Damian Williams, the United States Attorney for the Southern District of New York, and Christie M. Curtis, the Acting Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation, announced that HDR Global Trading Limited (Bitcoin Mercantile Exchange or BitMEX), pled guilty to violating the Bank Secrecy Act by willfully failing to establish, implement, and maintain an adequate anti-money laundering programme.
According to the allegations in the information and other filings and statements made in court, Arthur Hayes, Benjamin Delo, and Samuel Reed founded BITMEX in or about 2014. Gregory Dwyer became BITMEX’s first employee in 2015 and later its Head of Business Development. BITMEX, which has long serviced and solicited business from U.S. traders and operated through U.S. offices, was required to register with the Commodity Futures Trading Commission and establish and maintain an adequate AML program.
AML programs ensure that financial institutions, such as BITMEX, are not exploited for illicit purposes and serve to protect the integrity of the U.S. financial system and national security, more broadly.
The company and its executives knew that because BITMEX operated in the United States, including by serving U.S. customers, it was required to implement an AML programme that included a know-your-customer component but chose to flaunt those requirements, requiring only that customers provide an email address to use BITMEX’s services.
Indeed, senior executives each knew that customers residing in the United States continued to access BITMEX’s trading platform through at least in or about 2018 and that BITMEX policies nominally in place to prevent such trading were toothless or easily overridden to serve BITMEX’s bottom line goal of obtaining revenue through the U.S. market without regard to U.S. criminal laws.
Corporate executives took affirmative steps purportedly designed to exempt BITMEX from the application of U.S. laws like AML and KYC requirements despite knowing of BITMEX’s obligation to implement such programs by operating in the United States.
As part of BITMEX’s willful evasion of U.S. AML laws, the company lied to a bank about the purpose and nature of a subsidiary to allow the company to pump millions of dollars through the U.S. financial system.
HDR Global Trading Limited an entity incorporated in Seychelles, pled guilty to one count of violating the Bank Secrecy Act, which carries a maximum sentence of five years in prison and a fine. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
