BitMEX admits to not establishing anti-laundering rules per Bank Secrecy Act

BitMEX founders faced penalties for ignoring AML laws, compromising U.S. financial integrity from 2015-2020.
Despite past settlements, BitMEX plead guilty to BSA violations, highlighting persistent AML compliance issues.

As a seasoned researcher with extensive experience in financial crimes and regulatory compliance, I find the recent guilty plea by BitMEX to violating the Bank Secrecy Act (BSA) deeply concerning. The case, which is being overseen by U.S. District Judge John G. Koeltl, highlights the persistent AML compliance issues that plagued BitMEX from 2015 to 2020.

BitMEX has admitted in court, before Judge John G. Koeltl, to breaching the Bank Secrecy Act (BSA) by not setting up an effective anti-money laundering (AML) system.

From 2015 to 2020, BitMEX functioned without a robust anti-money laundering (AML) regime in place according to federal prosecutors.

Damian Williams, the U.S. Attorney, pointed out that BitMEX’s conduct posed a significant risk to the financial system by facilitating money laundering and violations of sanctions, potentially undermining its stability.

The Assistant Director for Acting Compliance at BitMEX, Christie M. Curtis, underscored that the company deliberately ignored anti-money laundering (AML) protocols in order to boost their income, consequently putting U.S. financial markets at risk from illicit transactions.

The creators of BitMEX – Arthur Hayes, Benjamin Delo, Samuel Reed, and initial employee Gregory Dwyer – were discovered to have deliberately disregarded the Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations.

To gain access to their service, all that was needed was an email address from U.S. clients, while they faithfully catered to American customers notwithstanding any regulatory demands.

Prosecutors revealed that BitMEX executives took deliberate steps to circumvent U.S. laws.

U.S. traders were given permission to use their platform, while they deceived a bank regarding the true intention of a subsidiary, which was to route large sums of money through the American financial system.

Previous legal actions and BitMEX’s response

I analyzed the situation and found that in 2021, BitMEX had faced previous legal actions leading up to their guilty plea. During that time, they entered into settlements with US regulatory bodies, admitting to wrongdoing and agreeing to pay a penalty of $100 million.

In 2022, the three founders pleaded guilty to U.S. charges, each agreeing to a $10 million fine.

BitMEX referred to the latest charge as “old news” on their social media platform X, stating,

“The identical accusation levied against our company leaders in 2020 pertains to BitMEX’s activities prior to September of that year.”

The firm admitted that it has accepted the BSA charge.

Additionally, we’ll request a swift trial on the sentencing and contend that no additional penalties should be imposed since the company’s founders have previously paid significant fines as part of earlier resolutions.

The exchange emphasized that its compliance standards have improved since the period at issue.

Prosecutors pointed out that BitMEX, headquartered in the Seychelles, accepted American customers to increase profits yet failed to comply with U.S. regulations meant to safeguard the financial system against misuse.

As a crypto investor, I’d put it this way: BitMEX was established back in 2014. However, they claimed to have left the US market in 2015. But unfortunately, their efforts to keep American residents away from the platform were not strong enough.

Executives continued to promote the exchange at conferences in the U.S.

A representative for prosecutors revealed that one of the founders of BitMEX purchased a company in Hong Kong specifically for handling US dollar transactions. However, they deceived a local bank in Hong Kong about the real intent behind this business.

This misconduct continued until 2020.

U.S. Attorney Damian Williams stated,

A confessed wrongdoing today highlights once more the importance of cryptocurrency businesses adhering to American legal regulations should they seek to profit from the US market.

2024-07-15 14:47

Previous legal actions and BitMEX’s response

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