BitMEX Employee Pleads Guilty to Violating Anti-Money Laundering/KYC Rules

Key Takeaways:

  • Prosecutors accuse 3 BitMEX Co-founder and Dwyer of servicing U.S. clients despite announcing its withdrawal from the U.S. market in 2015.
  • Prosecutors filed charges against the four in 2020 for violating the federal Bank Secrecy Act by failing to adopt anti-money laundering/ AML and KYC regulations.

On August 8, a one-time head of business development at BitMEX, Gregory Dwyer, pleaded guilty to violating the Bank Secrecy Act in court. Prosecutors accuse Mr. Dwyer of facilitating BitMEX’s flouting of U.S. anti-money-laundering rules. Dwyer has agreed to pay a $150,000 fine as part of a plea deal.

Apart from Dwyer, the 3 co-founders-former BitMEX CEO Arthur Hayes, Ben Delo, and Samuel Reed, pleaded guilty earlier this year. Hayes was sentenced to two years of probation while Delo received 30 months, and Reed is facing up to 5 years in prison.

Prosecutors first filed charges against the four BitMEX executives in 2020. DoJ Prosecutors said that from 2015 to 2020, Dwyer and the 3 BitMEX founders willfully violated the federal Bank Secrecy Act by non-complying anti-money laundering and “know your customer” programs, effectively turning the exchange into a money laundering platform.

Delo, Reed, and Hayes founded BitMEX in 2014 but failed to register with the U.S. Commodity Futures Trading Commission(CFTC), which has also filed a civil enforcement action against the company. According to prosecutors, BitMEX executives failed to implement AML procedures while doing business with U.S.-based clients and traders, despite the company being based in Seychelles.

Reportedly, co-founder Hayes had bragged about how bribing regulators in Seychelles jurisdiction cost just “a coconut.” The prosecutors state that despite announcing its withdrawal from the U.S. market in 2015, BitMEX continued servicing US-based customers.

“Thousands of U.S.-based clients were able to use the service even though they were meant to be blocked, and the controls put in place were “facade,” prosecutors said.

Commenting on the latest development, Manhattan U.S. Attorney Damian Williams said, “Today’s plea reflects that employees with management authority at cryptocurrency exchanges, no less than the founders of such exchanges, cannot willfully disregard their obligations under the Bank Secrecy Act“. 

In 2021, BitMEX entered into a $100 million settlement to resolve the regulatory lawsuit over its failure to follow U.S. rules while allowing Americans to access its trading platform.  In recent times, crypto firms have increasingly collided with American regulators for non-complying with several U.S. rules and regulations.

In Mid-2021, the Securities and Exchange Commission(SEC) settled a $10 million enforcement action with Poloniex LLC, whose employees had said they wanted to be aggressive about testing the limits of what could be traded without regulatory compliance.

Saniya Raahath
Saniya Raahath

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