Arthur Hayes and Benjamin Delo, founders of crypto exchange BitMEX, have pleaded guilty to violating the United States’ Bank Secrecy Act.
Per a press release from the U.S. Department of Justice, Hayes and Delo willfully failed to “establish, implement and maintain an anti-money laundering program at BItMEX.” Both have agreed to separately pay a $10 million criminal fine that represents gains derived from the offense.
U.S. Attorney Damian Williams—who announced the guilty pleas—said both men “allowed BitMEX to operate as a platform in the shadows of the financial markets,” adding that, “Today’s guilty pleas reflect this Office’s continued commitment to the investigation and prosecution of money laundering in the cryptocurrency sector.”
Williams said that crypto companies have become “critical gatekeepers” in the wider effort to ensure U.S. markets are fair, efficient and secure.
“The opportunities and advantages of operating in the United States are legion, but they carry with them the obligation for those businesses to do their part to help in driving our crime and corruption.”
Hayes and Delo now face a maximum penalty of five years in prison.
The BitMEX case
BitMEX is a crypto exchange that, per court documents and public filings, had a U.S.-based presence between September 2015 and September 2020.
Notwithstanding “false representations to the contrary by the company,” BitMEX served “thousands” of U.S. customers.
Both individuals reportedly “willfully caused BitMEX to fail to establish and maintain an AML program,” including a ‘know your customer’ (KYC) program that would verify the identity of BitMEX customers.
“As a result of its willful failure to implement AML and KYC programs, BitMEX was in effect a money laundering platform,” the press release added.
What’s more, according to the Indictment, public court filings and court statements, both men were “closely following” US regulatory developments that would have made them acutely aware of their legal obligations in this respect.
Serving US customers
Despite both men repeatedly claiming that the company did not serve U.S. customers, Hayes and Delo knew that BitMEX’s “purported withdrawal from the US market in or about September 2015 was a sham,” the press release said.
Not only did both men reportedly understand that U.S. customers were continuing to trade on BitMEX, they also understood that these customers “derived substantial profits” from BitMEX.
What’s more, both parties reportedly sought out U.S. customers by relying on BitMEX’s “Affiliate Program, a program which marketed the company to US customers by utilizing “influencers.”
In one instance, Delo allowed a U.S.-based customer to continue to access BitMEX because the person was “famous in Bitcoin.”
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