BitMEX Pleads Guilty to Bank Secrecy Act Violations in Major AML Case

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by Mayowa Adebajo · 3 min read
BitMEX Pleads Guilty to Bank Secrecy Act Violations in Major AML Case
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From 2015 to 2020 or thereabout, BitMEX operated in the United States without taking cognisance of federal regulations designed to prevent money laundering.

A recent statement from the US Attorney for the Southern District of New York, Damian Williams, has revealed that BitMEX may have just pled guilty to violating the Bank Secrecy Act (BSA). The plea comes as a result of BitMEX’s legal battle with the US authorities and has seen the exchange admit to willfully failing to establish, implement, and maintain an adequate anti-money laundering (AML) program.

According to Williams, BitMEX’s lack of care made it not put a meaningful AML program in place. This meant that, for a period of five years (from 2015 to 2020) or thereabout, the platform operated in the United States without taking cognisance of federal regulations designed to prevent money laundering.

BitMEX Admits to Lapses in AML Measures

BitMEX first began having legal issues in 2022. It was the year that Arthur Hayes, one of BitMEX’s founders, received a six-month home detention sentence after pleading guilty to BSA charges. Later the same year, the company’s former head of business development, Greg Dwyer, also faced consequences. Dwyer was handed 12 months of probation for similar charges.

According to attorney Williams, BitMEX undid itself with its lackadaisical attitude, making itself a go-to platform for large-scale money laundering and sanctions evasion schemes. While this was detrimental to the exchange itself, Williams also noted that BitMEX’s operations also posed a serious threat to the integrity of the financial system at large.

Without a doubt, this guilty plea from BitMEX gives an account of the necessity for crypto firms to comply with US laws by all means. That is, if they wish to benefit from the lucrative American market. Williams stressed the importance of adherence to legal standards to protect the financial system’s integrity and prevent misuse of crypto platforms.

Brief History of Platform

Founded in 2014, BitMEX quickly found relevance, servicing, and soliciting business from the US traders and operating through the U.S. offices. Despite its notable presence in the US market, however, the exchange neglected its obligation to register with the Commodity Futures Trading Commission (CFTC) and to establish a robust AML program. The guilty plea involves one count of violating the BSA and carries a maximum sentence of five years in prison and a fine.

For what it might be worth, though, BitMEX’s case is not exactly an isolated one as it is relatively common, even in other prominent crypto platforms. For context, the former head of Binance, Changpeng Zhao, recently bagged a four-month federal prison term sentence for similar AML lapses. Zhao’s guilty plea in late 2023 for failing to implement appropriate AML protocols at Binance bears a strong semblance to the regulatory challenges that BitMEX currently has on its hands.

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