BitMEX Slapped With $100 Million Fine For Violating Anti-Money Laundering Laws

BitMEX, the cryptocurrency trading platform, has incurred a substantial $100 million penalty for contravening US anti-money laundering (AML) requirements.

This penalty arises from the company’s noncompliance with the US Bank Secrecy Act (BSA), which permitted unlawful transactions on its platform for multiple years.

Noncompliance With KYC And AML Regulations

The violation stems from BitMEX’s lack of sufficient Know Your Customer (KYC) processes, which are necessary for any platform operating in the US. The goal of these protocols is to prevent illegal financial activities like money laundering.

BitMEX’s inability to enforce these rules permitted US users to circumvent regulations and engage in illicit trading on the platform, resulting in the infractions.

Cryptocurrency exchange BitMEX has been fined $100 million for violating the federal Bank Secrecy Act by failing to adequately police money laundering, the DOJ said https://t.co/9hUmB2w2TD pic.twitter.com/nwZpcLD9gD

— Reuters Legal (@ReutersLegal) January 15, 2025

Repercussions For BitMEX Founders

BitMEX as a whole is not the exclusive target of the penalty. There are legal ramifications for the platform’s developers, who actively oversaw these breaches.

Their failure to ensure compliance has significantly increased the penalty. This case highlights the financial and personal risks faced by CEOs of bitcoin exchanges that fail to set up regulatory frameworks.

The trading platform responded to Judge John Koeltl’s order by stating that the penalty is for an offense for which its founders received a fine in 2022. The exchange said in a statement on Wednesday that the $100 million fine is less than the $200 million that the Department of Justice (DoJ) had originally requested.

Apart from these penalties, BitMEX’s parent company has faced a two-year probation. Throughout this probation period, the exchange needs to develop its compliance practices and demonstrate a commitment to adhering to the law.

This probation is intended to verify that the company has learned its lesson and is actively taking measures to prevent any future violations.

BitMEX entered a guilty plea to a violation of the US Bank Secrecy Act in July 2024. The Southern District of New York U.S. Attorney’s Office declared that it had identified the conversation as a deliberate breach of existing statutes.

Benjamin Delo, Samuel Reed, and Arthur Hayes had acknowledged operating the exchange without requiring Know-Your-Customer (KYC) checks as early as 2020.

The penalty and probation might establish a precedent, leading to more stringent regulations throughout the industry. This represents a pivotal moment in the overarching discourse over the future of cryptocurrency regulations.

Featured image from Telegrafi, chart from TradingView