The United States Department of Justice (DOJ) has revealed that the founders of the Seychelles-based cryptocurrency exchange BitMEX – Arthur Hayes and Benjamin Delo – had pled guilty of violating the Bank Secrecy Act (the BSA). The authorities said the derivatives trading venue was “in effect a money-laundering platform” due to its willful failure to implement AML and KYC programs.
- The two execs, who were accused of violating the BSA by operating BitMEX, admitted to “willfully failing to establish, implement, and maintain an anti-money laundering (AML) program.”
- Under the plea agreement terms, Hayes and Delo have agreed to pay a $10 million criminal fine each. They could face a maximum of five years in prison.
- Damian Williams, the United States Attorney for the Southern District of New York, stated,
“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.”
- The DOJ also said Hayes and Delo communicated with users based in Iran, an OFAC-sanctioned jurisdiction, and allowed them to use the platform even after doing so.
- The authorities also quashed the two execs’ claims that no Americans were using the platform and added that Delo falsely altered internal tracking information to reflect that customer’s country of residence as being other than the United States.
- In October 2020, the DOJ alleged that Hayes, Delo, and indicted co-defendant Sam Reed tried to flout US AML regulations by setting up an off-shore shop enabling the country’s users to transact.
- This was followed by Commodity Futures Trading Commission (CFTC) slamming federal charges against BitMEX and its founders. After a 10-month long legal battle, BitMEX agreed to settle and will pay a fine worth $100 million to the CFTC.
- Following the court filings, Hayes stepped down as the CEO of BitMEX, the role was then taken up by Alexander Höptner.