Cryptocurrency executive faces extradition to face US money laundering charges
An Australian cryptocurrency mogul living in Bermuda is facing extradition to the US to face money laundering charges.
Magistrates’ Court heard yesterday that Gregory Dwyer, a senior employee for the cryptocurrency derivative exchange platform BitMEX, had been charged on October 1 last year with violating the US Bank Secrecy Act and conspiring to violate the Bank Secrecy Act.
The Act requires financial institutions to assist the US Government in combating money laundering schemes.
The District Court for the Southern District of New York requested that Mr Dwyer who is 38 and has been living in Warwick, be extradited to the US to face the charges.
But lawyer Jerome Lynch, representing Mr Dwyer, said his client opted to have an extradition hearing.
Magistrates Khamisi Tokunbo adjourned the case until August 25 when the hearing will take place.
He released Mr Dwyer on $20,000 bail and ordered him to hand over his passport and not to leave the island.
A spokesman for Gregory Dwyer said yesterday: "Mr Dwyer is innocent and looks forward to defending himself in court against these charges.
“His voluntary appearance today was the first step in that process."
The US Justice Department indictment filed against Mr Dwyer, as well as his colleagues Arthur Hayes, Benjamin Delo and Samuel Reed, alleges that the men “wilfully failed to establish, implement and maintain an adequate anti-money laundering ('AML’) programme, including an adequate customer identification programme, more commonly referred to as a know your customer programme”.
The criminal indictment alleges the Bitmex exchange was being used by hackers to launder stolen money, and by people in countries under US sanctions, including Iran.
It also claims the company solicited and accepted customers in the US, despite not being registered with the CFTC and even after it sought to exempt itself from US law by incorporating in the Seychelles.
Bitmex last year denied the allegations, stating it has “always sought to comply with applicable US laws, as those laws were understood at the time and based on available guidance”.
Mr Dwyer and the three other men resigned from their roles at Bitmex and at sister company, 100x Group last October.
Mr Reed, the chief technology officer of BitMEX, was arrested on October 6 last year. He has since been released on $5 million bail.
Mr Hayes, who was based in Singapore and is chief executive officer of the company , turned himself in to authorities on April 6. He is currently on $10 million bail.
Mr Delo, the UK’s first billionaire made off Bitcoin and the country’s youngest self-made billionaire, also turned himself in to authorities on March 15. He was released on $20 million bail.
All three men have pleaded not guilty to the charges.
According to The Sydney Morning Herald, a newspaper in Australia, said the four men could face five years in jail if convicted.
BitMEX was launched in 2014 as a platform for exchanging cryptocurrencies derivatives, which allows traders to make money off the performance of digital currencies.
Two of its associated companies are registered in Bermuda. They were formed after Mr Hayes visited Bermuda in June, 2018 and met David Burt and Wayne Caines, then national security minister who was leading the government’s fintech initiative.
The Premier tweeted photos of the meeting and wrote that Mr Hayes “met our #FinTech team to learn more about our digital asset regulation, with a view to establishing a Bitmex office in Bermuda”.
HDR Global Services (Bermuda) Ltd was incorporated here as an exempted software technology development company soon after, on July 3, 2018.
HDR Capital Ltd, an investment holding firm, was incorporated as an exempted company here on April 5, 2019.
The firms are understood to be based at Seon Place, on Front Street.
Mr Hayes, who has a Hong Kong address, was listed as the director of both entities on the Directors’ Register at the Registrar of Companies.
He and HDR Global Services (Bermuda) were named last year as defendants in a civil action brought by the Commodity Futures Trading Commission in the United States District Court for the Southern District of New York.
The lawsuit alleged that five BitMEX entities and the owners and operators of the BitMEX trading platform operated an unregistered trading platform and violated multiple regulations, including failing to implement required anti-money laundering procedures.