Crypto Exchange Bitmex Founders Plead Guilty to Bank Secrecy Act Violations CryptoBlog

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The founders of cryptocurrency derivatives exchange Bitmex, Arthur Hayes and Benjamin Delo, have pleaded guilty to violations of US bank secrecy law. “Due to its deliberate failure to implement the AML and KYC programs, Bitmex was in effect a money laundering platform,” the US Department of Justice said.

Bitmex Founders Guilty of Bank Secrecy Law Violations

The US Department of Justice (DOJ) announced on Thursday that the founders of cryptocurrency derivatives exchange Bitmex have pleaded guilty to violating the Bank Secrecy Act (BSA). The DOJ said:

Arthur Hayes and Benjamin Delo designed Bitmex as a platform to flaunt US anti-money laundering rules.

Hayes, 36, is from Miami, Florida. Delo, 38, resides in the UK and Hong Kong.

The Department of Justice explained that from at least September 2015 until the time of their indictment in September 2020, the two “deliberately caused Bitmex to fail to establish and maintain an AML program”, including an AML program. of know your customer (KYC). Hayes resigned as CEO of Bitmex after the indictment.

Hayes was made aware in May 2018 of allegations that Bitmex was being used to launder the proceeds of a cryptocurrency hack, the DOJ added. However, neither Hayes, Delo nor Bitmex subsequently filed a suspicious activity report or implemented measures to prevent future use of the platform to launder funds.

The DOJ detailed:

Due to its deliberate failure to implement the AML and KYC programs, Bitmex was actually a money laundering platform.

Bitmex was also used to evade sanctions, the DOJ noted, adding that Hayes and Delo communicated directly with exchange customers “who identified themselves as based in Iran, an OFAC-sanctioned jurisdiction, but have done nothing to implement an AML or KYC program after doing so.

Additionally, the crypto platform has never ceased operations in the United States “despite repeatedly stating that Bitmex does not serve US customers.” the DOJ said:

Both Hayes and Delo knew that Bitmex’s alleged withdrawal from the US market around September 2015 was a sham.

The “alleged” controls “Bitmex put in place to prevent US trading were an ineffective facade that, in fact, did not prevent users from accessing or trading on Bitmex from the United States,” the DOJ described.

Hayes and Delo also used U.S.-based crypto “influencers” to market Bitmex products to new U.S. customers through the platform’s “affiliate program,” the Justice Department noted.

The two founders pleaded guilty to one count each of violating the Bank Secrecy Act, which carries a maximum sentence of five years in prison, the DOJ detailed, adding:

Under the terms of their respective plea agreements, Hayes and Delo each agreed to separately pay a criminal fine of $10 million representing pecuniary gain from the offense.

In August last year, Bitmex agreed to pay $100 million to settle charges against the Commodity Futures Trading Commission (CFTC) and the Financial Crimes Enforcement Network (FinCEN). In January this year, the exchange acquired a German bank with the aim of creating a “regulated crypto powerhouse” in Europe.

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What do you think about the founders of Bitmex pleading guilty to breaking the bank secrecy law? Let us know in the comments section below.

Kevin Helms

An economics student from Austria, Kevin discovered Bitcoin in 2011 and has been an evangelist ever since. His interests include Bitcoin security, open source systems, network effects, and the intersection between economics and cryptography.

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