BitMEX to pay $100m to settle US regulators’ claims

The BitMEX cryptocurrency derivatives exchange has settled a civil dispute with the U.S. Commodity Futures Trading Commission (CFTC) and the Financial Crimes Enforcement Network (FinCEN). The company agreed to pay a $100 million fine.

Our CEO @AlexHoeptner writes on the resolution of our case with the CFTC and FinCEN, and what’s next for BitMEX: https://t.co/tus51OD7Mm pic.twitter.com/bP93DfzT9T

— BitMEX (@BitMEX) August 10, 2021

According to FinCEN, BitMEX did not implement or maintain anti-money laundering and customer-verification programs for more than six years.

According to the regulator, the exchange conducted transactions totalling not less than $209 million with known darknet markets and unregistered money services providing mixing services. BitMEX also conducted transactions involving high-risk jurisdictions and alleged fraudulent schemes. In at least 588 cases the exchange failed to file suspicious activity reports (SARs).

FinCEN found that BitMEX’s representations that it did not have US-based customers did not reflect reality. In addition, in some cases the exchange’s management falsified information about such users to conceal their actual location.

In addition to paying the penalties, BitMEX agreed to hire an independent consultant to conduct a retrospective analysis of its transaction data. As part of this, it will be determined whether the exchange should file additional Suspicious Activity Reports (SAR) for this activity.

BitMEX will also undergo two independent reviews to confirm the existence of appropriate policies, procedures and controls ensuring that the exchange does not operate in the United States.

From the penalty imposed by the regulator, the company must immediately pay $80 million. The remaining $20 million is suspended pending the successful completion of the SAR analysis and checks.

In October 2020, the CFTC filed a lawsuit against BitMEX and its founders. The Commission accused them of operating an unregistered trading platform and violating CFTC rules on KYC/AML procedures.

Additionally, the Department of Justice charged BitMEX co-founders Arthur Hayes, Ben Delo and Samuel Reed, as well as the exchange’s head of business development Greg Dwyer, with violations of the U.S. Bank Secrecy Act.

Reed was arrested in the United States and was released on bail of $5 million. bail of $20 million was posted in March 2021. Hayes surrendered to U.S. authorities in April; his bail amount was $10 million.

The criminal charges against them remain in force, and a New York court has scheduled a preliminary hearing for 28 March 2022.

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