Crypto exchange BitMEX pleads guilty to bank secrecy violation
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The courtroom saga of BitMEX, a pioneering cryptocurrency exchange, continues on, as the Department of Justice announced on Wednesday that the firm pled guilty to one count of Bank Secrecy Act violations.
Why it matters: Companies in the blockchain space skirted laws requiring them to check the identities and backgrounds of their users in the early days when it seemed like no one was paying attention.
- U.S. agencies are paying attention now, and they are aggressively reviewing those early practices, as we've seen again and again recently.
The latest: HDR Global Trading Limited, a Seychelles-registered entity that owns the exchange, entered the plea.
Context: The Bank Secrecy Act requires that financial firms make a check of its users to make sure they are not, in some way, bad actors.
- The SEC just sued a defunct bank over a similar issue.
What they're saying: "BitMEX not only failed to comply with nationally required anti-money laundering procedures designed to protect the US financial markets from illicit actors and transactions, but knowingly did so to increase the business's revenue," the FBI's Christie M. Curtis said in a statement.
- The statement alleges that at one point it didn't take anything more than an email address to register.
Flashback: This is not the first time the courts are considering BitMEX's program.
- In 2021, BitMEX settled with the CFTC over issues that included its failure to comply with anti-money laundering controls.
- Then in 2022, two of its cofounders were sentenced to probation over, again, one count of Bank Secrecy Act violation (Binance's founder was also sentenced over the same issue).
Zoom out: BitMEX created an innovation in 2016 that has been widely copied throughout the blockchain industry, perpetual futures. Unlike traditional futures that have an explicit expiration date, so-called "perps" are derivatives that never expire.
What's next: A judge will decide on sentencing.
