OKX Admits Guilt in Unlicensed Money Transfer Operations, Hit with $504M Fine
In a significant development in the cryptocurrency industry, Aux Cayes Fintech, operating as “OKEx” and “OKX,” has pleaded guilty to running an unlicensed money transmitting business. This case emphasizes the importance of compliance with financial regulations, particularly in the rapidly evolving world of digital currencies.
OKX’s Legal Troubles and Penalties
Matthew Podolsky, the Acting United States Attorney for the Southern District of New York, and James E. Dennehy, the Assistant Director in Charge of the FBI’s New York Field Office, announced that OKX has agreed to pay over US$504 million in penalties following its guilty plea. The case was overseen by US District Judge Katherine Polk Failla.
Violation of Anti-Money Laundering Laws
According to Podolsky, OKX knowingly violated anti-money laundering laws for over seven years, allowing more than US$5 billion in suspicious transactions to occur. He stated:
“Today’s plea and penalties highlight the consequences for financial institutions that violate the law.”
Dennehy added that OKX actively sought US customers and provided guidance on how to bypass security measures, facilitating illicit transactions:
“Their disregard for US law will not be tolerated.”
OKX’s Operations and Regulatory Compliance
Operating as one of the world’s largest cryptocurrency exchanges, OKX facilitates billions of US dollars in daily transactions across more than 300 cryptocurrencies. However, US regulations mandate such platforms to register with the Financial Crimes Enforcement Network (FinCEN) and enforce anti-money laundering measures, including Know Your Customer (KYC) protocols.
History of Non-Compliance
- Despite prohibiting US users since 2017, OKX knowingly catered to US customers, including institutional traders.
- From 2018 to early 2024, US users conducted transactions exceeding US$1 trillion, generating hundreds of millions in fees.
- OKX failed to register as a money services business and allowed customers to trade without KYC verification until November 2022.
- Even after implementing an IP ban, OKX was aware that users could bypass it using VPNs.
Facilitation of Illicit Activities
Reports indicate that OKX employees assisted US customers in evading restrictions. For instance, an employee advised a potential US user in April 2023:
“I know you’re in the US, but you could just put a random country and it should go through.”
Moreover, OKX actively sought US customers through advertising in the United States and sponsoring events like the Tribeca Film Festival.
Future Compliance Measures
In light of the plea agreement, OKX has engaged an external compliance consultant, with plans to collaborate until February 2027. The company will forfeit US$420.3 million and pay an additional criminal fine of US$84.4 million. Due to its cooperation with the investigation, OKX received a 25% reduction in its fine.
The investigation was spearheaded by the FBI’s New York Field Office, with prosecution managed by the Office’s Illicit Finance & Money Laundering Unit. Assistant US Attorneys Christopher D. Brumwell, Eli J. Mark, and Vladislav Vainberg are handling the case.
For more information regarding cryptocurrency regulations, you can visit SEC’s official site.
