The parent company of BitMEX, HDR Global Trading Limited, has been sentenced by the US District Court for the Southern District of New York to pay a $100 million fine for failing to comply with the US Bank Secrecy Act (BSA). Judge John Koeltl also sentenced the cryptocurrency exchange to two years of unsupervised probation, a conclusion to a long-drawn-out legal battle. The BitMEX judgment alleges that the platform operated for several years without a meaningful Anti-Money Laundering (AML) program.
BitMEX Penalized for AML Failures
Federal prosecutors noted that BitMEX did not adopt an AML program that included KYC standards and instead merely requested minimal user information, such as email addresses. The US Attorney’s office claimed that the crypto exchange ignored ‘essential’ BSA requirements, increasing the likelihood of illicit activity on its platform. The indictment said that the charges relate to alleged violations from 2015 to 2020, when the platform made significant revenue from US-based users.
BitMEX’s guilty plea in July 2024 to the BSA violations preceded the court’s decision. However, BitMEX downplayed the admission, calling the allegations ‘old news’ and saying it expected no further financial penalties. That’s a moot point, as the court slapped the firm with the $100 million fine to underline the severity of the violations and that it’s not taking the rise of crypto lightly.
The US government initially demanded a $417 million fine from BitMEX, claiming that the company made $155 million illegally from US users during its operation. However, the prosecutors stressed that the crypto exchange did not have proper compliance mechanisms, which put the financial system at risk. The criminal case ended with a fine and probation, as the court dismissed open counts against the firm during the sentencing hearing.
The fine is in addition to regulatory settlements with BitMEX and its executives that levied financial penalties. These settlements also include $100 million in consent payments to the US Commodity Futures Trading Commission (CFTC) and the Financial Crimes Enforcement Network (FinCEN)last year. The firm’s executives were other violators, including co-founders Arthur Hayes, Benjamin Delo, and Samuel Reed.
Executives Face Legal Consequences
Previously, BitMEX co-founders Hayes, Delo, Reed, and employee Gregory Dwyer were sentenced to probation for BSA violations. The charges were part of agreements with the US Department of Justice as part of guilty pleas. He and his co-founders, meanwhile, forked out $30 million in penalties as part of a civil case settled with the CFTC.
BitMEX executives faced legal proceedings in 2020 when Hayes stepped down as CEO and later handed himself to US authorities in 2021. Two executives received their penalties, representing the US government’s intention to impose penalties on individuals for compliance failures and the company itself. These actions show that these crypto firms have coordinated to enforce regulatory standards across the cryptocurrency space.
In its reaction to the latest judgment, BitMEX reiterated that the BSA violations were historical issues. The company said it was disappointed in the additional financial penalty but said the fine was significantly lower than the amount sought by the US government. According to an exchange statement, the case’s conclusion releases the exchange from managing the case to focus on future operations.
It marks the end of nearly four years of legal wrangling between the company and its executives over the $100 million fine and probation. The penalties serve as reminders of the regulatory expectations for cryptocurrency platforms doing business either within the US or transacting business with US markets. The case also shows the possible consequences of omitting AML and KYC measures.
FAQs
What is the penalty imposed on BitMEX by the US District Court?
BitMEX was fined $100 million and sentenced to two years of unsupervised probation.
Why was BitMEX penalized by the court?
BitMEX failed to comply with the US Bank Secrecy Act by operating without a proper AML program.
What period do the alleged violations by BitMEX cover?
The violations are alleged to have occurred between 2015 and 2020.
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