BitMEX co-founder Samuel Reed fined $10M, pleads guilty to violating US laws

The third founder of crypto exchange BitMEX, Samuel Reed, pleaded guilty in a federal court to violating anti-money-laundering rules, the Department of Justice said.

According to the guilty plea he entered in Manhattan, Reed, 32, could encounter up to 5 many years in prison. Additionally, he reached an agreement with the US authorities to admit his wrongdoing and agreed to pay a fine of $10 million. However, the last ruling for BitMEX’s senior manager will be decided by a federal judge later on.

“As today’s guilty plea reflects, this Office will not permit cryptocurrency exchanges to operate as a shadow financial system that enables criminal actors to move their illicit proceeds without detection, and will vigorously investigate and prosecute the operators of such exchanges who deliberately flout U.S. law,” said U.S. Attorney Damian Williams in a statement.

The news comes barely two weeks after BitMEX founders, Arthur Hayes and Benjamin Delo, pled guilty in a US federal court and agreed to each pay a $10 million fine.

The two co-founders of the controversial crypto derivatives exchange admitted to violating the Bank Secrecy Act’s anti-money-laundering provisions. As part of their plea deals, both men also face a prison term between six months and one year, but they are free to argue for a lesser sentence at their sentencing hearings.

BitMEX paid $100m fine to settle US charges

In 2020, FBI prosecutors indicted BitMEX’s owners and top executives: Arthur Hayes, Benjamin Delo, Samuel Reed, and Gregory Dwyer. The four men stood accused of violating the Bank Secrecy Act, evading money laundering regulations and operating an unlicensed business.

The indicted officials allowed BitMEX to operate as a platform “in the shadows of the financial markets,” the DoJ said.

In August, BitMEX paid $100 million in a settlement with the US authorities over allegations it broke CFTC and FinCEN rules by allowing Americans to trade on the platform.

US authorities had sued BitMEX with a long list of charges that are focused on whether the pioneering exchange acted as a broker without having regulatory approval. Moreover, the complaint charged the platform with acting as a counterparty to leveraged crypto trades, failing to implement KYC procedures and anti-money laundering procedures.

The CFTC estimates that BitMEX has facilitated ‘trillions of dollars’ in cryptocurrency derivatives transactions, received $11 billion in deposits and earned more than $1 billion in fees since beginning the operations in 2014.

Financefeeds.com