Emily Walker
BitMEX, a cryptocurrency trading platform, faces a hefty $100 million fine for violating US anti-money laundering (AML) laws.
This fine results from the company’s failure to adhere to the US Bank Secrecy Act (BSA), which allowed illegal transactions to occur on its site over several years.
Failure to Comply with KYC and AML Standards
The issue arose due to BitMEX’s inadequate Know Your Customer (KYC) measures, a requirement for businesses operating in the US. These measures are intended to thwart unlawful financial activities, such as money laundering.
Because of BitMEX’s negligence in implementing these protocols, users in the US could bypass regulations and partake in prohibited trading on the platform, leading to violations.
The Department of Justice announced that BitMEX is facing a $100 million penalty due to insufficient controls against money laundering, in violation of the Bank Secrecy Act pic.twitter.com/nwZpcLD9gD
— Reuters Legal (@ReutersLegal) January 15, 2025
Consequences for BitMEX Founders
It’s not only BitMEX that is facing penalties; the platform’s founders are also legally accountable for the breaches.
Due to their failure to ensure compliance, the penalty has substantially increased. This case underscores the financial and personal liabilities encountered by executives of cryptocurrency exchanges that neglect regulatory frameworks.
Imposition Of A Two-Year Probationary Period
In response to Judge John Koeltl’s ruling, BitMEX noted that the penalty is linked to prior fines imposed on its founders in 2022. The exchange indicated in a statement that the imposed $100 million fine is lower than the original $200 million sought by the Justice Department (DoJ).
In addition to the fines, BitMEX’s parent company is subjected to a two-year probation. During this time, the exchange must enhance its compliance protocols and prove its commitment to lawful practices.
This period aims to verify that the company has taken steps to correct its past mistakes and avoid similar violations in the future.
Guilty Plea
In July 2024, BitMEX pleaded guilty to breaching the US Bank Secrecy Act. The U.S. Attorney’s Office for the Southern District of New York indicated that this was a willful violation of established laws.
Founders Benjamin Delo, Samuel Reed, and Arthur Hayes acknowledged that they operated the exchange without implementing KYC checks since 2020.
Impact on the Crypto Industry
This ruling and subsequent probation could set a precedent that leads to stricter regulations across the cryptocurrency sector. This signifies a crucial turning point in the ongoing conversation regarding the future of crypto regulations.
Featured image from Telegrafi, chart from TradingView