Crypto platform used for money laundering, evading sanctions: DoJ

The founders of offshore crypto trading platform Bitcoin Mercantile Exchange (BitMEX) have admitted to violating U.S. anti-money-laundering (AML) rules.

The U.S. attorney’s office for the Southern District of New York announced that the founders of BitMEX, Arthur Hayes and Benjamin Delo, pled guilty to violating the U.S. Bank Secrecy Act by failing to establish anti-money-laundering controls at the exchange, including know-your-client (KYC) measures.

Under their plea agreements, both men agreed to pay a US$10-million criminal fine.

“As cryptocurrencies and technologies designed to facilitate their trade proliferate, companies engaged in the virtual currency economy have become critical gatekeepers in efforts to ensure that U.S. markets are fair, efficient and secure,” said Damian Williams, U.S. attorney, in a release.

In this case, however, Williams said the company was designed to flout AML obligations, and that Hayes and Delo “allowed BitMEX to operate as a platform in the shadows of the financial markets.”

“As a result of its willful failure to implement AML and KYC programs, BitMEX was in effect a money-laundering platform,” the U.S. Department of Justice (DoJ) said in a statement. It added that the platform was also used to violate financial sanctions, and continued to deal with U.S.-based customers even after purporting to withdraw from the U.S. market.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.