Wednesday, a third co-founder of the BitMEX cryptocurrency exchange pleaded guilty to failing to prevent money laundering, violating the Bank Secrecy Act. He agreed to pay a $10 million fine, like two previous co-founders who pleaded guilty before him. Last year, BitMEX agreed to pay up to $100 million in fines, as well.  

“BitMEX and its founders have collectively faced up to $130 million in fines, a penalty which continues to amount to a drop in the bucket. Exchanges which willfully and purposefully flaunt AML & KYC rules actively engage in nefarious behavior which may help fund terrorism. When you’re doing that, it's easy to rack up an extra hundred million dollars in profit to set aside for fines. You can’t simultaneously say that we need to crack down on money laundering in cryptocurrency and then let some of the most notorious enablers of money laundering go free without jail time,” said Richard Gardner, CEO of Modulus, a US-based developer of ultra-high-performance trading and surveillance technology that powers global equities, derivatives, and digital asset exchanges.

“They knew that, if they were going to operate in the United States, that they had a legal obligation to institute AML and KYC programs. They failed to meet that requirement. This personal fine of $10 million does nothing except embolden those who might similarly consider flouting the rules. Especially given what’s happening in Russia right now. How easy would it be for Putin, or any number of terrorist groups and drug cartels, to find an unscrupulous exchange operator, and offer $200 million for the ability to run assets through their exchange freely and outside of the proper channels?” asked Gardner.

“This deal opens the door to money laundering, terrorism, and more. Some government officials have long branded cryptocurrency as being a way to facilitate nefarious activities. Yet, when they have the opportunity to make an example out of one of the most notorious, they balk. The best way to keep exchanges operating within the law is to deal harshly with those who make an active choice to operate in the shadows,” said Gardner.

Modulus is known throughout the financial technology segment as a leader in the development of ultra-high frequency trading systems and blockchain technologies. Modulus has provided its exchange solution to some of the industry’s most profitable digital asset exchanges, including a well-known multi-billion-dollar cryptocurrency exchange. Over the past twenty years, the company has built technology for the world’s most notable institutions, with a client list which includes NASA, NASDAQ, Goldman Sachs, Merrill Lynch, JP Morgan Chase, Bank of America, Barclays, Siemens, Shell, Yahoo!, Microsoft, Cornell University, and the University of Chicago.

“The FBI did excellent work on this case. It has been a long, hard road. They should be applauded for rooting out the bad actors. But it can’t all culminate in a fine. Jail time is necessary. That’s how you send a message to the industry. That’s how you ensure that digital assets stay on the up-and-up. If BitMEX founders don’t spend a day in prison, then all the talk about the need to stop money laundering is just talk,” said Gardner.