Crypto Exchange BitMEX Pleads Guilty to Violating the Bank Secrecy Act From 2015 to 2020

BitMEX has pleaded guilty to violating the Bank Secrecy Act (BSA), according to a Wednesday announcement from the U.S. Department of Justice (DOJ).

According to newly published court documents, the Seychelles-based crypto exchange willfully failed to set up an adequate know-your-customer (KYC) and anti-money laundering (AML) program at the exchange between September 2015 and September 2020, when the Commodity Futures Trading Commission (CFTC) charged the exchange with offering illicit crypto derivative trading services to U.S. customers and the DOJ charged four of the exchange’s employees with violating the BSA.

Until September 2020, BitMEX allowed customers to register and trade cryptocurrency basically anonymously, without providing any identifying information or documentation, and advertised itself as a place where retail customers could trade without real-name verification, the DOJ alleged. Because of the lax AML/KYC standards, prosecutors say, BitMEX became a destination for money laundering and sanctions violations.

Additionally, according to court documents, the company and its executives made false statements to an unnamed international bank to convince the bank to open a bank account for a shell company called Shine Effort Inc. Limited, ultimately controlled by Delo, for which BitMEX was the beneficial owner.

“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,” said U.S. Attorney Damian Williams in a DOJ press release. “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. Today’s guilty plea indicates again the need for cryptocurrency companies to comply with U.S. law if they take advantage of the U.S. market.”

The 2020 charges against BitMEX’s three co-founders Arthur Hayes, Samuel Reed and Benjamin Delo – and its first employee, Gregory Dwyer – are nearly identical to the charge BitMEX pleaded guilty to, and concern the company’s actions over the same time period. The executives all previously pleaded guilty as well.

In a blog post, BitMEX called the charge "old news" and said: "BitMEX has long since fully remediated its operations, and there is nothing new in this charge. We have accepted the BSA charge, will seek an expedited sentencing hearing, and argue that no further fine should be imposed, given the substantial amounts already paid by our founders under the BSA charges brought against them, and under our no admission/no denial settlements with the CFTC and FinCEN in 2021."

"Needless to say, this charge has no impact on our business operations. The BitMEX platform will continue to lead the market as the safest, most trusted, financially-stable, and professionally operated crypto derivatives exchange, employing new products and innovations month by month to many satisfied users," the post said.

A DOJ spokesperson declined to comment on why the charges against BitMEX as a company were filed four years after the same charges were filed against four of its executives.

BitMEX has not yet been sentenced. The case is being overseen by U.S. District Judge John G. Koeltl of the Southern District of New York (SDNY).

UPDATE (July 11, 2024 at 13:45 UTC): Adds comment from BitMEX and adds clarifying language.