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- Arthur Hayes and Ben Delo both pleaded guilty to violating the Bank Secrecy Act while at the helm of BitMEX and agreed to each pay $10 million in penalties.
- The two could still be sentenced to five years in prison, with their spokespeople saying that they regret their actions and accept responsibility for their actions.
The founders of one of the world’s largest Bitcoin derivatives exchanges have pleaded guilty to violating U.S banking laws and face up to five years behind bars for their crimes. Arthur Hayes and Ben Delo, founders of BitMEX exchange also agreed to pay $10 million each in penalties.
In a press release, the U.S Justice Department said that Arthur and Ben had pleaded guilty to violating the U.S Bank Secrecy Act by knowingly failing to establish an anti-money laundering program at BitMEX.
Founders of cryptocurrency exchange plead guilty to bank secrecy act violations https://t.co/HDro0zieEA
— US Attorney SDNY (@SDNYnews) February 24, 2022
The two pleaded guilty before U.S. District Judge John G. Koeltl. As part of their plea, they will each pay $10 million, which according to the DoJ, represents pecuniary gain derived from the offense.
BitMEX, formally known as the Bitcoin Mercantile Exchange, is a giant derivatives exchange based in Seychelles. According to the DoJ, it served American users between September 2015 and September 2020. In that time, it failed to abide by the BSA which requires all financial services firms to have adequate AML programs in place.
The DoJ accused BitMEX of being a money-laundering platform. It cited one incident in 2018 when Hayes, who was the CEO, and Delo, who was the COO, were informed that BitMEX was being used to launder the proceeds of a hack.
“Neither HAYES, DELO, nor their company filed a suspicious activity report thereafter (indeed, BitMEX filed no suspicious activity reports at all between 2014 and September 2020),” the press release claimed.
In addition, they enabled their users to evade sanctions by dealing with clients from sanctioned countries such as Iran.
Hayes has always maintained that BitMEX didn’t serve U.S users. However, the DoJ says that this was all a sham. Allegedly, all the measures that the exchange put in place were “an ineffective facade that did not, in fact, prevent users from accessing or trading on BitMEX from the United States.”
In addition to the fines, the two face a five-year maximum prison sentence.
Commenting on the plea, U.S. Attorney Damian Williams said, “As cryptocurrencies and technologies designed to facilitate their trade proliferate, companies engaged in the virtual currency economy have become critical gatekeepers in efforts to ensure that U.S. markets are fair, efficient, and secure.”
He added:
Arthur Hayes and Benjamin Delo built a company designed to flout those obligations; they willfully failed to implement and maintain even basic anti-money laundering policies. They allowed BitMEX to operate as a platform in the shadows of the financial markets. Today’s guilty pleas reflect this Office’s continued commitment to the investigation and prosecution of money laundering in the cryptocurrency sector.
