April 18, 2024

Founders of the crypto trading platform, BitMEX, are to pay a fine of $10 million each after breaking the Bank Secrecy Act. This payment is coming after the exchange paid $100 million in 2021 for flouting United States regulations. 

BitMEX Pioneers Plead Guilty To Charge Against Them

“Benjamin Delo and Arthur Hayes, pioneers of the exchange platform, BitMEX (Bitcoin Mercantile Exchange), have been found guilty of defying the Bank Secrecy Act. Both individuals deliberately refused to develop, enforce, and sustain an AML (Anti-money laundering) program at their exchange firm,” stated US Attorney Damian Williams. Delo and Hayes have each accepted to pay a $10 million financial penalty for monetary gain derived from the violation after a series of court cases with the United States DOJ (Department of Justice).

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BitMEX is a cryptocurrency exchange platform situated in the Seychelles which provides crypto derivatives, futures, and margin trading of about 100x. The firm offered crypto services to US citizens without making them undergo any AML (anti-money laundering) or KYC (know-your-customer) procedures. According to the DOJ’s notice concerning the matter on the 24th of February, BitMEX had become a “financial theft platform” due to its absence of regulatory requirements.

Absence Of Regulatory Guideline For Users 

Running a cryptocurrency company in the United States means “it is the duty of such enterprises to do their share to help fight fraud and corruption,” said Damian Williams, attorney for the DOJ. Williams went on to say that BitMEX was an “exchange firm in the dark areas of the financial markets,” and that it did the following:

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“The founders formed a firm with the express purpose of evading such requirements; they purposely failed to develop and maintain even the simplest AML standards.”

The allegation that Hayes influenced the Seychelles government when the crypto exchange finalized its transfer to the city in 2020 bolstered the DOJ’s allegation. Some sources claim that Hayes boasted that the bribe was very cheap.

Even though BitMEX’s headquarters were in America from around 2015 – 2020, Delo and Hayes claimed no US citizen used the exchange firm. The Department of Justice established that the claim was false. Last January, the company stated it had vetted all its customers through a KYC-AML process.

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The proportion of BTC derivatives open interest (OI) owned by BitMEX has shrunk to nothingness since properly verifying all its customers. Last year in February, there was roughly $3.5 billion in open interest, with BitMEX accounting for about one-third of it. According to CoinGlass statistics, the OI is now about $15.18 billion, with BitMEX accounting for just $482 million (about 3%).

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