Samuel Reed – one of three co-founders of the BitMEX crypto exchange – has joined his colleagues Arthur Hayes and Benjamin Delo in pleading guilty to disobeying the Bank Secrecy Act’s anti-money laundering provisions.
- BitMEX is based in the East African Seychelles Archipelago, north of Madagascar. Founded in 2014, it facilitates the trading of cryptocurrency and related derivatives products.
- Like Hayes and Delo last month, Reed has pleaded guilty to “willfully failing to establish, implement, and maintain an anti-money laundering (“AML”) program at BitMEX,” according to the Justice Department.
- Specifically, Reed failed to follow U.S. KYC and AML requirements at his exchange, despite being very familiar with their existence. Furthermore, he repeatedly lied about the exchange having withdrawn its operations from the country since September of 2015.
- He also failed to file a suspicious activity report when notified that his exchange was being used to launder stolen funds from a crypto hack in May of 2018. In fact, no such reports were ever made by the exchange from 2014 through to September of 2020.
“This Office will not permit cryptocurrency exchanges to operate as a shadow financial system that enables criminal actors to move their illicit proceeds without detection,” said the department, “and will vigorously investigate and prosecute the operators of such exchanges who deliberately flout U.S. law.”
- As punishment, Reed will be forced to pay a $10 million fine representing the gains derived from his offenses. The 32-year old could also face a maximum of 5 years in prison.
- As of 2021, BitMEX places KYC requirements on its users, after agreeing to settle a lawsuit with the CFTC and FinCEN for $100 million.