BitMEX Crypto Exchange Pleads Guilty to Bank Secrecy Act Violations
BitMEX Crypto Exchange – BitMEX has pleaded guilty to violating the Bank Secrecy Act (BSA), as announced by the U.S. Department of Justice (DOJ) on Wednesday. According to court documents, the Seychelles-based cryptocurrency exchange willfully failed to implement adequate know-your-customer (KYC) and anti-money laundering (AML) programs between September 2015 and September 2020. During this period, the Commodity Futures Trading Commission (CFTC) charged BitMEX with offering illicit crypto derivative trading services to U.S. customers, while the DOJ charged four of the exchange’s employees with violating the BSA.
Lax AML/KYC Standards and Consequences
Until September 2020, BitMEX allowed customers to register and trade cryptocurrency anonymously without providing any identifying information or documentation. The DOJ alleged that BitMEX advertised itself as a platform where retail customers could trade without real-name verification. Due to these lax AML/KYC standards, prosecutors claim that BitMEX became a hotspot for money laundering and sanctions violations.
Statements from U.S. Attorney Damian Williams
“As 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,” stated U.S. Attorney Damian Williams in a DOJ press release. “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. Today’s guilty plea indicates again the need for cryptocurrency companies to comply with U.S. law if they take advantage of the U.S. market.”
Charges Against BitMEX Executives
The 2020 charges against BitMEX’s three co-founders—Arthur Hayes, Samuel Reed, and Benjamin Delo—and its first employee, Gregory Dwyer, mirror the charge to which BitMEX pleaded guilty. These charges concern the company’s actions over the same time period, and all executives previously pleaded guilty as well.
Additional Guilty Plea: Lying to a Foreign Bank
BitMEX also pleaded guilty to lying to a foreign bank as part of its BSA violations. Court documents reveal that the company and its executives made false statements to an unnamed international bank to open an account for a shell company named Shine Effort Inc. Limited, which was ultimately controlled by Delo. BitMEX was the beneficial owner of this shell company.
Current Status and Future Proceedings
A DOJ spokesperson declined to comment on why the charges against BitMEX as a company were filed four years after the same charges were filed against its executives. BitMEX has not yet been sentenced. The case is being overseen by U.S. District Judge John G. Koeltl of the Southern District of New York (SDNY). A representative for BitMEX did not respond to CoinDesk’s request for comment.
BitMEX Pleads Guilty to Bank Secrecy Act Violations: FAQ
What is the Bank Secrecy Act (BSA)?
The Bank Secrecy Act (BSA), enacted in 1970, is a U.S. law that requires financial institutions to help the government detect and prevent money laundering. It mandates that institutions establish and maintain procedures to verify customer identities and report suspicious activities.
What did BitMEX do to violate the BSA?
BitMEX failed to implement adequate know-your-customer (KYC) and anti-money laundering (AML) programs from September 2015 to September 2020. This allowed customers to trade cryptocurrencies anonymously, facilitating money laundering and sanctions violations.
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