The US Department of Justice (DOJ) announced that:

On February 24, 2022, DOJ announced that Arthur Hayes and Benjamin Delo, the founders and executives of BitMEX, a CVC derivatives exchange, pleaded guilty before US District Judge John G. Koeltl of the US District Court of the Southern District of New York (SDNY) to violating the BSA by willfully failing to establish, implement, and maintain an AML program at BitMEX. Although BitMEX claimed to be an offshore exchange, US customers were able to access the BitMEX platform and conduct cryptocurrency derivatives trading without appropriate customer due diligence.

Notwithstanding BitMEX's public representation that its platform was not conducting business with US persons, BitMEX allegedly failed to implement appropriate policies and actions to prevent US customers from accessing the exchange and even sought out US customers. Delo allegedly altered US customer information to hide the customer's true location. Under their respective plea agreements, Hayes and Delo each agreed to separately pay a $10 million criminal fine. In 2021, the CFTC and FinCEN reached settlements with BitMEX regarding related charges (see Legal Update, CFTC and FinCEN Settle Charges Against Offshore Cryptocurrency Derivatives Exchange BitMEX).

Update: On February 28, 2022, the US District Court of the SDNY denied a motion to dismiss criminal charges against Samuel Reed, a co-founder of BitMEX. The charges against Reed are similar to those brought against Hayes and Delo, and state that BitMEX failed to implement and maintain AML programs as required by the BSA. The indictment alleges that Reed knew the BitMEX serviced US customers, allowed US customers to access the platform, and willfully caused BitMEX to fail to adopt proper AML procedures. The Court dismissed Reed's arguments and held that:

The Court also clarified that several agencies may have concurrent regulatory authority in the cryptocurrency space.

On February 25, 2022, DOJ announced that Satish Kumbhani, the founder of BitConnect, a cryptocurrency investment platform, has been charged with orchestrating a global Ponzi scheme by the US Attorney's Office of the Southern District of California. Kumbhani allegedly misled investors about BitConnect's "lending program," specifically its ability to generate profits trading on cryptocurrency exchange markets, and obtained approximately $2.4 billion from investors. In reality, BitConnect operated as a Ponzi scheme, and paid earlier investors with money from later investors.

Kumbhani allegedly shut down the lending program after about a year, and "directed his network of promoters to fraudulently manipulate and prop up the price of BitConnect's digital currency, a commodity known as BitConnect Coin (BCC)." The charges allege that Kumbhani evaded US regulations governing the financial industry, and never registered with FinCEN, as required by the BSA.

Kumbhani has been charged with conspiracy to commit wire fraud, wire fraud, conspiracy to commit commodity price manipulation, operation of an unlicensed money transmitting business, and conspiracy to commit international money laundering. Previously, the SEC had filed a civil action against BitConnect and the DOJ had announced criminal charges relating to BitConnect (see Legal Update, Updated: SEC Charges US Promoters in $2 Billion Unregistered BitConnect Offering, Settles 10b-5 and Other Charges Against Loci Inc.).