Crypto Exchange Bitmex’s Founders Plead Guilty to Bank Secrecy Act Violations – Arthur Hayes and Benjamin Delo, the founders of cryptocurrency derivatives exchange Bitmex, have pleaded guilty to violating the U.S. Bank Secrecy Act.
The US Department of Justice declared that “Bitmex was effectively a money-laundering platform as a result of its willful failure to execute AML and KYC systems.”
The founders of cryptocurrency derivatives exchange Bitmex pled guilty to breaching the Bank Secrecy Act, according to the US Department of Justice.
The Department of Justice stated:
Bitmex was designed by Arthur Hayes and Benjamin Delo as a way to flaunt U.S. anti-money laundering regulations.
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Hayes, 36, is from Miami. Delo, 38, resides in the United Kingdom and Hong Kong.
The two “willfully caused Bitmex to fail to create and maintain an AML program,” including a know-your-customer (KYC) program, from at least September 2015 until their indictment in September 2020, according to the Justice Department. Following the indictment, Hayes resigned as CEO of Bitmex.
According to the DOJ, Hayes was told in May 2018 that Bitmex was being used to launder the proceeds of a cryptocurrency breach. However, neither Hayes, Delo, nor Bitmex filed a suspicious activity report or took any steps to prevent future money laundering on the platform.
The Department of Justice provided the following information:
Bitmex was effectively a money-laundering platform due to its purposeful inability to establish AML and KYC standards.
The DOJ noted that both Hayes and Delo communicated directly with Bitmex customers “who self-identified as being based in Iran, an OFAC-sanctioned jurisdiction, but did nothing to implement an AML or KYC program after doing so.”
Furthermore, the crypto platform’s operations in the United States were never suspended “Despite consistently asserting that Bitmex did not serve U.S. consumers,” the DOJ said.
Hayes and Delo were both aware that Bitmex’s purported withdrawal from the US market in September 2015 was a sham.
The “purported controls Bitmex implemented to prohibit U.S. trade were an ineffectual facade that did not, in fact, prevent users from accessing or trading on Bitmex from the United States,” according to the DOJ.
According to the Justice Department, Hayes and Delo also used U.S.-based crypto “influencers” to advertise Bitmex’s products to new U.S. clients through the platform’s “affiliate program.”
The two founders according to the DOJ, pled guilty to one count of violating the Bank Secrecy Act, which carries a maximum penalty of five years in jail.
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Crypto Exchange Bitmex’s Founders Plead Guilty to Bank Secrecy Act Violations – Hayes and Delo each agreed to pay a $10 million criminal fine to represent pecuniary gain obtained from the offense under the terms of their respective plea agreements.
Bitmex agreed to pay $100 million to settle allegations with the Commodity Futures Trading Commission (CFTC) and the Financial Crimes Enforcement Network (FCEN) in August of last year (FinCEN). The exchange bought a German bank in January with the goal of creating a “regulated crypto powerhouse” in Europe.
