CryptocurrencyCryptocurrency Exchanges

BitMex Cofounder Pleads Guilty to Anti-Money-Laundering Violations

Samuel Reed is a cofounder at BitMex, and he has pleaded guilty to the money laundering charges leveled against him. 

Samuel Reed pleaded guilty to violating the United States Bank Secrecy Act. During a hearing on Wednesday in New York Federal Court, Reed admitted to disregarding the Bank Secrecy Act’s anti-money-laundering provision.

Reed is expected to pay a sum of 10 million USD fine. He is the third co-founder of the company to plead guilty to violating the United State’s anti-money-laundering regulations. Just last month, it was exposed by the Department of Justice that co-founders Arthur Hayes and Benjamin Delo were guilty of the same crime.

This organization is pretty controversial, and prosecutors have alleged that BitMex established offshore operations to evade United State’s anti-money-laundering rules. But, this never stopped the firm from granting US customers access to its platform. 

Prosecutors also alleged that BitMex failed even to perform basic identity checks on its customers. They also alleged that the management is in the habit of turning a blind eye to shady dealings like laundering crime proceeds.

BitMex Cofounder, Sam Reed’s Plea Details

On the 9th of March, Reed pled guilty to “willfully failing to establish, implement, and maintain” AML rules at BitMex. A criminal fine of 10 million USD represents the pecuniary gain derived from Reed’s offenses. 

This accusation against Reed carries a maximum jail time of five years; however, whether Reed will serve this or not depends on the decision of the Federal judge later.

Prosecutors also claimed that the BitMex third criminal cofounder was aware of the company’s collaboration in laundering the rewards of a cryptocurrency back in 2018.  It is alleged that he purposely refrained from filing the necessary reports to the regulators.

This was the same sentence that Benjamin Delo and Arthur Hayes incurred during their time. They paid the same amount of fine too. 

Controversial Legal Issues BitMex Have Had in the Past

Sometime in 2020, BitMex came up against BSA violation charges when the Commodity Futures Trading Commission (CFTC) and DOJ presented federal charges each. The CFTC charges against Bitmex went along the lines of civil offenses, but the DOJ charges against the organization were criminal and pretty severe.

BitMex was accused by the United States derivatives markets regulatory agency of violating standard CFTC rules and carrying out operations on an unregistered platform. Two significant regulations that the company broke are the “know your customer” regulation and the “anti-money-laundering.” 

It was a fierce battle, but eventually, BitMex settled the case with CFTC through a sizable penalty fee of 100 million USD. Half of this penalty went to CFTC, while the remaining went to the Financial Crimes Enforcement Network (FinCEN).

According to Reed’s lawyer, the accused hopes to put all the legal issues behind him and make a good comeback. In his exact words, “Mr. Reed is pleased to have resolved this matter and looks forward to focusing on the next phase of his life and career.”

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