BitMEX Admits to Operating Without Proper Anti-Money Laundering Controls

US Attorney Damian Williams announced that BitMEX operated in the US without any adequate Anti-Money Laundering (AML) program from 2015 to 2020.

The exchange failed to implement Know Your Customer (KYC) standards, only requiring users to provide an email address. Founders Arthur Hayes, Benjamin Delo, and Samuel Reed were fully aware of this non-compliance with AML requirements and its legal implications for US users, thereby breaching federal law.

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Williams emphasized the severity of the situation, stating:

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.

The legal repercussions for those involved could be severe, with potential prison sentences of up to five years and substantial fines.

In 2022, after admitting guilt to AML violations in a case brought by the US Commodity Futures Trading Commission, the three founders were collectively ordered to pay a $30 million civil penalty. They were also each given probation sentences.

BitMEX's guilty plea highlights the importance for crypto exchanges to comply with US financial regulations to ensure the integrity of the market.

In other news, the US Securities and Exchange Commission (SEC) has recently filed a lawsuit against the crypto-friendly bank Silvergate. The SEC alleges that Silvergate misled investors regarding the effectiveness of its AML compliance program and its oversight of clients, including the now-bankrupt crypto exchange FTX.

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Having completed a Master’s degree in Economics, Politics, and Cultures of the East Asia region, Aaron has written scientific papers analyzing the differences between Western and Collective forms of capitalism in the post-World War II era.
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