NEW YORK (Reuters) – U.S. prosecutors on Thursday filed criminal charges accusing four founders and executives of the BitMEX cryptocurrency derivatives exchange of failing to take sufficient steps to stop money laundering.
The U.S. Department of Justice charged Arthur Hayes, Benjamin Delo and Samuel Reed, who together founded BitMEX in 2014, and Gregory Dwyer, its first employee and later head of business development, with violating the Bank Secrecy Act and conspiring to violate that law.
Reed has been arrested in Massachusetts, while the other defendants are at large, the Justice Department said. The defendants’ lawyers could not immediately be identified. Hayes is also BitMEX’s chief executive and Reed its chief technology officer.
According to court papers, the defendants knew that because BitMEX served U.S. customers, it was supposed to implement an anti-money laundering program that included a “know your customer” requirement.
But prosecutors said the defendants instead took “affirmative steps” to evade those requirements, including by incorporating BitMEX and affiliates in the Seychelles, which they believed had less stringent regulations.
The U.S. Commodity Futures Trading Commission filed a separate civil lawsuit seeking to halt BitMEX’s commodity derivatives business in the United States.
Reporting by Jonathan Stempel in New York; editing by Jonathan Oatis