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Founders of BitMEX plead guilty to violating Bank Secrecy Act

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Pavan A Follow

INDIA

Mar, 01 2022

Mar, 01 2022

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Bitcoin derivatives exchange BitMEX's founders, Arthur Hayes and Benjamin Delo, have pleaded guilty to violating the laws of the United States Bank Secrecy Act.

 

On Thursday, Arthur Hayes and Benjamin Delo testified in New York federal court that they had violated the Bank Secrecy Act's anti-money laundering provisions.


After reaching an agreement with prosecutors, both men entered pleas and agreed to pay a $10 million fine. “As a result of its willful failure to implement AML and KYC programs, BitMEX was in effect a money-laundering platform,” said the U.S. Department of Justice.

 

According to the DOJ's announcement on the case on Thursday, BitMEX's lack of regulatory compliance essentially caused it to become a "money-laundering platform." The Department of Justice informed Hayes in May 2018 that Bitmex had been used to launder the proceeds of a cryptocurrency hack. Hayes, Delo, and BitMEX, on the other hand, did not file a suspicious activity report or take any other steps to prevent the platform from being used for money laundering in the future.

 

BitMEX is a crypto trading platform based in Seychelles that offers crypto futures, derivatives, and margin trading up to 100x. The exchange used to provide its services to Americans without any know-your-customer (KYC) or anti-money laundering (AML) verification procedures.

 

According to the DOJ, BitMEX was also used to circumvent sanctions, with Hayes and Delo communicating directly with BitMEX customers who self-identified as being based in Iran, an OFAC-sanctioned jurisdiction, but then failing to implement an AML or KYC program.

 

BitMEX's share of Bitcoin futures open interest (OI) has shrunk to insignificance since it fully vetted all of its users. In February 2021, there was only about $3.5 billion in OI, with BitMEX accounting for nearly a third of it. However, according to CoinGlass data, there is now $15.18 billion in OI, with BitMEX accounting for $482 million, or 3%.


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Pavan A

CBW - External Analyst

INDIA

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