BitMEX is one of the world’s largest cryptocurrency trading platforms. On August 10, 2021, the U.S. District Court for the Southern District of New York entered a Consent Order that the U.S. Commodities Futures and Trading Commission agreed to with five companies charged with operating BitMEX. The order required the BitMEX entities to pay a $100 million civil monetary penalty. See here
BitMEX is owned and operated by HDR Global Trading Limited, which is registered in the Seychelles. HDR is an acronym of the last names of its founders, Arthur Hayes, Ben Delo, and Sam Reed. In 2022, each of the founders entered guilty pleas for violating the Bank Secrecy Act and signed consent orders to each pay a $10 million fine. They were also enjoined from further violations of the Commodity Exchange Act and CFTC regulations. See here.
For the last piece of this saga, BitMEX entered a guilty plea on July 10, 2024 and was sentenced on January 15, 2025. According to the Justic Department:
BITMEX and its executives knew that because BITMEX served U.S. customers, it was required to implement an AML [anti-money laundering ] program that included a KYC [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 U.S. 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 U.S. 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 BITMEX to pump millions of dollars through the U.S. financial system.
During the sentencing hearing, BitMEX said no further fine was necessary, citing the earlier payouts and saying it had become a “compliant business” that rectified its past mistakes. The government requested a fine of more than $400 million.
It is reported that District Judge John Koeltl, of the Southern District of New York, credited a government expert who said BitMEX took in over $1.3 billion of revenue during the relevant period and that roughly 11% of the company’s users during the relevant time were in the U.S. He observed that, for five years, BitMEX maintained that that it was not in the United States and, only after being criminally indicted, did BitMEX acknowledge responsibility. Thus, in his view, there was not only a violation of criminal law, but also a willful one.
The judge sentenced BitMEX to a fine of $100 million for violating the Bank Secrecy Act by willfully failing to establish, implement, and maintain an adequate AML and KYC program. In addition to the fine, BITMEX was sentenced to two years’ probation.