BitMEX Admits Guilt in Bank Secrecy Act Violation Read CoinChapter.com on Google News
NAIROBI (CoinChapter.com)— Cryptocurrency exchange BitMEX admitted guilty of violating the Bank Secrecy Act (BSA) by operating without a meaningful Anti-Money Laundering (AML) program. The US Department of Justice announced this development on July 10.
BitMEX’s Flawed AML Protocols Exposed
US Attorney Damian Williams stated that BitMEX failed to establish and maintain an adequate AML program from 2015 to 2020. The violation surfaced during the 2022 criminal proceedings against BitMEX founders Arthur Hayes, Benjamin Delo, and Samuel Reed.
Williams emphasized that BitMEX’s lack of compliance opened the platform to large-scale money laundering and sanctions evasion, posing a significant threat to the financial system’s integrity.
BitMEX co-founder could face a class action lawsuit.
Williams pointed out that BitMEX facilitated large-scale money laundering and sanctions evasion. He emphasized that today’s guilty plea underscores the necessity for cryptocurrency companies to comply with U.S. law if they operate in the U.S. market.
FBI Acting Assistant Director Christie M. Curtis emphasized that BitMEX’s lax approach to service access credentials and AML procedures aimed to increase revenue while knowingly exposing the US financial system to illicit activities.
Founders’ Legal Troubles and Wider Industry Impact
BitMEX, incorporated as HDR Global Trading Limited in the Republic of Seychelles, admitted to “flouting” AML requirements. The exchange failed to implement an AML program with Know Your Customer standards, merely asking users for an email address.
The practice was a clear violation of federal law, impacting US-based users.
BitMEX faces charges for Bank Secrecy Act violations. Source: US Justice Department
The company’s founders were aware of these violations, leading to severe legal consequences. Those responsible could face up to five years in prison and substantial fines.
In 2022, a court mandated Hayes, Delo, and Reed to pay a combined $30 million civil penalty following a case by the US Commodity Futures Trading Commission. The founders received probation after pleading guilty to AML requirement violations under the BSA.
However, the BitMEX case adds to the ongoing scrutiny of cryptocurrency exchanges. US courts are preparing to sentence individuals connected to the defunct exchanges FTX and Alameda Research.
Judge Lewis Kaplan in the Southern District of New York will start sentencing FTX co-founder Gary Wang and former engineering director Nishad Singh in October. Former CEO Sam Bankman-Fried received a 25-year sentence following his trial and conviction.
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