BitMEX, the global cryptocurrency exchange, has been hit with a $100 million penalty for breaching the Bank Secrecy Act by neglecting anti-money laundering (AML) laws and know-your-customer (KYC) procedures. The United States Attorney’s Office for the Southern District of New York released a statement highlighting the company's willful failure to implement an effective AML/KYC program. "Anti-money laundering and know-your-customer rules protect Americans from fraud, combat money laundering, and prevent the financing of terrorist activity," said U.S. Acting Attorney Matthew Podolsky. Podolsky emphasized the importance of financial institutions, including cryptocurrency exchanges, adhering to these protective measures to safeguard the economy and national security.
The founding trio of BitMEX—Arthur Hayes, Benjamin Delo, Samuel Reed—and their first employee, Gregory Dwyer, all pleaded guilty in 2022 to violating the act, evidenced in court filings and statements. The platform, known for servicing U.S. traders since 2014, was mandated to maintain an AML program and register with the Commodity Futures Trading Commission (CFTC). BitMEX chose to disregard these requirements, allowing customers to use services with merely an email address, and continued to allow U.S. customers to access its platform, according to a report by the U.S. Attorney’s Office.
The investigation revealed that BitMEX executives not only knew of their legal obligations but also took deliberate steps to evade U.S. laws. They were accused of lying to a bank regarding the nature of a subsidiary, facilitating the funneling of millions of dollars through the U.S. financial system. The fine and the admission of guilt by BitMEX's corporate entity come as the conclusion of an investigation praising the efforts of the Federal Bureau of Investigation’s New York Money Laundering Investigation Squad.
In the wake of the sentencing, in addition to the hefty fine, BitMEX also received two years' probation. Assistant U.S. Attorneys Jessica Greenwood and Thane Rehn, of the Office's Illicit Finance & Money Laundering Unit, handled the prosecution. This outcome sends a stark reminder to the cryptocurrency industry of the legal repercussions facing entities that seek profit over compliance with regulations designed to shield the integrity of the financial system from illicit activities.
