The cryptocurrency trading platform, BitMEX, was hit with a hefty fine of $100 million due to violations related to the United States’ anti-money laundering (AML) regulations.
The penalty is a result of the company failing to adhere to the U.S. Bank Secrecy Act (BSA), allowing illegal transactions to occur undetected on their platform over several years.
Noncompliance With KYC And AML Regulations
The root cause of the issue lies in insufficient Know Your Customer (KYC) procedures at BitMEX, essential for platforms functioning within the U.S. These measures are designed primarily to thwart illicit financial actions such as money laundering.
The lax enforcement of BitMEX’s rules allowed U.S. users to bypass regulations and participate in illegal trading activities on the platform, leading to the occurrence of these violations.
According to the Department of Justice, cryptocurrency trading platform BitMEX was penalized $100 million due to negligence in preventing money laundering activities, as they allegedly didn’t comply sufficiently with the Bank Secrecy Act regulations.
— Reuters Legal (@ReutersLegal) January 15, 2025
Repercussions For BitMEX Founders
In summary, it’s important to note that BitMEX as a whole isn’t solely facing penalties. Instead, the platform’s creators or developers, who were directly involved in overseeing these violations, are also subject to legal consequences.
Lack of enforcement on their part has led to a substantial rise in the consequences. This situation underscores the potential monetary and personal repercussions for CEOs of Bitcoin exchanges who neglect to establish regulatory structures.
Imposition Of A Two-Year Probationary Period
In response to Judge John Koeltl’s order, the trading platform explained that the penalty they are facing pertains to an offense for which their founders were previously fined in the year 2022. The exchange clarified in a statement issued on Wednesday that the fine of $100 million is lower than the $200 million initially proposed by the Department of Justice (DoJ).
Beyond these penalties, the parent company of BitMEX has been put on a two-year supervision. During this supervision period, the exchange must work on enhancing its compliance procedures and show evidence of following legal guidelines.
The purpose of this probation is to confirm that the company has taken the necessary lessons to heart and is now proactively implementing steps to avoid repeating any similar infractions in the future.
Guilty Plea
In July 2024, BitMEX admitted to breaking the US Bank Secrecy Act. The U.S. Attorney’s Office for the Southern District of New York confirmed that they found this action to be a deliberate violation of the current laws.
In 2020, Benjamin Delo, Samuel Reed, and Arthur Hayes admitted that they were running their exchange without performing Know-Your-Customer (KYC) verifications.
Penalties For The Crypto Industry
Establishing penalties and probations could set a trend towards tougher rules across the entire crypto industry, marking a significant shift in the ongoing conversation about future cryptocurrency regulations.
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2025-01-17 01:41