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High-Ranking BitMEX Employee pleads to BSA violations

Department of Justice

U.S. Attorney’s Office

Southern District of New York


FOR IMMEDIATE RELEASE

Monday, August 8, 2022

High-Ranking Employee At Cryptocurrency Exchange Pleads Guilty To Bank Secrecy Act Violations

Gregory Dwyer Managed BitMex’s Flouting of U.S. Anti-Money Laundering Rules 

Damian Williams, the United States Attorney for the Southern District of New York, announced that GREGORY DWYER, a high-ranking employee of purportedly “off-shore” cryptocurrency derivatives exchange the Bitcoin Mercantile Exchange or “BitMEX,” pled guilty today to violating the Bank Secrecy Act (the “BSA”) by willfully failing to establish, implement, and maintain an anti-money laundering (“AML”) program at BitMEX, and aiding and abetting the same.  DWYER pled guilty today before U.S. District Judge John G. Koeltl.

U.S. Attorney Damian Williams said:  “With this plea, this Office has now obtained criminal convictions against all three founders, as well as a high-ranking employee at BitMEX, for willful violations of anti-money laundering laws.  Today’s plea reflects that employees with management authority at cryptocurrency exchanges, no less than the founders of such exchanges, cannot willfully disregard their obligations under the Bank Secrecy Act.”

According to the Indictment, public court filings, and statements made in court:

DWYER was one of the first employees of BitMEX, and served as its Head of Business Development.  BitMEX is an online cryptocurrency derivatives exchange that, during the relevant time period, had U.S.-based operations and served thousands of U.S. customers.  From at least September 2015, and continuing at least through the time of the Indictment in September 2020, DWYER, working with BitMEX’s founders Arthur Hayes, Benjamin Delo, and Samuel Reed, willfully caused BitMEX to fail to establish and maintain an AML program, including a program for verifying the identify 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. 

DWYER aided and abetted BitMEX’s failure to institute AML or KYC programs despite closely following U.S. regulatory developments that made clear the legal obligation to do so if BitMEX operated in the United States, which it did.  DWYER knew that BitMEX’s purported withdrawal from the U.S. market after in or about September 2015 was a sham, and that purported “controls” BitMEX put in place to prevent U.S. trading were an ineffective facade that did not, in fact, prevent users from accessing or trading on BitMEX from the United States.  Among his other tasks at BitMEX, DWYER collected and circulated data evidencing that BitMEX users included traders, and that the company earned revenue, from the United States.

*                *                *

DWYER, 39, of Australia and Bermuda, pled guilty to one count of violating the Bank Secrecy Act, which carries a maximum penalty of five years in prison.  Under the terms of his plea agreement, DWYER agreed to separately pay a $150,000 criminal fine representing pecuniary gain derived from the offense.

The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

HAYES, DELO, and REED, previously pled guilty to the same count, and were sentenced by Judge Koeltl.

Mr. Williams praised the outstanding investigative work of the FBI’s New York Money Laundering Investigation Squad, and thanked the attorneys and investigators at the Commodity Futures Trading Commission whose expertise and diligence were integral to the development of this investigation.

The prosecution is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit. Assistant U.S. Attorneys Jessica Greenwood, Samuel Raymond, and Thane Rehn are in charge of the prosecution.

Link:

DOJ Press Release

Categories: Anti-Money Laundering Bank Secrecy Act (BSA) Department of Justice (DOJ) Updates Enforcement Actions Pleas and Verdicts

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