According to a press release from the U.S. Department of Justice (DOJ), co-founder of BitMEX Samuel Reed has pleaded guilty to violating the Bank Secrecy Act. This is coming weeks after fellow founders Benjamin Delo and Arthur Hayes did the same.
U.S. Attorney Damian Williams stated that the Office will not allow crypto exchanges to carry out their operation as a shadow financial system that enables criminal actors to easily move their illicit proceeds. The Office will intensify efforts to investigate and prosecute the operators of such organizations that fail to follow the right process while going business in the country.
BitMEX Co-Founders Failed In Anti-Money Laundering Act
Red and his co-founders Delo and Hayes were accused of knowingly failing to maintain anti-money laundering protocols that are set out by the law. These include verifying the identity of their customers to prevent any illicit movement of funds. Asa result, their platform became a money-laundering hub for cybercriminals and others involved in illicit businesses.
Additionally, the DOJ stated that Reed and other defendants claimed that BitMEX did offer its services to US customers. But in reality, numerous customers in the U.S. registered and have been doing business on the platform. The crypto exchange purportedly withdrew its services from the U.S. in September 2015. But after BitMEX’s alleged withdrawal, the exchange knowingly kept offering its platform to U.S.-based clients.
Reed Faces 5 Years Imprisonment
The DOJ said that apart from Reed knowingly allowing customers in the U.S. to access its platform, it also deprived substantial profits of BitMEX due to the US-based trading. According to the DOJ, the maximum prison sentence for the violation of the Bank Secrecy Act is five years. In addition, Reed has agreed to pay $10 million as a fine for the act.
Reed was founded in 2014 and facilitates the trading of cryptocurrencies and related derivatives products.
In 2021 BitMEX agreed to settle a lawsuit with FinCEN and the SFTC for $100 million. The crypto exchange has also placed KYC requirements on its users to avoid further sanctions.
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