BitMEX, a major cryptocurrency exchange, has admitted to violating the Bank Secrecy Act (BSA) by neglecting to implement a robust Anti-Money Laundering (AML) program, according to the US Department of Justice.
On July 10, US Attorney Damian Williams announced BitMEX’s guilty plea, highlighting the exchange’s failure to establish an effective AML program from 2015 to 2020. The case stemmed from testimony during 2022 criminal proceedings involving some of BitMEX’s founders and employees.
“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,” said Williams. “Today’s guilty plea indicates again the need for cryptocurrency companies to comply with US law if they take advantage of the US market.”
The US Attorney’s office stated that BitMEX blatantly disregarded AML requirements by not enforcing Know Your Customer (KYC) standards, only requiring users to provide an email address. Founders Arthur Hayes, Benjamin Delo, and Samuel Reed were aware that their lax approach affected US-based users, violating federal law.
Incorporated in the Republic of Seychelles under HDR Global Trading Limited, BitMEX faces severe consequences, including potential prison sentences of up to five years and substantial fines for responsible parties.
Previously, in 2022, Hayes, Delo, and Reed were ordered to pay a combined $30 million civil penalty in a case brought by the US Commodity Futures Trading Commission. The trio received probation sentences after pleading guilty to violating AML requirements under the BSA.
This development comes as US courts prepare to sentence individuals connected to the now-defunct cryptocurrency exchange FTX and Alameda Research. Judge Lewis Kaplan of the Southern District of New York will determine the fate of FTX co-founder Gary Wang and former engineering director Nishad Singh starting in October. Former FTX CEO Sam Bankman-Fried is already serving a 25-year sentence following his trial and conviction.
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