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Crypto Exchange BitMEX Pleads Guilty to AML Breaches Under Bank Secrecy Act

Shalini Nagarajan
Last updated: | 2 min read
BitMEX guilty

Crypto exchange and derivative trading platform BitMEX pled guilty to violating the Bank Secrecy Act on Wednesday.

The US Attorney for the Southern District of New York said that BitMEX willfully failed to establish, implement, and maintain an adequate anti-money laundering program.

“BitMEX’s founders and long-time employee admitted in federal court in 2022, the company, one of the leading cryptocurrency derivatives platforms in the world from 2015 to 2020, operated in the United States without any meaningful anti-money laundering program, as required by federal law,” US attorney Damian Williams said.

“As a result, 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.”

A BitMEX spokesperson told Cryptonews that the charge is old news. “This is the same charge brought in 2020 against our founders relating to BitMEX’s operations up to September 2020. Our founders accepted this and were sentenced back in 2022. BitMEX has long since fully remediated its operations, and there is nothing new in this charge,” they added.

Further, the exchange said it has accepted the charge. It plans to seek an expedited sentencing hearing and argue that no further fine should be imposed.

BitMEX Leadership Penalized with Probation and $10M Fines

BitMEX has faced significant legal issues in the US since 2022. In late 2022, prosecutors sought 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 founder, received a six-month home detention sentence after his guilty plea. Another founder, Ben Delo, was sentenced to 30 months of probation.

As part of the plea deal, each co-founder was required to pay a $10m criminal fine. The amount represents the financial gains derived from their offense.

BitMEX Found Guilty of Flouting US AML and KYC Regulations

The Justice Department stated that BitMEX and its executives were obligated to establish an anti-money laundering (AML) program, which includes a Know-Your-Customer (KYC) component, due to their operations in the US. However, the company and its executives deliberately disregarded these requirements. They only required customers to provide an email to access the exchange’s services.

Since its inception in Nov. 2014 through at least Sept. 2020, BitMEX consciously offered services to thousands of US-based customers, the complaint said. This occurred even after the company claimed to have exited the US market in Sept. 2015 to evade compliance with US laws.

Further, the complaint said that senior executives were aware that BitMEX’s policies to prevent such access were ineffective or easily bypassed to boost revenue from the U.S. market, ignoring criminal laws. These executives took deliberate steps intended to exempt BitMEX from US regulations like AML and KYC, despite knowing the legal requirements due to their operations in the US.

In an attempt to evade AML laws, BITMEX misrepresented the purpose and nature of a subsidiary to a bank, allowing it to move millions of dollars through the financial system.

BitMEX has not yet received a sentence. The case is under the US District Judge John G. Koeltl in the Southern District of New York (SDNY)’s jurisdiction.