The US Attorney’s Office for the Southern District of New York released a statement on Thursday, February 24^th, 2022, that two founders of BitMEX would plead guilty to violating the Bank Secrecy Act (BSA) and failing to maintain anti-money laundering programs at their BitMEX cryptocurrency exchange.  The founders have agreed to pay a $10 million fine for their alleged criminal activity and to disgorge gain derived from the activity.

U.S. Attorney Damian Williams:

“As cryptocurrencies and technologies designed to facilitate their trade proliferate, companies engaged in the virtual currency economy have become critical gatekeepers in efforts to ensure that U.S. markets are fair, efficient, and secure. The opportunities and advantages of operating in the United States are legion, but they carry with them the obligation for those businesses to do their part to help in driving out crime and corruption.  Arthur Hayes and Benjamin Delo built a company designed to flout those obligations; they willfully failed to implement and maintain even basic anti-money laundering policies.  They allowed BitMEX to operate as a platform in the shadows of the financial markets. Today’s guilty pleas reflect this Office’s continued commitment to the investigation and prosecution of money laundering in the cryptocurrency sector.”

BitMEX Crypotcurrency Exchange an Alleged Money Laundering Platform

The founders of BitMEX, from 2015 to 2020, are alleged by the New York US Attorneys to have ignored anti-money laundering laws, failed to set up any required anti-money laundering programs, and failed to implement know your customer (KYC) programs.  As a result they are alleged to have created “in effect, a money laundering platform”.

The government provides examples in their latest press release, including an allegation the founders knew in 2018 their platform was laundering property gained through a cryptocurrency hack but did not act, and did not file a suspicious activity report.  The government noted that BitMEX failed to file any suspicious activity reports from 2014 through 2020.

The government further alleges that BitMEX’s lack of anti-money laundering or KYC programs allowed it to function as an escape for sanctions.  The government alleged that the founders knowingly interacted with customers who self-identified as located in sanctioned jurisdictions, but the exchange continued to serve these customers.

Finally, the government alleged BitMEX founders knowingly serviced United States customers despite claiming to not do so.  BitMEX continued to service US customers and actively marketed to new US potential customers through “influencers”.

The two founders each pled guilty to one count of violating the Bank Secrecy Act.

BItMEX $100 Million CTFC Penalty

BitMEX companies were previously hit with a $100 million penalty by the Commodity Futures Trading Commission (CFTC), in August 2021, for failing to implement anti-money laundering and KYC programs. The companies included in the penalty were HDR Global Trading Limited, HDR Global Services (Bermuda) Limited, ABS Global Trading Limited, Shine Effort Inc Limited, and 100x Holding Limited.

Director of Enforcement Vincent McGonagle:

“This action highlights that the registration requirements and core consumer protections Congress established for our traditional derivatives market apply equally in the growing digital asset market. Cryptocurrency trading platforms conducting business in the U.S. must obtain the appropriate registration, and must implement robust Know-Your-Customer and Anti-Money Laundering procedures.”

Cryptocurrency Law Firm

Schneider Wallace represents customers affected by cryptocurrency fraud or misconduct, including representing purchaser of Tether regarding conspiracy to manipulate crypto markets.