The BitMEX exchange deliberately failed to develop, implement, and maintain an adequate anti-money laundering (AML) program as required by federal law. This was stated in a statement by the U.S. Attorney for the Southern District of New York.
From 2015 to 2020, BitMEX was one of the leading cryptocurrency derivatives platforms.
“The platform became a tool for large-scale money laundering and sanctions evasion schemes, posing a serious threat to the integrity of the financial system. The admission of guilt once again highlights the necessity for cryptocurrency companies to comply with U.S. laws if they wish to benefit from the American market,” the statement reads.
The prosecutor explained that BitMEX, founded in 2014, “for a long time served and attracted American traders, and also operated through local offices, was required to register with the CFTC, and to create and maintain an adequate AML program.”
In December 2022, a court found the organization’s former Head of Business Development, Greg Dwyer, guilty of violating the U.S. Bank Secrecy Act (BSA) and sentenced him to one year of probation.
This followed the former executive’s admission of failing to implement an anti-money laundering program at BitMEX as part of a deal with U.S. authorities. The deal included a $150 million fine.
In October 2020, the U.S. Department of Justice charged the exchange’s co-founders Arthur Hayes, Ben Delo, Samuel Reed, and Dwyer with violating the BSA.
Simultaneously, the CFTC filed a lawsuit against BitMEX. The regulator accused its founders of operating an unregistered trading platform and violating rules regarding KYC/AML procedures.
Delo and Hayes surrendered to U.S. authorities in March and April 2021, respectively. They were released on bail of $20 million and $10 million.
In August 2021, the exchange settled the civil lawsuit from the CFTC by agreeing to a $100 million fine and an independent audit. That same year, Dwyer, residing in Bermuda, agreed to extradition to the U.S.
In the spring of 2022, Reed admitted guilt in violating the BSA. The terms of the agreement with authorities included a $10 million fine. Delo and Hayes will pay the same amount.
The latter avoided actual prison time, receiving a two-year probation with six months of home detention. In June, Delo was sentenced to 30 months of probation.