Along with three other BitMEX co-founders who have previously acknowledged breaking U.S. law, a senior employee of the cryptocurrency futures exchange has pleaded guilty in New York to failing to implement an anti-money-laundering program.
The United States Attorney for the Southern District of New York stated on Monday that a high-ranking employee at the offshore cryptocurrency derivatives exchange, Gregory Dwyer, entered a plea of guilty to breaking a federal anti-money laundering rule.
Dwyer admitted to breaking the Bank Secrecy Act by “failing to build, implement, and manage an anti-money laundering program” at BitMEX, where he formerly oversaw business development.
In a press release, U.S. Attorney Damian Williams stated,
“Today’s plea reflects that employees with management authority at cryptocurrency exchanges, no less than the founders of such exchanges, cannot willfully disregard their obligations under the Bank Secrecy Act.”
Lack of KYC aided BitMEX in criminal activity
The three co-founders of the company, Arthur Hayes, Benjamin Delo, and Samuel Reed, had previously been convicted guilty by judgments obtained by the U.S. Attorney. According to prosecutors, BitMEX’s absence of know-your-customer (KYC) procedures allowed the business to flourish as a hub for illegal conduct, including as money laundering and sanction evasion.
Two years ago, BitMex was hit with civil and criminal accusations by the CFTC, DOJ, and FinCEN after the company allowed Americans to trade cryptocurrency futures on its platform without having a U.S. registration or using poor know-your-customer (KYC) procedures. Although the agencies ultimately reached a $100 million settlement with the exchange last summer, the accusations led to a shift in the exchange’s management.
The Commodity Futures Trading Commission (CFTC) and the Financial Crimes Enforcement Network (FinCEN) filed civil lawsuits against the four men as well as BitMEX and other business entities, which resulted in financial penalties. Hayes, Reed, and Delo each had to pay $10 million after BitMEX was compelled to pay the regulators $100 million.