By
Bena Ilyas
April 10th, 2024
According to the DOJ press release, “as a result of its willful failure to implement AML and KYC programs, BitMEX was in effect a money-laundering platform.”
The Department of Justice (DOJ) has announced that BitMEX founders Arthur Hayes and Benjamin Delo have pleaded guilty to violating the US Bank Secrecy Act (BSA) in federal court on Thursday.
Hayes accepted responsibility for his actions, stating that he was anticipating a time when this would all be behind him.” Delo also expressed regret that “the platform he co-founded, lacked an adequate customer identification program.”
How It Started
DOJ and the Commodity Futures Trading Commission (CFTC) first filed charges against BitMEX and its founders in 2020.
Hayes, Delo, and two others were accused of running BitMEX, a crypto spot and derivativesBitMEX trading platform, without putting checks in place to prevent money laundering, violating the BSA and AML protocols.
According to the DOJ, Hayes, Delo and co-company owner, Samuel Reed attempted to bypass US AML regulations by situating its office offshore despite allowing local transactions from U.S residents on the platform.
Likewise, CFTC claimed BitMEX allowed US customers to trade crypto derivatives products even though it was not registered as a derivatives firm with the regulatory body.
Allegations and Counter-Actions
According to the DOJ press release, “as a result of its willful failure to implement AML and KYC programs, BitMEX was in effect a money-laundering platform.”
Last year, the company settled its charges with The CFTC and the Financial Crimes Enforcement Network BitMEX, with the company forking out a $100 million fine to the regulatory agencies.
Now, the founders have entered a guilty plea to one count of violating the BSA on Thursday. While they could face up to 5 years in prison, their actual sentences will be decided by a federal judge later.
It was not immediately clear whether Reed and Gregory Dwyer, BitMEX’s first employee who was also charged in 2020, also plan to plead guilty to the charges.
In 2018, BitMEX was used to launder funds secured from a crypto hack. At another time, BitMEX allowed customers from Iran, a sanctioned jurisdiction, to use the platform. These were violations of the protocol and warranted protection by the DOJ.
Shortly after the allegations were made, Hayes stepped down as BitMEX’s CEO.
BitMEX Unaffected by Case
Speaking about the development, company spokesperson, Taylor Bossung noted the company was abreast of developments in the DOJ case.
He said:
“We will not be commenting on an ongoing legal matter to which no BitMEX entity is a party. It’s business as usual.”
He also assured customers their funds were secure and the case had no impact on the functionalities of its platforms.