CRIMINAL CAPITALI$M
Co-founders of major cryptocurrency trading platform BitMEX are charged with violating the US Bank Secrecy Act

Shalini Nagarajan Oct. 2, 2020

OZAN KOSE/Getty

Four top executives of major crypto trading platform BitMEX have been charged with violating US anti-money laundering regulations, the Commodity Futures Trading Commission said on Thursday.

The co-founders and head of business development have each been charged with one count of violating the US Bank Secrecy Act and one count of conspiracy to violate the act.

Each charge carries a maximum penalty of five years in prison, the Justice Department said.
A lawsuit alleged that BitMEX "failed to implement the most basic compliance procedures."

One of the four defendants was arrested in Massachusetts on Thursday morning.


Top executives of major cryptocurrency trading platform BitMEX have been charged with violating US anti-money laundering rules, a statement issued by the federal regulatory agency showed on Thursday.

Co-founders Arthur Hayes, Benjamin Delo, and Samuel Reed and head of business development Gregory Dwyer were each charged with one count of violating the Bank Secrecy Act and one count of conspiracy to violate the act.

Each charge carries a maximum penalty of five years in prison, the US Department of Justice said.

The act requires financial institutions in the US to maintain reports on currency transactions and customer relationships in order to prevent money laundering.

BitMEX "failed to implement the most basic compliance procedures" such as not having regulatory approval to run its trading facility, the Commodity Futures Trading Commission said in its own lawsuit.

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William Sweeney, FBI assistant director, said the four defendants "willfully violated" the act by evading its requirements. "One defendant went as far as to brag the company incorporated in a jurisdiction outside the U.S. because bribing regulators in that jurisdiction cost just 'a coconut.'"

BitMEX's platform received over $11 billion in Bitcoin deposits and earned over $1 billion in fees while accepting orders and funds from customers in the US, the CFTC said.

While Reed was arrested in Massachusetts on Thursday morning, the other three defendants remain at large, according to the Justice Department.

BitMEX is the second-largest cryptocurrency derivates exchange based on trading volumes, according to CoinMarketCap, after Binance. It holds around 193,000 BTC, worth about $2 billion at current prices.

The total crypto-market capitalization lost around $13 billion in the hours following news that BitMEX was charged with US regulation violations. Bitcoin fell by more than 4% to $10,455, while Ethereum fell more than 8% and Ripple fell 5.7% on Friday.