Crypto Exchange BitMEX Pleads Guilty to Violating Bank Secrecy Act

On Wednesday, the U.S. Department of Justice (DOJ) announced that BitMEX has pleaded guilty to violating the Bank Secrecy Act (BSA).

According to newly published court documents, the exchange failed to implement an adequate know-your-customer (KYC) and anti-money laundering (AML) program from September 2015 to September 2020.

BitMEX’s Guilty Plea

During this period, the Commodity Futures Trading Commission (CFTC) charged the platform with offering U.S. customers illicit crypto derivative trading services. Additionally, the DOJ charged four of the exchange’s employees with violating the BSA.

U.S. Attorney Damian Williams stated, “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.”

Williams explained that this made BitMEX a tool for large-scale money laundering and sanctions evasion schemes, which posed a severe threat to the financial system’s integrity.

In the same sentiment, FBI Acting Assistant Director in Charge Christie M. Curtis stated, “By only mandating lax service access credentials, BitMEX not only failed to comply with nationally required anti-money laundering procedures designed to protect the US financial markets from illicit actors and transactions, but knowingly did so to increase the business’s revenue.”

BitMEX was founded in 2014 by Arthur Hayes, Benjamin Delo, and Samuel Reed. Gregory Dwyer joined as the first employee and later became Head of Business Development in 2015.

The charges brought against the three co-founders and Dwyer in 2020, which they all previously pleaded guilty to, are almost identical to the charge BitMEX has now pleaded guilty to and involve the company’s activities over the same time period.

The prosecution will be managed by the U.S. Attorney’s Office’s Illicit Finance and Money Laundering Unit, with the company’s co-founders facing a potential five-year prison sentence.

Regulatory Violations

According to court documents and statements, BitMEX, which serviced and solicited business from U.S. traders and operated through U.S. offices, was required to register with the CFTC and establish an adequate AML program. Such programs are essential to prevent financial institutions from being exploited illegally.

The court documents reveal that BitMEX’s executives took specific actions to avoid applying U.S. laws, such as AML and KYC requirements, despite knowing they were necessary. The company required only an email address for customers to access its services.

Senior executives were also fully aware that U.S. residents continued using BitMEX’s trading platform until at least 2018 and that the existing policies to prevent such trading were ineffective and easily bypassed.

The company also misled a bank about a subsidiary’s purpose, facilitating the transfer of millions of dollars through the U.S. financial system.