On Wednesday, the U. S. Department of Justice (DOJ) stated that the cryptocurrency exchange platform BitMEX has agreed to a plea of guilty to flouting the Bank Secrecy Act (BSA).
The Seychelles-based exchange has agreed to the settlement findings. They knowingly did not maintain an adequate KYC/AML program from September 2015 to September 2020.
Global cryptocurrency exchange BitMEX pleads guilty to Bank Secrecy Act offense@NewYorkFBI https://t.co/atA1YhRwrO
— US Attorney SDNY (@SDNYnews) July 10, 2024
At that time, BitMEX permitted users to open accounts and trade without submitting their identification details, thus facilitating money laundering and sanctions evasion.
What are BitMEX’s Legal Proceedings?
In September 2020, the US Commodity Futures Trading Commission (CFTC) accused BitMEX of providing unlawful crypto derivatives to US clients.
At the same time, the DOJ accused four of BitMEX’s executives, including co-founders Arthur Hayes, Samuel Reed, Benjamin Delo, and the first employee of the exchange, Gregory Dwyer, of violating the BSA.
These executives had entered a plea bargain earlier in the same year, 2022, and were released with probation.
BitMEX’s lack of AST/KYC procedures allowed it to become a hub for money laundering and sanctions-busting, thus threatening the financial system. Apart from the BSA violation, BitMEX also admitted to providing false information to a foreign bank to open an account for a shell company.
The company named Shine Effort Inc. Limited, controlled by Delo, with BitMEX as the beneficial owner.
Sentencing and Statements from Officials
In the announcement, U.S. Attorney Damian Williams underlined that the BitMEX actions are especially grave. He recalled that any cryptocurrency businesses operating in the U. S. market must adhere to the law.
FBI Acting Assistant Director in Charge Christie M. Curtis also had similar sentiments, saying that BitMEX was fully aware that it was flouting the regulations to make more profits.
The case is currently hear by the U.S. District Judge John G. Koeltl of the Southern District of New York. BitMEX has not yet sentence, but the organization and its officials may be imprisone for up to five years and fined heavily.
BitMEX’s Historical Context and Implications
BitMEX, registered in the Republic of Seychelles, has been providing services and accepting users from the United States for a long time. However, the company management decided to ignore US laws by only asking for email addresses for account creation and avoiding the AML and KYC processes.
In this regard, the executives knew that, despite the measures that were put in place, the U. S. clients were still using the BitMEX trading platform.
In this case, the cryptocurrency industry learns the importance of compliance with AML and KYC measures in exchanges.
The actions by the DOJ and the FBI present a strong message on enforcement of the US financial laws and penalizing those who seek to defraud the laws for their selfish gains.
Such a guilty plea by BitMEX is in line with the increasing actions by the US authorities to go after non-compliant crypto exchanges.
This comes after other prominent cases like the ones involving individuals affiliated with the bankrupt cryptocurrency exchange FTX and trading firm Alameda Research.
