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BitMex Admits to Violating Bank Secrecy Act and AML Negligence–Will Executives Face Charges?

Published 6 days ago
Teuta Franjkovic
Published 6 days ago
By Teuta Franjkovic
Verified by Insha Zia

Key Takeaways

  • BitMEX admitted to violating US AML laws.
  • This admission is the latest in a series of legal challenges for the exchange.
  • Previously, BitMEX settled with regulators for $100 million, and its founders faced individual charges and fines.
  • As BitMEX seeks leniency in sentencing, the case highlights the critical importance of AML/KYC compliance for crypto companies operating in the US.

Crypto exchange BitMEX has admitted in a Manhattan Federal court to violating Anti-Money Laundering (AML) and Know-Your-Customer (KYC) regulations, despite clear guidelines under the Bank Secrecy Act, while continuing to conduct business with US-based customers.

The admission of guilt could mark the resolution of its legal battles dating back to 2021. 

BitMEX, “A Hub For Extensive Money Laundering,” US Attorney

Damian Williams, the United States Attorney for the Southern District of New York, announced that the exchange implemented only minimal verification procedures and remained negligent of the regulations.

According to  US Attorney Damian Williams:

“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 pointed out  that BitMEX’s lax practices turned the exchange into a hub for extensive money laundering and sanctions evasion. He highlighted that users could use the crypto exchange’s services simply by providing an email address. 

According to the Department of Justice, the exchange’s leaders, including founders Arthur Hayes, Benjamin Delo, Samuel Reed, and early employee Gregory Dwyer, reportedly prioritized profits over regulatory compliance.

Williams emphasized that the guilty plea reaffirms the necessity for cryptocurrency companies to adhere to US law when operating within the US market.

BitMEX Downplays Revived Charge, Seeks Leniency in Sentencing

BitMEX dismissed the latest charges  as old news, asserting that it mirrors the 2020 allegations brought by the Commodity Futures Trading Commission (CFTC) against its founders, to which BitMEX had already pleaded guilty. 

The exchange is now pushing for an expedited sentencing hearing to avoid additional fines by emphasizing the hefty penalties already paid by its founders and in previous settlements. BitMEX also noted that its compliance standards have since improved from the period addressed by the charge.

BitMEX told CCN:

Since its inception, BitMEX has continuously invested in its compliance program and adopted industry best practices to secure customer assets as regulations evolve.”

The exchange also asserted its commitment to complying with AML and Counter-Financing of Terrorism, reiterating that it’s adhering to international best practices, “even in areas where regulations are absent or still developing.” The company emphasized that it is actively working with global regulators, including the Financial Action Task Force, as part of its ongoing efforts

A Legal Odyssey Since 2020

BitMEX’s legal woes in the US date back several years. In 2020, the CTFC charged founders Arthur Hayes , Ben Delo, and Samuel Reed with similar violations of the Bank Secrecy Act by negligently performing AML and KYC checks. 

By 2022, BitMEX had reached a $100 million settlement with US regulators and saw its founders plead guilty to charges, each paying $10 million in fines. In the same year, executives from the crypto exchange, such as Greg Dwyer, the company’s former head of business development, also served sentences.

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