BitMEX, the Seychelles-based crypto exchange, has pleaded guilty to violating the Bank Secrecy Act (BSA). This was announced on Wednesday by the U.S. Department of Justice (DOJ).
Court documents reveal that BitMEX failed to establish an adequate know-your-customer (KYC) and anti-money laundering (AML) program. This lapse occurred between September 2015 and September 2020. During this period, the Commodity Futures Trading Commission (CFTC) charged the exchange with offering illicit crypto derivative trading services to U.S. customers. The DOJ charged four of the exchange’s employees with BSA violations.
Until September 2020, BitMEX allowed customers to register and trade cryptocurrency anonymously, without any identifying information or documentation. The DOJ claims the exchange promoted itself as a platform where users could trade without real-name verification. This lax approach to AML/KYC standards, prosecutors say, made the exchange a hub for money laundering and sanctions violations.
U.S. Attorney Damian Williams commented,
“As BitMEX’s founders and long-time employee admitted in federal court in 2022, the company operated in the United States without any meaningful anti-money laundering program, as required by federal law. 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.”
BitMEX’s Old Charges
The 2020 charges against BitMEX’s co-founders Arthur Hayes, Samuel Reed, and Benjamin Delo, and its first employee, Gregory Dwyer, are nearly identical to the charge the exchange pleaded guilty to. The executives previously pleaded guilty as well.
In addition, BitMEX pleaded guilty to lying to a foreign bank as part of its BSA violation. The company and its executives made false statements to an unnamed international bank to convince it to open an account for a shell company called Shine Effort Inc. Limited. The exchange was the beneficial owner of this company.
A DOJ spokesperson did not comment on why the charges against BitMEX were filed four years after the same charges were filed against its executives. The exchange 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. The exchange’s representatives did not respond to requests for comment.
