BitMEX pleads guilty to violating bank secrecy act
On a recent Wednesday, it was unveiled by the U.S. Department of Justice (DOJ) that BitMEX has conceded to breaches of the Bank Secrecy Act (BSA).
Newly released judicial records indicate that from September 2015 to September 2020, the trading platform did not establish sufficient measures for know-your-customer (KYC) and anti-money laundering (AML) procedures.
Throughout the implicated timeframe, the Commodity Futures Trading Commission (CFTC) accused the exchange of unlawfully providing crypto derivative trading options to American clientele. Simultaneously, the DOJ indicted four individuals associated with the exchange for disobeying the BSA.
Damian Williams, the U.S. Attorney, articulated, acknowledged by the founders and a veteran employee of BitMEX in federal court in 2022, the enterprise, a prominent player in the global cryptocurrency derivatives market from 2015 to 2020, engaged in operations on American soil devoid of any substantial anti-money laundering mechanisms, a clear violation of federal statutes.
Williams detailed how BitMEX was leveraged in expansive money laundering and sanctions dodging operations, critically endangering the integrity of the financial landscape.
Similarly, FBI Acting Assistant Director in Charge Christie M. Curtis remarked, BitMEX's choice to enforce minimal user authentication requirements not only constituted a breach of mandatory national anti-money laundering standards aimed at shielding the U.S. financial sectors from corrupt entities and dealings but was a deliberate move to augment its profits.
Established in 2014 by Arthur Hayes, Benjamin Delo, and Samuel Reed, BitMEX welcomed Gregory Dwyer as its inaugural employee who ascended to Head of Business Development in 2015.
The accusations against the trio of founders and Dwyer in 2020, which saw them all conceding guilt earlier, closely mirror the current guilty plea by BitMEX, enveloping the entity's conduct over the aforementioned years.
These proceedings are to be orchestrated by the Illicit Finance and Money Laundering Unit of the U.S. Attorney’s Office, with the firm's founders potentially facing a five-year sentence in prison.
Court filings and declarations disclose that BitMEX, engaging with and enticing business from American traders via U.S. offices, was obligated to register with the CFTC and forge a robust AML framework. Such frameworks are pivotal in safeguarding financial bodies from illicit exploitation.
The records expose that BitMEX’s brass undertook deliberate measures to sidestep U.S. mandates, like AML and KYC requisites, despite cognizance of their necessity. The exchange's requirement for merely an email for customer service access is highlighted.
It also emerged that senior leaders were well informed of the sustained use of BitMEX's trading services by U.S. inhabitants till at least 2018, acknowledging the inefficacy and easy circumvention of policies aimed at preventing such usage.
Moreover, the entity deceived a bank regarding the motive of a subsidiary, enabling the illicit flow of millions through the U.S. financial structure.
