Samuel Reed, 32, the final co-founder of the cryptocurrency exchange, BitMEX, has pleaded guilty on Wednesday. in the District Court of the US in New York’s Southern District for violating the BSA (Bank of Secrecy Act) by willingly failing to implement, maintain and establish the anti-money laundering scheme at BitMEX exchange.
Reed entered the plea in the Manhattan federal court, and according to the plea agreement, Reed will be paying a fine of $10 million, and the charge will carry a sentence of 5 years of imprisonment, as stated by the Department of Justice. The term of imprisonment will, however, be decided by the Federal judge at a later date.
Benjamin Delo and Arthur Hayes are the other two co-founders of BitMEX, who were also found guilty of similar charges about a month ago.
According to the Manhattan Attorney, Damian Williams, the office will no longer allow crypto exchanges to run as shadow financial systems that allow such criminals to move illicit proceedings without any detection.
Prosecutors mentioned that Reed was informed in May 2018 about how the exchange was facilitating laundering activities. However, they neither filed any report with the regulators nor improved the internal compliance at BitMEX.
BitMEX was established back in 2014, and the three co-founders, along with Gregory Dwyer, an employee at BitMEX, were charged for failing to execute the mandatory KYC (Know-Your-Customer) requirement in 2020. The crypto exchange had turned the exchange platform into a convenient place for sanctions violation and money laundering. However, Dwyer was removed from the list as he pleaded not guilty while his lawyers refrained from making any comment on it.
Last year, BitMEX agreed to pay a fine of $100 million in order to settle the separate fees for illegally allowing client funds to be traded with crypto when the platform was still not registered. It also failed to conduct client due diligence at that time.