Arthur Hayes and Benjamin Delo, two of the founders of offshore cryptocurrency exchange BitMEX, pleaded guilty on Thursday for the violation of the United States Bank Secrecy Act by failing to establish anti-money laundering provisions.
Both of them have agreed to pay $10 million each as a criminal fine under the terms of their plea agreement. In addition, they are looking at a maximum jail term of 5 years, but the judge will decide on the sentencing.
Deliberate Lapses
BitMEX was established in 2014 and gained popularity for offering 100x leverage on cryptocurrency derivative instruments. The exchange officially withdrew its services from the US markets around September 2015, but the prosecutors said that both Hays and Delo knew that the move was a sham. The controls put in place by the exchange to prevent US customers from trading were ineffective.
According to the prosecutors, BitMEX knew about the US-based trading and was collecting substantial profits from their activities. They even lured US customers through influencer marketing under their affiliate program.
Delo was even accused of changing BitMEX’s internal tracking information to show some popular customers’ countries other than the US.
At the time, Hayes and Delo held top executive positions at the exchange. Moreover, the criminal allegations on them forced the exchange to bring new faces to the top management.
“Arthur Hayes and Benjamin Delo built a company designed to flout [crime and corruption preventing] obligations; they willfully failed to implement and maintain even basic anti-money laundering policies,” said US Attorney Damian Williams. “They allowed BitMEX to operate as a platform in the shadows of the financial markets.”
Hayes and Delo were charged by the US prosecutors in October 2020, alongside another Co-Founder, Samuel Reed, and employee, Gregory Dwyer. Furthermore, the exchange settled with the US authorities in separate civil charges, paying $100 million.
