BitMEX has now lost all earnings in the United States as a result of the founders’ guilty pleas
Arthur Hayes and Benjamin Delo, co-founders of BitMEX, acknowledged to violating anti-money laundering rules and agreed to pay $10 million in penalties each.
According to the Department of Justice, BitMEX founders Arthur Hayes and Benjamin Delo have pled guilty to violating the Bank Secrecy Act and agreed to pay $10 million in penalties each (DoJ).
Former BitMEX executives accepted a plea agreement with US authorities but face up to a year in jail.
Former Chief Operating Officer Delo and former Chief Executive Officer Hayes confessed to violating anti-money laundering (AML) legislation in Federal Court on Thursday.
The BitMEX founders did not implement know-your-customer (KYC) or anti-money laundering (AML) protections. Additionally, they intentionally permitted the movement of criminal monies via their Seychelles-based cryptocurrency trading platform.
Hayes was informed that BitMEX was being used to launder the profits of a cryptocurrency breach but took no action to prevent it, according to the DoJ.
However, officials deemed BitMEX to be a “money-laundering platform” because to its inability to establish adequate security measures. The Department of Justice stated:
“Unsurprisingly, BitMEX served as a conduit for sanctions violations as well: Hayes and Delo both communicated directly with BitMEX customers who self-identified as being based in Iran, an OFAC-sanctioned jurisdiction, but took no action to implement an AML or KYC programme following their communication.”
BitMEX is no longer fashionable. However, in 2015 and 2016, it was one of the most famous crypto trading platforms in the industry. This resulted in the founders amassing considerable riches.
The exchange was the first to sell what are known as “perpetual futures,” a form of cryptocurrency investment instrument. These allowed for leveraged bets on Bitcoin price exposure of up to 100 times, with BTC serving as collateral.
Arthur Hayes, the creator of BitMEX, ‘accepts responsibility’
Hayes and Delo were first detained in 2020, with former head technology officer Samuel Reed and first employee Gregory Dwyer.
They admitted at the time that they had allowed US-based cryptocurrency traders to access BitMEX despite earlier claiming they were geo-blocked.
BitMEX was sentenced to pay $100 million in August by a federal court for its inadequate anti-money laundering practises. The corporation restated its commitment to prohibiting residents of the United States from utilising its services.
According to the Wall Street Journal, a Delo spokesman said that the most recent penalty, along with the prior settlement, amounted to the whole of BitMEX’s revenues from its US activities.
Delo “regrets” BitMEX’s inadequate client identity checks, they continued. Hayes’ attorney said (as reported by the Wall Street Journal) that his client “accepts responsibility for his conduct and looks forward to putting this issue behind him.”
According to the BitMEX’s former chief executive’s Twitter timeline, Arthur Hayes seems to have been unfazed by the legal turmoil.
US Attorney Damian Williams said (our emphasis) in response to the pair’s guilty pleas: “The chances and benefits of doing business in the United States are many, but they come with a duty for corporations to contribute to the fight against crime and corruption.”
“[Hayes] and [Delo] established a business with the express purpose of flouting those requirements; they wilfully failed to develop and maintain even the most basic anti-money laundering practises. They enabled BitMEX to function as a platform in the financial markets’ shadows.”
Regarding the other two BitMEX insiders, Reed’s court hearing is scheduled for next month, while Dwyer’s has been rescheduled until October.