BitMEX’s Admission of Guilt for Regulatory Failures
Recently, the U.S. Department of Justice (DOJ) disclosed that BitMEX has acknowledged violating the Bank Secrecy Act by not having a robust know-your-customer (KYC) and anti-money laundering (AML) program between September 2015 and September 2020.
Indictment Details
- During this timeframe, the Commodity Futures Trading Commission (CFTC) accused BitMEX of providing U.S. clients with unauthorized cryptocurrency derivative trading services.
- The DOJ also brought charges against four BitMEX employees for flouting the BSA regulations.
According to U.S. Attorney Damian Williams, BitMEX’s leaders admitted that the platform functioned in the U.S. without a sufficient AML program, making it a hub for money laundering and sanctions evasion.
The FBI has pointed out that BitMEX knowingly neglected anti-money laundering requirements to boost its profits, thereby endangering the integrity of the financial system.
Company Background
- Established in 2014 by Arthur Hayes, Benjamin Delo, and Samuel Reed, BitMEX saw Gregory Dwyer join as the first staff member, eventually rising to Head of Business Development in 2015.
- The charges pressed against the co-founders and Dwyer in 2020 are similar to the recent regulatory breach, encompassing their activities from 2015 to 2020.
BitMEX’s co-founders could face up to five years in prison as the Illicit Finance and Money Laundering Unit of the U.S. Attorney’s Office leads the prosecution.
Failure to Adhere to Regulatory Requirements
Official reports and statements reveal that BitMEX, which targeted U.S. traders and had U.S. offices, disregarded the necessity to register with the CFTC and implement an effective AML program to combat illegal exploitation.
BitMEX’s executives consciously evaded U.S. laws by not enforcing AML and KYC measures despite knowing the importance, only mandating an email address for account access.
- Executives were aware of U.S. residents using the platform until 2018, with inadequate policies in place to prevent such activities.
- The company even deceived a bank about a subsidiary’s purpose, enabling millions of dollars to flow through the U.S. financial system.
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