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BitMEX Confesses to Five Years of Bank Secrecy Act Violations

According to Bitcoin price analysis, BitMex experiences its second-largest BTC outflow, impacting market trends and investors amid ongoing regulatory challenges

Shashank Bhardwaj
Published: Jul 11, 2024 03:55:33 PM IST
Updated: Jul 12, 2024 06:39:24 PM IST

Image: Shutterstock Image: Shutterstock

On July 10, the US Department of Justice (DOJ) declared that the crypto exchange BitMEX had pleaded guilty to breaking the Bank Secrecy Act (BSA) from 2015 to 2020.

The court records depicted that BitMEX, which was the top crypto derivatives platform, did not have a valid anti-money laundering (AML) and know-your-customer (KYC) system that was operational, which made the exchange a favourable place for money launderers and for finding ways to evade sanctions, therefore threatening the integrity of the financial system.

The DOJ also alleged that until September 2020, the exchange allowed users to register and trade crypto assets anonymously without providing identity proof or documentation. It promoted itself as a place where retail customers could trade without verification.

The allegations against BitMEX were identical to those filed in 2020 against the exchange's co-founders, Arthur Hayes, Samuel Reed, and Benjamin Delo—and Gregory Dwyer, their first hire, who had already confessed to the same BSA violations.

In 2022, a court summoned the co-founders to pay a combined $30 million civil fine to the US Commodity Futures Trading Commission. All three were sentenced separately to probation in 2022 after admitting guilty to violating AML conditions under the BSA.

The BitMEX co-founders' guilty plea does not necessarily mean the end of their legal troubles. They still face potential penalties, including fines and prison sentences, which the court will determine during sentencing. They could face up to five years in prison for the BSA violations and another five years for the conspiracy charges. However, the actual sentences may vary based on various factors.

The BitMEX case serves as a warning for the crypto industry, emphasising the need for exchanges and platforms to comply with existing financial regulations.  The case also highlights the increasing pressure on companies to adapt to the globally evolving regulatory landscape. As governments and world leaders seek to bring crypto under their province, exchanges and platforms must prioritise compliance and work closely with authorities to maintain legitimacy and trust.

Shashank is the founder of yMedia. He ventured into crypto in 2013 and is an ETH maximalist.
Twitter: @bhardwajshash