For their roles in violating the Bank Secrecy Act and operating a “money laundering platform,” Arthur Hayes and Benjamin Delo will each have to pay a fine.
After a lengthy legal battle with the US Department of Justice, the founders of cryptocurrency exchange BitMEX have pled guilty to breaching the Bank Secrecy Act (DOJ).
At their crypto derivatives and futures exchange, BitMEX, American Arthur Hayes and British Hong Konger Benjamin Delo acknowledged to “willfully neglecting to establish, implement, and manage an anti-money laundering (AML) programme.”
BitMEX is a crypto trading platform situated in the Seychelles that offers crypto futures, derivatives, and margin trading up to 100x. Americans used to be able to use the exchange’s services without having to go through any know-your-customer (KYC) or anti-money laundering (AML) checks. According to the DOJ’s notice on the case on February 24, BitMEX became a “money-laundering platform” as a result of its lack of regulatory compliance.
Hayes and Delo both entered guilty pleas before of the March trial date, agreeing to pay a total of $10 million in criminal fines.
HAYES, 36, of Miami, Florida, and DELO, 38, of the United Kingdom and Hong Kong, pled guilty to one count each of violating the Bank Secrecy Act, which carries a maximum penalty of 5 years in prison – DOJ
— db (@tier10k) February 24, 2022
Operating a crypto business in the United States involves “the obligation for those enterprises to do their share to help drive out crime and corruption,” according to DOJ attorney Damian Williams. He went on to say that BitMEX was a “platform in the shadows of financial markets,” and that it did the following:
“Arthur Hayes and Benjamin Delo formed a firm with the express purpose of evading such requirements; they wilfully failed to develop and maintain even the most basic anti-money laundering standards.”
The allegation that Hayes bribed the Seychelles municipal government when BitMEX completed its transfer there in 2020 bolstered the DOJ’s case. He is said to have boasted that the bribing cost him only a coconut.
Despite the fact that BitMEX’s headquarters were in the United States from roughly 2015 to 2020, Hayes and Delo claimed that no Americans used the platform. The Department of Justice established that the claim was false. By January 2021, the exchange claimed to have vetted all of its users through a KYC-AML process.
BitMEX’s proportion of Bitcoin futures open interest (OI) has shrunk to insignificance since properly verifying all of its users. In February 2021, there was only roughly $3.5 billion in OI, with BitMEX accounting for nearly a third of it. According to data from CoinGlass, there is now $15.18 billion in OI, with BitMEX accounting for only $482 million, or 3%.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.
