A United States court has imposed an additional $100 million fine on cryptocurrency exchange BitMEX for violations of the Bank Secrecy Act. This decision comes two years after the exchange had already agreed to pay a $110 million penalty. The ruling underscores the strictness of U.S. regulators regarding anti-money laundering (AML) and know-your-customer (KYC) requirements on crypto platforms.

The Case Against BitMEX

The accusations against BitMEX stem from allegations that, over five years since its inception, the exchange violated U.S. legal norms. The platform reportedly earned approximately $1.3 billion while failing to comply with the Bank Secrecy Act.

In October 2020, U.S. authorities charged BitMEX's founders—Arthur Hayes, Benjamin Delo, Samuel Reed, and top executive Gregory Dwyer—with violating AML and KYC regulations designed to combat illicit financial activities and ensure transparency in cryptocurrency transactions. Case materials indicate that until January 2021, most users could trade on the platform without mandatory identification, creating favorable conditions for potential illegal use.

Record Fines: Initial Penalty Insufficiency and New Measures

The initial decision to fine BitMEX was made in 2020 when the exchange agreed to a $110 million penalty. However, the court later deemed this punishment insufficient. The judge argued that the scale of violations and the profits gained by the exchange considerably exceeded the fine's amount, rendering it ineffective as a deterrent.

As a result of the current court decision, BitMEX is obligated to pay an additional $100 million, bringing the total fines to $210 million. This is one of the largest penalties ever imposed on a cryptocurrency platform, highlighting the sternness of U.S. regulators.

Consequences for the Exchange and its Founders

Following the 2020 charges, the platform's leadership underwent significant changes. All accused—Hayes, Delo, Reed, and Dwyer—pled guilty, received probationary sentences, and agreed to pay multi-million dollar fines individually. They subsequently stepped down from their roles, and BitMEX undertook substantial changes in its corporate structure and operation policies.

By January 2021, the entire user base had completed the verification process, a crucial step in appeasing regulatory concerns. Nonetheless, legal battles and fines have significantly impacted BitMEX's reputation and its position in the crypto derivatives industry.

BitMEX's Significance in the Crypto Market

BitMEX was one of the first cryptocurrency platforms to offer perpetual futures contracts, a tool that quickly became popular among traders. For years, the exchange was a leader in the crypto derivatives sector, setting industry standards. However, due to regulatory issues, its standing has weakened, allowing competitors like Binance and FTX (prior to their collapse) to take leading market positions.

The fines and legal troubles have affected client trust in the platform. Despite this, following the conclusion of legal proceedings, BitMEX continues its operations, focusing on adhering to regulatory requirements.