BitMEX Fined $100M for Violating Bank Secrecy Act

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On January 15th, it was disclosed by the U.S. Department of Justice (DOJ) that BitMEX and its overseeing firm, HDR Global Trading Limited, were penalized $100 million for breaking the Bank Secrecy Act (BSA) regulations.

The court determined that the cryptocurrency exchange intentionally neglected to put in place strong enough measures against money laundering (AML) and customer identification (KYC).

BitMEX’s Response

Beyond the penalty, the company was ordered to undergo supervised monitoring for two years. U.S. Attorney Matthew Podolsky underscored the importance of this decision, explaining that it serves as a powerful warning to companies who fail to adhere to Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations, facing serious repercussions if they do so.

The progression of events is due to the company’s admission of guilt for BSA infringements, which occurred in July 2024. This confession came after a lengthy legal dispute. Originally, the company had agreed to a penalty of $110 million, but later faced additional fines imposed by the court.

In a statement, BitMEX acknowledged feeling disappointed about the increased fine, yet emphasized that the imposed penalty was notably less than the $420 million sought by the Department of Justice in the preceding three years.

The company dismissed the accusations as outdated information and felt relieved in settling the issue, demonstrating its determination to progress with an enhanced emphasis on technological advancements and exceptional service delivery. Moreover, it acknowledged its initiatives to fortify regulatory adherence, such as installing sophisticated identity verification tools and establishing robust Anti-Money Laundering (AML) and Know Your Customer (KYC) structures.

Legal Fallout

It was revealed through legal records that BitMEX, established in 2014 by Arthur Hayes, Benjamin Delo, and Samuel Reed, with Gregory Dwyer joining in 2015, deliberately conducted business within the U.S. without the necessary registration or an adequate Anti-Money Laundering (AML) system in place.

Although they knew about the necessary regulations, the company’s leaders found ways around Know Your Customer (KYC) procedures, enabling U.S. traders to use the platform with limited identification checks.

As a crypto investor, I uncovered that this exchange intentionally implemented strategies to bypass U.S. regulations and deceived a banking institution regarding the operations of one of its subsidiaries. The purpose was to route millions of dollars through the financial system, prioritizing profit-making over adherence to regulatory requirements.

This recent court decision is connected to a criminal trial, which comes after individual settlements involving Hayes, Delo, Reed, and Dwyer. Previously, they had all admitted their guilt regarding violations of the Bank Secrecy Act and received sentences in 2022. In addition, these executives were also penalized collectively $30 million in a civil lawsuit filed by the Commodity Futures Trading Commission (CFTC) earlier that same year.

As a crypto investor, I recall when BitMEX consented to a $100 million settlement with the Commodity Futures Trading Commission (CFTC) and the Financial Crimes Enforcement Network (FinCEN) back then. In 2020, Arthur Hayes, who was CEO at that time, stepped down from his position. Later on, he surrendered to U.S. authorities in response to the criminal charges leveled against him.

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2025-01-16 22:26