Bitcoin
Crypto Exchange BitMEX Pleads Guilty to Violating Bank Secrecy Act from 2015 to 2020
BitMEX has pleaded guilty to violating the Bank Secrecy Act (BSA), according to a report on Wednesday. announcement from the US Department of Justice (DOJ).
According to recently published court documents, the Seychelles-based cryptocurrency exchange willfully failed to establish an adequate know-your-customer (KYC) and anti-money laundering (AML) program on the exchange between September 2015 and September 2020, when the Commodity Futures Trading Commission (CFTC) charged the exchange with offering illicit cryptocurrency derivatives trading services to U.S. customers and the DOJ charged four employees of the exchange with violating the BSA.
Until September 2020, BitMEX allowed customers to register and trade cryptocurrencies largely anonymously, without providing any identifying information or documentation, and advertised itself as a place where retail customers could trade without real-name verification, the DOJ alleged. Because of lax AML/KYC standards, prosecutors say BitMEX became a destination for money laundering and sanctions violations.
“As the founders and longtime employees of BitMEX admitted in federal court in 2022, the company, one of the world’s leading cryptocurrency derivatives platforms from 2015 to 2020, operated in the United States without a meaningful anti-money laundering program as required by federal law,” U.S. Attorney Damian Williams said 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 again highlights the need for cryptocurrency companies to comply with U.S. law if they are to take advantage of the U.S. market.”
The 2020 charges against BitMEX’s three co-founders, Arthur Hayes, Samuel Reed and Benjamin Delo — and its first employee, Gregory Dwyer — are nearly identical to the indictment to which BitMEX pleaded guilty and concern the company’s actions during the same period. All of the executives have also previously pleaded guilty.
However, BitMEX also pleaded guilty to lying to a foreign bank as part of its BSA violation. According to court documents, the company and its executives made false statements to an unnamed international bank to convince the bank to open a bank account for a shell company called Shine Effort Inc. Limited, ultimately controlled by Delo, of which BitMEX was the beneficial owner.
A DOJ spokesperson declined to comment on why charges against BitMEX as a company were filed four years after the same charges were filed against four of 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.