On August 8, 2022, Gregory Dwyer, a high-ranking employee of the Bitcoin Mercantile Exchange (“BitMEX”) pled guilty to one count of violating the Bank Secrecy Act (“BSA”) for willfully failing to establish, implement, and maintain an anti-money laundering (“AML”) program at the company.
BitMEX is an online cryptocurrency derivatives exchange that is based in the Seychelles. Dwyer, who served as the company’s Head of Business Development, is the fourth person associated with BitMEX to be convicted of BSA violations. In February and March of this year, BitMEX’s three founders, Arthur Hayes, Benjamin Delo, and Samuel Reed, pled guilty to the same criminal violation. In addition, in August 2021, five companies that operated BitMEX agreed to pay $100 million to settle civil charges brought by the Commodities Futures and Trading Commission.
The Department of Justice (“DOJ”) has stated that the three founders and Dwyer willfully caused BitMEX to fail to establish and maintain an AML program, including a program for verifying the identity of BitMEX’s customers, known as a “know your customer” program. The DOJ found that, despite the fact that BitMEX received notice that the platform was being used to launder the proceeds of a cryptocurrency hack, the company did not file suspicious activity reports or implement an effective compliance program, even though it had a legal obligation to do so. As a result, the DOJ determined that BitMEX became, in effect, a platform for money laundering.
This latest conviction illustrates DOJ’s continued focus on the digital asset sphere. Southern District of New York United States Attorney Damian Williams stated that Dwyer’s plea shows that, “employees with management authority at cryptocurrency exchanges … cannot willfully disregard their obligations under the Bank Secrecy Act.”