BitMEX Admits Guilt in Bank Secrecy Act Violation Case

The Bank Secrecy Act (BSA) violation was admitted by BitMEX, a cryptocurrency exchange situated in the Seychelles, according to a statement released by the U.S. Department of Justice (DOJ) on Wednesday. An important turning point in the current investigation into cryptocurrency exchanges and their regulatory compliance has been reached with this admission.

BitMEX failed to set up adequate anti-money laundering (AML) and know-your-customer (KYC) procedures between September 2015 and September 2020. BitMEX was accused by the Commodities Futures Trading Commission (CFTC) of providing U.S. consumers with illicit cryptocurrency derivative trading services during this time. The DOJ accused four BitMEX workers of violating the BSA at the same time.

BitMEX allowed users to register and trade cryptocurrencies anonymously, without requiring identification. The DOJ alleged that this lack of robust AML/KYC standards made BitMEX a hotspot for money laundering and sanctions evasion.

Legal Consequences and Admissions

U.S. Attorney Damian Williams highlighted the severity of BitMEX’s actions: “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. As a result, BitMEX opened itself up as a vehicle for large-scale money laundering and sanctions evasion schemes, posing a serious threat to the integrity of the financial system.”

In addition to the BSA violation, BitMEX also pleaded guilty to making false statements to a foreign bank. The court documents revealed that the company misled an international bank to secure an account for Shine Effort Inc. Limited, a shell company controlled by co-founder Benjamin Delo.

BitMEX’s three co-founders, Arthur Hayes, Samuel Reed, and Benjamin Delo, along with its first employee, Gregory Dwyer, had previously pleaded guilty to similar charges. The charges against BitMEX as a company echo those against its executives and concern the same time period.

Although the company has pleaded guilty, it has not yet been sentenced. The case is under the jurisdiction of U.S. District Judge John G. Koeltl of the Southern District of New York (SDNY). A spokesperson for the DOJ declined to explain why the company’s charges were filed four years after the executives’ charges.