to the U.S. Department of Justice’s decision to file a charge of Bank Secrecy Act (BSA) violation against HDR Global Trading Limited (HDR), the entity owning and operating BitMEX, we would like to share the following statement.

The BSA charge is old news – this is… pic.twitter.com/xvnGvfPvOA

— BitMEX (@BitMEX) July 10, 2024

The company accepted the charge and seeks an expedited sentencing hearing. BitMEX argued that no further fines should be imposed, given the substantial amounts already paid by the founders under the BSA charges and settlements with the CFTC and FinCEN in 2021.

ABOUT THE AUTHOR See More

Arslan Butt

Index & Commodity Analyst

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

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