Crypto Exchange BitMEX Is Accused of Money Laundering

Crypto Exchange BitMEX Is Accused of Money Laundering

October 3, 2020

Criminal charges have been filed against the owners of BitMEX, arguably one of the largest and most popular cryptocurrency exchanges in the world. The company has been accused of engaging in illegal transaction activity and of money laundering.

BitMEX Owners Experience Indictments

BitMEX chief executive Arthur Hayes was formally charged on Thursday by prosecutors in the greater metropolitan area of New York City. In addition, three of the platform’s other owners – including Benjamin Delo, Samuel Reed and Gregory Dwyer – have also been charged with fraud and other miscellaneous crimes. At the time of writing, only Reed has been apprehended, while the other owners of the trading exchange remain at large and out of regulators’ hands.

Lawyers working against BitMEX claim that the trading platform was told many times that it was being utilized by hackers and cyberthieves to launder illicit funds by people in sanctioned nations like Iran. Despite the several warnings executives received, they did nothing to stop the activity, nor did they take any action to implement higher safety standards for their customers.

As it stands, BitMEX is easily one of the top five largest crypto exchanges in the world. There was a time where just recently, it was handling close to $2 billion in daily crypto transactions. According to an indictment released earlier in the week:

BitMEX made itself readily available as a vehicle for money laundering and sanctions violations.

The crypto exchange has been around for roughly six years. Founded in 2014, the company has pushed the boundaries of non-regulated crypto activity like no other trading platform. The company was one of the first to allow the buying and trading of bitcoin derivatives or futures at a time when very few rules existed and when it was considered unusual or even nonsensical to do so. While the regulation surrounding this activity has grown in recent years, BitMEX did it at a time when there were virtually no boundaries or blockades.

In addition, BitMEX was also known for not employing know your customer (KYC) protocols to ensure that customers’ identities had been verified. This made it easy to launder money through the platform. BitMEX did not begin following identity verification methods until August of this year.

While Arthur Hayes – the co-founder of the company – is initially from the United States, he settled on the platform’s homeland of Seychelles in Africa for several reasons. The indictment reads:

It cost less to bribe Seychellois authorities – just ‘a coconut’ – than it would cost to bribe regulators in the United States and elsewhere.

Are These False Charges?

A spokesperson for a company called HDR Global Trading Limited – which shares corporate ties to BitMEX – mentioned in a recent interview:

We strongly disagree with the U.S. government’s heavy-handed decision to bring these charges, and we intend to defend the allegations vigorously.

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