BitMEX Pleads Guilty to Bank Secrecy Act Violation, Faces Potential Penalties
Cryptocurrency derivatives exchange BitMEX has pleaded guilty to violating the Bank Secrecy Act (BSA) by willfully failing to establish and maintain an adequate anti-money laundering (AML) program from 2015 to 2020. The U.S. Department of Justice (DOJ) announced the plea on July 10, 2024, marking another chapter in the exchange’s ongoing legal troubles.
According to U.S. Attorney Damian Williams, BitMEX operated in the United States without implementing meaningful AML protocols, despite being required to do so under federal law. This lax approach to compliance allegedly allowed the platform to become a vehicle for large-scale money laundering and sanctions evasion, posing a significant threat to the integrity of the financial system.
The exchange, founded in 2014, reportedly allowed users to access its services with minimal verification, requiring only an email address. This practice continued even as executives, including founders Arthur Hayes, Benjamin Delo, and Samuel Reed, were aware that U.S. customers were using the platform in violation of federal regulations.
Violation of the Bank Secrecy Act carries a a maximum sentence of five years in prison and a potential fine, with the case assigned to U.S. District Judge John G. Koeltl. However, in a statement following the announcement, BitMEX characterized the charge as “old news,” referring to similar charges brought against its founders in 2020.
The company stated that it has “long since fully remediated its operations” and plans to seek an expedited sentencing hearing. BitMEX argues that no further fines should be imposed, given the substantial amounts already paid by its founders under previous BSA charges and settlements with the Commodity Futures Trading Commission (CFTC) and Financial Crimes Enforcement Network (FinCEN) in 2021.
This guilty plea follows a series of legal actions against BitMEX and its leadership. In 2022, Hayes, Delo, and Reed pleaded guilty to similar criminal charges and received probation sentences. The CFTC had previously ordered the company to pay $100 million in penalties for operating an unregistered trading platform and violating AML regulations.
BitMEX maintains that the charge will not impact its current business operations and that it has since implemented robust know-your-customer (KYC) and AML programs, which have been independently audited. The exchange aims to continue operating as a leading crypto derivatives platform, emphasizing its commitment to compliance and user satisfaction.
