Crypto Exchange BitMEX Pleads Guilty to Violating the Bank Secrecy Act From 2015 to 2020

BitMEX
has
pleaded
guilty
to
violating
the
Bank
Secrecy
Act
(BSA),
according
to
a
Wednesday

announcement
from
the
U.S.
Department
of
Justice
(DOJ).

According
to
newly
published
court
documents,
the
Seychelles-based
crypto
exchange
willfully
failed
to
set
up
an
adequate
know-your-customer
(KYC)
and
anti-money
laundering
(AML)
program
at
the
exchange
between
September
2015
and
September
2020,
when
the
Commodity
Futures
Trading
Commission
(CFTC)

charged
the
exchange
with
offering
illicit
crypto
derivative
trading
services
to
U.S.
customers
and
the
DOJ
charged
four
of
the
exchange’s
employees
with
violating
the
BSA.

Until
September
2020,
BitMEX
allowed
customers
to
register
and
trade
cryptocurrency
basically
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
the
lax
AML/KYC
standards,
prosecutors
say,
BitMEX
became
a
destination
for
money
laundering
and
sanctions
violations.

“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,”
said
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.”

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
charge
BitMEX
pleaded
guilty
to,
and
concern
the
company’s
actions
over
the
same
time
period.
The
executives
all
previously
pleaded
guilty
as
well.

However,
BitMEX
also
pleaded
guilty
to
lying
to
a
foreign
bank
as
part
of
its
violation
of
the
BSA.
According
to
the
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,
for
which
BitMEX
was
the
beneficial
owner.

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
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.