- BitMEX co-founder Samuel Reed has pleaded guilty to violating the Bank Secrecy Act
- Reed was the last man standing after fellow accused Arthur Hayes and Benjamin Delo took plea deals last month
- Reed has been hit with a $10 million and faces up to five years in prison
Samuel Reed, the third BitMEX co-founder to be charged by the Department of Justice (DOJ) for violating the Bank Secrecy Act, has pleaded guilty. Reed follows in the footsteps of fellow co-founders Arthur Hayes and Benjamin Delo to have switched from fighting the charges to accepting them, and has been hit with a $10 million fine and a possible prison sentence. The DOJ has labelled BitMEX a “money laundering platform” because of its lax approach to Know Your Customer/Anti-Money Laundering (KYC/AML) protocols, which it said allowed users to launder funds anonymously through bitcoin.
Reed Follows Hayes and Delo in Guilty Pleas
Reed’s troubles began in July 2019 when the U.S. Commodity Futures Trading Commission (CFTC) announced an investigation into the platform which it claimed was illegally serving U.S. customers, something BitMEX denied. A year later BitMEX finally introduced a KYC/AML program, but this was too little too late – in October 2020 the CFTC charged BitMEX and its co-founders with violating the Bank Secrecy Act.
Reed, Hayes, and Delo all pleaded not guilty to the charges and pledged to fight, but it seems that the wealth of evidence against them was so strong that a plea deal was the best they could hope for. All three have since changed their tune, with Reed being the last man standing, until yesterday.
BitMEX Trio to be Sentenced Later This Year
The DOJ report didn’t mince words when it came to Reed’s actions:
REED willfully caused BitMEX to fail to establish and maintain an AML program, including a program for verifying the identify [SIC] of BitMEX’s customers (or a “know your customer” or “KYC” program). As a result of its willful failure to implement AML and KYC programs, BitMEX was in effect a money laundering platform.
Reed was hit with a $10 million fine to reflect his earnings from the enterprise, and will be sentenced later in the year, with a maximum five year sentence on the table, although his guilty plea will likely see this hugely reduced.
