BitMEX Co-founder Faces Trial for Anti-money Laundering Case

Written by Mike Boutwell

August 31, 2022

Money laundering is no small feight, and BitMEX Co-founder faced a crucial trail for it. Money laundering is a crime of money laundering and criminal enforcement. Many laws have been set forth to prevent such an act. However, many individuals have broken these standards and escaped punishment. However, in this case, the judge denied giving leisure to the perpetrator. 

BitMEX is a cryptocurrency exchange platform running diligently by founders: Arthur Hayes and Benjamin Delo in 2014. Both pleaded guilty to violating the bank secrecy act by failing to establish an anti-money laundering program, because of which they were charged a $10 million fee. While both the founders agreed to pay their based punishment, Samuel Reed Co-founded BitMEX. However, he placed a plea to be dismissed from his criminal charges. However, his request was denied by a federal judge in Manhatten. Reed’s lawyers had argued that the prosecution was a ‘test case’. Hence Reed’s right was violated due process. They said in the court papers that it was not set clearly that BitMEX was required to register as a futures commission merchant (FCM). U.S. District Judge Jhon Khoeltl was heading the case, and he argued that Bitcoin is a commodity, which is why BitMEX is said to be an FCM and hence facilitates Bitcoin derivatives and futures trade. Accordingly, Reed’s plea held no ground in front of the judge’s ruling. The prosecutors had charged the three men, along with the employee Gregory Dwyer in October 2020, with a lack of competence in implementing a “know your customer” requirement allocated by federal law. Dwyer had not pleaded guilty; however, in August of 2021, BitMEX agreed to pay up to $100 Million to settle the charges. It was not an easy few months for BitMEX at all. However, justice had to be paid.

To prevent what happened to the founders of BitMEX, you must be vigilant in implementing an anti-money laundering program. There are three steps to money laundering, and being aware of them will help you find solid ground in solving this dilemma:

1. Placement:

This is the first step of money laundering and begins by moving criminal proceeds into a legitimate source of income. Hence, it can be moved into financial instruments or bank accounts. 

2. Layering:

After the money has been put into place, the second step involves layering or structuring the money. This involves breaking down significant bulk funds into a series of smaller transactions. 

3. Integration:

At this final stage, the funds are integrated into the criminal’s legitimate financial accounts. As with the earlier stages, this will typically involve smaller transactions. 

Hence, knowing these steps will keep you vigilant about the process of the criminal and how it can be prevented at its core. Many countries have set their anti-money laundering acts, such as the 2002 Proceeds of Crime act in the U.K. The case of the cofounders of BitMEX encourages us to be cautious of Bank Secrecy Acts to prevent trouble in the future. 

You May Also Like…