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BitMEX Pleads Guilty to Bank Secrecy Act Violation in AML Case

BitMEX Pleads Guilty to Bank Secrecy Act Violation in AML Case

Jul 10, 2024

BitMEX Pleads Guilty to Bank Secrecy Act Violation in AML Case

BitMEX has entered a guilty plea to a charge of violating the Bank Secrecy Act (BSA) by failing to establish an "adequate anti-money laundering (AML) program," as announced by the U.S. Attorney for the Southern District of New York. This violation underscores the increasing scrutiny regulators are placing on exchanges to comply with U.S. financial regulations.

According to a press release by Damian Williams, the U.S. Attorney, BitMEX operated in the United States from 2015 to 2020 without a meaningful AML program, which is a requirement under federal law. The lack of such a program "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," says Williams.

BitMEX's legal troubles in the U.S. have been ongoing since at least 2022, with previous legal actions taken against its executives. Greg Dwyer, the exchange's former head of business development, faced a proposal for a 12-month probation sentence for a similar violation, while Arthur Hayes, one of the founders of BitMEX, was sentenced to six months of home detention after pleading guilty to violating the BSA.

The company has agreed to a guilty plea on one count of violating the BSA, with the charge carrying a maximum sentence of five years in prison and a fine. This case is not isolated; other y exchanges, including Binance, have faced penalties for failing to implement adequate AML protocols.

In response to the charge, BitMEX released a statement acknowledging the violation as "old news," referring to charges brought against the founders in 2020 related to the company's operations up to September 2020. BitMEX has accepted the charge and is seeking an expedited sentencing hearing, arguing that no additional fines should be imposed due to substantial amounts already paid by its founders in previous settlements with the Commodity Futures Trading Commission (CFTC) and the Financial Crimes Enforcement Network (FinCEN) in 2021.

BitMEX emphasizes that the charge does not impact its current operations, stating that it has significantly improved its compliance standards and activities since the period in question. The exchange asserts that it has implemented a user verification program and that its KYC and AML programs have been independently audited.

The Block Article

BitMEX Statement

SDNY Press Release


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