Crypto Exchange BitMEX Admits Guilt in Violations of Anti-Money Laundering Regulations Under Bank Secrecy Act

Crypto exchange and derivatives trading platform BitMEX entered a guilty plea on Wednesday for breaching the Bank Secrecy Act.

The US Attorney for the Southern District of New York indicated that BitMEX intentionally failed to create, implement, and uphold a sufficient anti-money laundering program.

“In federal court in 2022, BitMEX’s founders and a long-time employee acknowledged that the company, which was among the top cryptocurrency derivatives platforms globally from 2015 to 2020, operated within the United States without a meaningful anti-money laundering program, as mandated by federal law,” stated US attorney Damian Williams.

“Consequently, BitMEX became a conduit for extensive money laundering and sanctions evasion activities, representing a significant risk to the integrity of the financial system.”

A representative from BitMEX informed Cryptonews that the charge is outdated. “This is the same allegation made in 2020 against our founders concerning BitMEX’s operations up to September 2020. Our founders acknowledged this and were sentenced in 2022. BitMEX has since fully rectified its operations, and there is nothing new in this charge,” they remarked.

Additionally, the exchange confirmed its acceptance of the charge. It intends to request an expedited sentencing hearing and contend that no additional fine should be levied.

BitMEX Leadership Penalized with Probation and $10M Fines

BitMEX has encountered considerable legal challenges in the US since 2022. In late 2022, prosecutors pursued a 12-month probation sentence for Greg Dwyer, the former head of business development, for violating the US Bank Secrecy Act.

Earlier that year, Arthur Hayes, a BitMEX co-founder, received a six-month home detention sentence following his guilty plea. Another co-founder, Ben Delo, was sentenced to 30 months of probation.

As part of the plea agreement, each co-founder was mandated to pay a $10 million criminal fine, reflecting the financial benefits gained from their offense.

BitMEX Found Guilty of Flouting US AML and KYC Regulations

The Justice Department asserted that BitMEX and its executives were required to implement an anti-money laundering (AML) program, which includes a Know-Your-Customer (KYC) element, due to their operations in the US. However, the company and its executives intentionally overlooked these obligations, only requiring customers to provide an email to access the exchange’s services.

Since its launch in November 2014 until at least September 2020, BitMEX knowingly provided services to thousands of customers based in the US, according to the complaint. This occurred even after the company claimed to have exited the US market in September 2015 to avoid compliance with US regulations.

Furthermore, the complaint indicated that senior executives were aware that BitMEX’s measures to prevent such access were ineffective or easily circumvented to increase revenue from the US market, disregarding criminal laws. These executives took intentional actions aimed at exempting BitMEX from US regulations such as AML and KYC, despite being aware of the legal requirements due to their operations in the US.

In an effort to circumvent AML laws, BitMEX misrepresented the purpose and nature of a subsidiary to a bank, enabling it to transfer millions of dollars through the financial system.

BitMEX has not yet been sentenced. The case falls under the jurisdiction of US District Judge John G. Koeltl in the Southern District of New York (SDNY).

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