The Seychelles-based exchange admitted to violating the regulations imposed by the Bank Secrecy Act between September 2015 and September 2020.
On July 10th, the United States Department of Justice (DoJ) announced that HDR Global Trading Limited, which owns and operates the BitMEX exchange, pleaded guilty to violating the Bank Secrecy Act (BSA).
According to DoJ documents, the Seychelles-based exchange failed to establish an adequate program for customer identity verification (KYC) and anti-money laundering (AML) controls between September 2015 and September 2020.
Accusations and details
In September 2020, the Commodity Futures Trading Commission (CFTC) accused BitMEX of offering illegal cryptocurrency derivatives trading services to clients in the United States.
Simultaneously, the DOJ accused co-founders Arthur Hayes, Samuel Reed, Benjamin Delo, and employee Gregory Dwyer of violating the BSA. The four falsified statements to convince an international bank to open an account for the shell company Shine Effort Inc. Limited, controlled by Benjamin Delo. All four have already admitted their guilt to this charge.
Until September 2020, BitMEX allowed customers to register and trade cryptocurrencies without providing identity information or documents, promoting the platform as a place where retail customers could operate by registering only with an email address.
According to U.S. Attorney Damian Williams, BitMEX’s AML/KYC standards were so permissive that the platform became a reference point for money laundering and sanctions violations.
Williams stated:
“As admitted by the founders of BitMEX in federal court, the company operated without an adequate AML/KYC program.”
It seems strange why the charges against BitMEX as a company were filed four years after the same charges were filed against the four executives.
Response from BitMEX
In response to the DoJ, BitMEX reiterated that the accusation of violating the BSA, originally brought up in 2020 and resulting in sentences in 2022, is not new. The company highlighted its efforts to completely rectify its oversight processes since then, stating:
“Our users, partners and regulatory stakeholders have long recognised that BitMEX’s compliance standards and activities have changed immeasurably since the period subject to the BSA charge.”
BitMEX expressed opposition to further fines, citing the substantial amounts already paid by its co-founders and the settlements reached with the Commodity Futures Trading Commission (CFTC) and the Financial Crimes Enforcement Network (FinCEN).
