BitMEX founders plead guilty to violating money laundering laws – they face five years in prison

BitMEX

Arthur Hayes and Ben Delo have pleaded guilty to breaching banking secrecy as BitMEX managers and will each voluntarily pay a $10 million fine. The two could still be sentenced to up to five years in prison. Their spokesmen said they both regret their behavior and accept responsibility for their actions.

The founders of one of the world’s largest Bitcoin derivatives exchanges have pleaded guilty to violating US banking laws and may face up to five years in prison. Arthur Hayes and Ben Delo, the founders of the BitMEX exchange, also agreed to pay a $10 million fine each.

In a press release , the US Department of Justice stated that Hayes and Delo have pleaded guilty to violating the US Bank Secrecy Act by intentionally failing to implement anti-money laundering measures at BitMEX.

The two pleaded guilty before US District Judge John G. Koeltl. As part of their admission of guilt, they will each pay $10 million, which the Department of Justice says is equivalent to the monetary gain derived from the crime.

BitMEX, formally “Bitcoin Mercantile Exchange”, is a derivatives exchange based in the Seychelles. According to the Justice Department, she served American customers between September 2015 and September 2020. During that time, it has failed to comply with the Bank Secrecy Act (BSA), which requires all financial service providers to have adequate anti-money laundering mechanisms in place.

The Justice Department accused BitMEX of being a money laundering platform. It cited an incident in 2018 when Hayes, the CEO, and Delo, the COO, were informed that BitMEX was being used to launder proceeds from a criminal hack.

“Neither Hayes nor Delo nor their company subsequently filed any SARs — in fact, between 2014 and September 2020, BitMEX did not file any SARs at all,” the press release reads.

Additionally, they enabled their clients to circumvent sanctions by trading with clients from sanctioned countries like Iran.

Hayes has always maintained that BitMEX has not served US customers. However, the Justice Department claims that this was all a hoax. Allegedly, all actions taken by the exchange were “an ineffective facade that did not prevent users from accessing or trading BitMEX from the United States.”

In addition to the fines, the two face a maximum of five years in prison.

Commenting on the confession, US Attorney Damian Williams said:

“With the proliferation of cryptocurrencies and technologies to facilitate their trading, companies engaged in the virtual currency economy have become critical gatekeepers, ensuring that US markets are fair, efficient and secure. Arthur Hayes and Benjamin Delo built a company designed to disregard these obligations; they willfully failed to implement and maintain even basic anti-money laundering measures. They allowed BitMEX to operate as a platform in the shadow of the financial markets. Today’s guilty pleas reflect this office’s continued commitment to investigating and prosecuting money laundering in the cryptocurrency sector.”

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