Crypto Exchange BitMEX Pleads Guilty to Violating the Bank Secrecy Act From 2015 to 2020

Newly revealed court records accuse a Seychelles-based cryptocurrency exchange of intentionally neglecting to establish proper know-your-customer (KYC) and anti-money laundering (AML) protocols from September 2015 to September 2020. During this period, the Commodity Futures Trading Commission (CFTC) accused the exchange of illegally providing crypto derivative trading services to American clients, while the Department of Justice (DOJ) indicted four of its employees for breaking the Bank Secrecy Act (BSA).

As a researcher investigating the cryptocurrency exchange platform, BitMEX, I’ve discovered that until September 2020, the company allowed customers to register and trade anonymously without providing any identifying information or documentation. The platform marketed itself as a venue where retail traders could transact without undergoing real-name verification. However, according to the Department of Justice (DOJ), these lenient Anti-Money Laundering (AML) and Know Your Customer (KYC) practices made BitMEX an attractive hub for money laundering activities and violations of economic sanctions.

BitMEX’s founders and former employees acknowledged in a federal court hearing in 2022 that their company, which was among the world’s top cryptocurrency derivatives platforms from 2015 to 2020, had no effective anti-money laundering measures in place as mandated by US law. Consequently, BitMEX became a prime tool for large-scale money laundering and evasion of sanctions, endangering the financial system’s stability. The recent guilty plea serves as another reminder that cryptocurrency firms must abide by US regulations if they wish to tap into the American market.

The charges filed against Arthur Hayes, Samuel Reed, Benjamin Delo, and Gregory Dwyer of BitMEX in 2020 are very similar to the charge BitMEX admitted to, covering the same time frame. Each of the executives also previously confessed to their involvement.

As a researcher investigating the case of BitMEX, I’ve discovered that the cryptocurrency trading platform admitted to providing false information to an international bank in breach of the Bank Secrecy Act (BSA). The documents filed in court allege that BitMEX and its executives deceived the bank by making misleading statements regarding a shell company named Shine Effort Inc. Limited, which was actually controlled by BitMEX and owned by Delo. I’m currently examining the details of this case to gain a deeper understanding of its implications.

As a researcher, I’ve come across an intriguing development in the legal proceedings against BitMEX. While charges were brought against four of the company’s executives back in 2019, it wasn’t until this year that the DOJ decided to file charges against BitMEX as a entity. A spokesperson for the Department of Justice has remained silent on the reason behind this delay.

The case concerning BitMEX is still under consideration by U.S. District Judge John G. Koeltl of the Southern District of New York (SDNY). No verdict has been reached against BitMEX as of now.

A representative for BitMEX did not respond to CoinDesk’s request for comment.