One of the world’s largest cryptocurrency exchanges, OKX, has admitted to breaking U.S. laws designed to prevent financial crimes. The company pleaded guilty to operating without a proper license and failing to follow anti-money laundering (AML) rules. As a result, the exchange will pay over $504 million in penalties.
OKX is a Seychelles-based company that has been in operation since at least 2017. It allows people to trade various cryptocurrencies, including Bitcoin and Ethereum. However, despite its global presence, the platform was supposed to follow U.S. laws if it wanted to do business with American customers. Instead, the company knowingly ignored these rules, allowing criminals to move illegal money through its platform.
For years, OKX did not have strong security measures to verify users’ identities. This made it easy for people in the U.S. to create accounts without providing real information. The company also failed to report suspicious transactions, a key requirement under U.S. law. Because of these failures, over $5 billion in questionable transactions were processed through OKX.
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Encouraging Users to Bypass Security Measures
OKX officially claimed that U.S. customers were not allowed to trade on its platform. However, behind the scenes, the company actively sought American users. It even gave advice on how to bypass security checks. Employees instructed U.S. customers to enter false information when signing up. For example, an OKX employee told a user to pretend they were from the United Arab Emirates and enter random numbers as their ID.
To further hide U.S. customers, the exchange allowed them to trade through third-party brokers. These brokers did not have to reveal the real identity of their clients. This made it nearly impossible to track who was actually making transactions.
Even though OKX had a policy of blocking U.S. customers based on their IP addresses, this was not enough to stop people from using VPNs to access the platform. The company also advertised its services in the U.S., sponsoring events like the Tribeca Film Festival and using American marketers to promote its platform.
Failure to Monitor Suspicious Transactions
Until May 2023, OKX failed to use proper technology to track and detect illegal transactions. It did not have strong controls in place to check if any of its users were involved in money laundering or other criminal activities.
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Additionally, OKX did not screen its customers against U.S. government sanctions lists. This means that individuals or groups who were banned from financial transactions could still use the platform without any restrictions.
As a result of these failures, more than $5 billion in suspicious transactions were processed through the exchange. Criminals took advantage of the weak security and used the platform to move illegal funds.
The Role of Large Financial Institutions
Some of OKX’s biggest customers were large U.S. financial institutions that traded trillions of dollars’ worth of cryptocurrency. These institutions provided liquidity to the platform, making it one of the most powerful exchanges in the world. However, OKX never registered as a Money Services Business (MSB), a legal requirement for financial companies operating in the U.S.
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OKX made hundreds of millions of dollars in fees from these transactions, despite knowing that it was breaking the law. By allowing anonymous trading, the exchange created a platform where illegal money could be moved undetected.
OKX’s Guilty Plea and Financial Penalties
After years of breaking U.S. laws, OKX finally admitted guilt and agreed to pay over $504 million in penalties. This includes a $420.3 million forfeiture and an $84.4 million criminal fine. Because OKX cooperated with authorities and started making changes to its policies, it received a 25% reduction in its fine.
As part of the deal, the exchange will continue working with a compliance consultant until at least 2027. This consultant will ensure that it follows the law and prevents U.S. users from illegally accessing its platform.
Despite these penalties, OKX’s illegal actions have already caused significant damage. By failing to follow anti-money laundering laws, the company made it easier for criminals to move money undetected. Authorities have made it clear that financial companies that violate U.S. laws will face serious consequences.
This case is being handled by the U.S. government’s Illicit Finance & Money Laundering Unit. Investigators worked for years to uncover the truth about OKX’s operations, and their findings have now led to one of the biggest penalties ever for a cryptocurrency exchange.
