BitMEX Founders Plead Guilty to Bank Secrecy Act Violations

The founders of crypto exchange BitMEX have been found guilty of violating the Bank Secrecy Act after a lengthy lawsuit with the United States Department of Justice (DOJ).

American Arthur Hayes and British Hong Konger Benjamin Delo allowed to “deliberately failing to establish, implement, and maintain an anti-money laundering (AML)” program on their crypto derivatives and futures exchange, BitMEX.

BitMEX is a Seychelles-based crypto trading platform that offers crypto futures, derivatives and margin trading up to 100x. The exchange once offered its services to Americans without any know-your-customer (KYC) or AML verification procedures. The DOJ’s Feb. 24 announcement on the matter argues that such a lack of regulatory compliance essentially turned BitMEX into a “money laundering platform.”

Both Hayes and Delo pleaded guilty ahead of the March lawsuit and have agreed to pay $10 million in criminal fines each.

DOJ attorney Damian Williams said operating a crypto company in the US “imposes an obligation on those companies to do their part to eradicate crime and corruption.” He went on to say that BitMEX was operating as “a platform in the shadow of financial markets” and that:

“Arthur Hayes and Benjamin Delo have built a company designed to meet those commitments; they deliberately failed to implement and enforce even a basic anti-money laundering policy.”

Adding more fuel to the DOJ’s case was the insinuation that Hayes bribed the Seychelles local government when BitMEX completed its move there in 2020. He would boast that the bribe only cost him a coconut.

Although the BitMEX base of operations was located in the United States from approximately 2015 to 2020, Hayes and Delo insisted that no Americans were using the platform. The DOJ proved the claim was not factual. In January 2021, the exchange reported that it had verified 100% of its users using a KYC-AML procedure.

Related: BitMEX Execs Reveal EU Expansion With Takeover of German Banks

Since all users have been fully vetted, BitMEX’s share of Bitcoin futures open interest (OI) has become relatively insignificant. In February 2021, there was only about $3.5 billion in OI, nearly a third of which came from BitMEX. However, there is now $15.18 billion in OI according to data from CoinGlassof which only $482 million, or 3%, comes from BitMEX.

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