Regulation
BitMEX Pleads Guilty to Violating US Bank Secrecy Act
Cryptocurrency exchange BitMEX has pleaded guilty to violating the Bank Secrecy Act.
According to attorney Damian Williams, BitMEX intentionally failed “establish, implement and maintain an adequate system to combat money laundering (LAMalga) plan.”
He explained that BitMEX, founded in 2014, had a long history of serving and attracting American traders. Operating through local offices, it was required to register with the Commodity Futures Trading Commission (Transparency Commission) and comply with the AML policy.
“BitMEX has opened up as a vehicle for large-scale money laundering and sanctions evasion, posing a serious threat to the integrity of the financial system.”
Damian Williams, United States Attorney
FBI Deputy Director Christie M. Curtis added that BiteMEX management violated the law to increase the company’s revenue. The cryptocurrency platform was required to implement an AML program that required Quality check verification but ignored these requests. Instead, it only asked customers to provide an email address.
“BitMEX not only failed to comply with nationally required anti-money laundering procedures designed to protect U.S. financial markets from illicit actors and transactions, but it knowingly did so to increase corporate revenue.”
Christie M. Curtis, Deputy Director of the FBI
start of problems
In October 2020, US authorities loaded BitMEX Management. The CFTC alleged that they were operating an unregistered trading platform and violating its rules, including anti-money laundering and customer verification.
The U.S. Department of Justice also charged BitMEX co-founders Arthur Hayes, Benjamin Delo, Samuel Reed, and the platform’s head of business development Gregory Dwyer with violating the Bank Secrecy Act (BSA). Reed, who served as the exchange’s CTO, was arrested.
In 2022, the platform faced more legal troubles. Prosecutors asked the court to sentence Dwyer to 12 months in prison for violating the BSA.
Cane Done a deal with U.S. authorities and pleaded guilty to violating the BSA. Under the terms of the deal with authorities, he was required to pay a fine of $10 million, the amount the Department of Justice assessed as criminal income he had earned.
Hayes was sentenced to six months of house arrest after pleading guilty, while the maximum penalty for violating the BSA is five years in prison.
Following the lawsuits, the co-founders resigned from their positions at BitMEX and the exchange paid approximately $100 million to the CFTC and the Financial Crimes Enforcement Network (FinCEN). Additionally, the co-founders pleaded guilty to the charges against them and agreed to pay fines of $10 million each.
BitMEX Price Manipulation
In April 2020, a group of users filed a class action lawsuit against Hayes, Reed, and Delo. The plaintiffs accused the entrepreneurs of creating a system that allowed them to receive undue benefits. According to the lawsuit, the exchange co-founders used access to customer accounts and a manipulation scheme to make illicit profits.
In April 2024, Judge Andrew Carter announced that Delo was responsible for designing and implementing the fraudulent scheme.
Other exchanges are also coming under pressure from US authorities
This is not the first time that a cryptocurrency exchange or its executives have been accused of failing to comply with US law. In April, Binance founder and former CEO Changpeng Zhao he was sentenced to four months for failing to follow proper AML protocols. However, the sentence was significantly less than the three years federal prosecutors insisted on. Zhao apologized for his poor decisions and took full responsibility for his actions.
In addition, the court will soon sentence those associated with the activities of the infamous FTX cryptographic platform. According to the latest informationThe court is considering the case of FTX co-founder Gary Wang and the bankrupt company’s former CTO Nishad Singh. They could face decades in prison for their involvement in a multibillion-dollar fraud.
The Department of Finance has rejected the SEC and CFTC’s regulation of cryptocurrencies
At the same time, U.S. Treasury Secretary Janet Yellen previously denied instructing or coordinating the actions of the SEC and CFTC to regulate cryptocurrencies during her testimony before the U.S. House of Representatives Committee on Financial Services.
The Treasury secretary’s remarks come amid an ongoing debate over the role of various regulators in overseeing the burgeoning digital currency industry. Yellen’s comment suggests she did not direct or coordinate the actions of the two regulators.