On 15th of January, a federal judge has sentenced HDR Global Trading Limited, the parent company of cryptocurrency exchange BitMEX, to two years of unsupervised probation and imposed a $100 million fine.
Guilty for Violating U.S. Bank Secrecy Act
The judgment, issued by U.S. District Judge John Koeltl in Manhattan, follows the company’s guilty plea in July. This marks the conclusion of a lengthy legal battle involving the exchange and its founders over violations of the Bank Secrecy Act (BSA).
The case stemmed from allegations that BitMEX and its founders—Arthur Hayes, Benjamin Delo, and Samuel Reed—willfully ignored anti-money laundering (AML) and “know your customer” (KYC) regulations between 2015 and 2020.
Prosecutors argued that BitMEX turned a blind eye to illicit activities by failing to implement sufficient compliance programs.
The crypto exchange reportedly allowed users to trade cryptocurrencies with only an email address, circumventing basic verification protocols.
Legal Battles and Penalties
This sentencing is part of a broader crackdown on the exchange and its executives. In 2021, BitMEX settled civil charges with the U.S. CFTC and the Financial Crimes Enforcement Network (FinCEN), agreeing to pay $100 million for improperly screening customers and failing to register as required. A year later, the company’s founders were also ordered to pay $30 million in penalties in a civil case.
In the criminal case, prosecutors initially sought a $417 million fine, accusing the company of showing little remorse and claiming that BitMEX pleaded guilty only because it had no alternative after its founders’ admissions.
However, the court settled on a $100 million penalty, acknowledging prior payouts and BitMEX’s reform claims.
BitMEX’s Response
In response to the judgment, BitMEX expressed disappointment over the additional fine but noted the penalty was far lower than the amounts initially pursued by the Department of Justice (DOJ).
BitMEX emphasized its significant compliance improvements since the BSA violations occurred between 2015 and 2020. The exchange noted its implementation of a “best-in-class user verification program” and advanced KYC and AML systems.
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“Our compliance standards have changed immeasurably since the period subject to the BSA charge,” the statement read.
The Founders’ Legal Journey
The legal troubles for Hayes, Delo, and Reed began in 2020 when U.S. authorities alleged that the trio knowingly violated the BSA by operating the exchange without proper controls.
Hayes surrendered to authorities in 2021, and all three founders later pleaded guilty to related charges. They were sentenced to probation and faced substantial financial penalties.
A Milestone in Crypto Regulation
The sentencing marks the conclusion of U.S. criminal and civil cases against BitMEX after nearly four years of litigation. While the company has paid substantial fines and undergone significant leadership changes, including Hayes stepping down in 2020, the case highlights the increasing scrutiny faced by cryptocurrency platforms.
As regulatory bodies worldwide tighten oversight of the crypto industry, the BitMEX case serves as a stark reminder of the importance of compliance. It underscores that even prominent exchanges are not immune to accountability for failing to follow financial laws.
With its legal woes largely behind it, BitMEX now aims to rebuild trust and focus on delivering secure and compliant services in the ever-evolving cryptocurrency market.
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