“Old News:” BitMEX Dismisses Guilty Plea to AML Violations
Crypto exchange BitMEX is facing enforcement actions.
The exchange has set the record straight.
Regulations in the crypto industry have become commonplace, marked by increasing actions by financial and regulatory authorities to enforce oversight of the asset class. These efforts have led to significant enforcement actions against several major industry giants, many resulting in hefty sanctions.
The ever-rolling regulatory radar has now set its sights on crypto exchange BitMEX, thrusting the firm into a tussle with authorities.
The crypto industry faced another ‘DOJ vs. Exchange’ episode on Wednesday, July 11, 2024, when authorities unveiled charges against BitMEX. However, the announcement did not sit too well with the exchange, prompting an immediate response to set the record straight. Sponsored
In a release on the same day, BitMEX asserted that the charges brought by the justice department are “old news,” asserting that they mirror previous sanctions the exchange has already faced.
“The BSA charge is old news – this is the same charge brought in 2020 against our founders relating to BitMEX’s operations up to September 2020,” stated the exchange.
BitMEX acknowledged the violations linked to its operations until September 2020 but argued that no further fines are necessary, highlighting the substantial penalties its founders received under the previous BSA charges.
The exchange further stressed that its compliance standards have since significantly improved, including integrating AML and KYC requirements to prevent violations, adding that it will seek an expedited sentencing hearing to bring the case to a close. Sponsored
Despite the exchange’s assertions, the charges have raised concerns across the industry.
Central to the charges, unveiled in a July 10 release, are allegations of the violation of the United States Bank Secrecy Act. Authorities asserted that BitMEX willfully failed to establish, implement, and maintain an adequate anti-money laundering program, allowing the use of its platform for illicit transactions for financial gain.
“BitMEX opened itself up as a vehicle for large-scale money laundering and sanctions evasion schemes, posing a serious threat to the integrity of the financial system,” stated US attorney Damian Williams.
The DOJ emphasized that BitMEX and its founders, Arthur Hayes, Benjamin Delo, and Samuel Reed, failed to integrate the necessary regulatory requirements to operate in the United States despite soliciting and operating business within the region.
BitMEX was further accused of deceiving a bank “about the purpose and nature of a subsidiary to allow the company to pump millions of dollars through the U.S. financial system.” The exchange’s guilty plea carries a maximum sentence of five years in prison and a fine.
On the Flipside
Binance founder Changpeng Zhao is currently serving a prison sentence following his conviction by the DOJ.
In March 2024, former FTX CEO and founder Sam Bankman Fried was sentenced to 25 years in prison following a lengthy regulatory tussle with the DOJ.
Why This Matters
BitMEX’s counter that the DOJ’s charges are outdated offers comfort that it may not be facing significant enforcement actions. However, the Justice Department’s actions have a track record of leading to prolonged legal processes and severe penalties, leaving the exchange’s future uncertain.
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