KEY POINTS

  • BitMEX’s CEO Arthur Hayes and three others were charged with violation of the Bank Secrecy Act
  • The Commodity Futures Trading Commission alleged the company executed derivatives transactions on an unregistered board
  • FBI Assistant Director William F. Sweeney Jr. said the four defendants willfully evaded anti-money laundering requirements

Authorities have filed charges against the owners of derivatives cryptocurrency exchange BitMEX for allowing money laundering to thrive on the platform.

BitMEX’s CEO Arthur Hayes, company executives Samuel Reed and  Ben Delo, and its first employee Gergory Dwyer were charged with violation of the Bank Secrecy Act and conspiring to violate the act, the Department of Justice announced Thursday. 

Reed was arrested in Massachusetts while the others were still at large, said the New York Times.

The Commodity Futures Trading Commission (CFTC) alleged that the Hong Kong-based company executed derivatives transactions such as futures and options on an unregistered board. The regulator accused the company of failing to implement strict anti-money laundering (AML) and know-your-customer (KYC) features, which made Bitmex available as a vehicle for money laundering and sanctions violations, the indictment stated.

FBI Assistant Director William F. Sweeney Jr. said the four defendants willfully violated the Bank Secrecy Act by evading U.S. anti-money laundering requirements. The DOJ alleged that BitMEX and the founders knew too well that they were servicing U.S. customers but chose not to implement the AML and KYC requirements. Even if some measures were put in place to prevent U.S. customers from accessing the website, these measures could easily be overridden by, for example, the use of VPN.  

“For example, the defendants caused BitMEX and its parent corporations formally to incorporate in the Seychelles, a jurisdiction they believed had less stringent regulation and from which they could still serve U.S. customers without performing AML and KYC,” the