The Department of Justice (DOJ) announced on July 10 that HDR Global Trading Limited, known as the crypto exchange BitMEX, has pleaded guilty to violating the Bank Secrecy Act (BSA).
The DOJ alleged that BitMEX operated without adequate anti-money laundering (AML) program. BitMEX’s founders, Arthur Hayes, Benjamin Delo, Samuel Reed, and the first employee, Gregory Dwyer, faced the allegations.
BitMEX Responds to the DOJ’s Charges
Despite operating in the US and serving its customers, BitMEX only required an email address for access, ignoring the “know your customer” (KYC) requirements. According to the DOJ, this negligence facilitated illicit activities through the platform.
The US Attorney for the Southern District of New York, Damian Williams, emphasized the gravity of the offense. He stated that the exchange’s actions posed a considerable threat to the financial system’s integrity.
“As BitMEX’s founders admitted in federal court, the company operated without a meaningful AML program, opening itself up to money laundering and sanctions evasion schemes,” Williams said.
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Additionally, FBI Acting Assistant Director in Charge Christie M. Curtis noted that profit motives drove the exchange’s lax service access credentials and intentional non-compliance.
“Today’s plea represents the FBI’s steadfast dedication to ensuring adherence to all US financial laws, protecting the US financial system, and holding accountable those who attempt to establish a workaround for profits,” Curtis stated.
In response to the DOJ’s announcement, BitMEX responded by saying that the BSA charge, previously brought against its founders in 2020 and sentenced in 2022, is not new. The company emphasizes that it has since fully remediated its operations.
“Our users, partners, and regulatory stakeholders recognize that our compliance standards have changed immeasurably since the period subject to the BSA charge,” BitMEX’s official statement reads.
BitMEX argues that no further fines should be imposed due to the substantial amounts already paid by its founders and through settlements with the CFTC and FinCEN. The company also noted that these charges would not impact its business operations. It reaffirms its commitment to maintaining the highest safety, trust, and financial stability standards.
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The BitMEX case reflects broader regulatory scrutiny on the crypto industry. Other major exchanges, such as Binance, have faced similar penalties.
Binance’s founder and former CEO, Changpeng Zhao, was recently sentenced to four months in federal prison for failing to implement appropriate AML protocols. The US courts are also getting ready to sentence individuals linked to the defunct crypto exchange FTX.
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