The US Department of Justice said on Thursday that BitMEX founders had entered a guilty plea to charges of violating the Bank Secrecy Act by failing to set in place an anti-money laundering system.
Benjamin Delo and Arthur Hayes, two of the co-founders, have agreed to each pay a $10 million fine as part of their plea agreement.
They might face up to five years in jail, though their exact sentences will be determined later by a federal judge, according to the Manhattan U.S. Attorney’s Office.
The accusations were brought as part of a US clampdown on the Seychelles-based cryptocurrency exchange. It was one of the largest bitcoin derivatives trading platforms in the world at the time.
BitMEX Founders Knew What’s Going On
Hayes and Delo consented to a six- to 12-month prison sentence each under the terms of the plea deal.
Damian Williams, the US Attorney for the Southern District of New York, disclosed in a statement that the defendants permitted BitMEX to operate “in the shadows of the financial markets.”
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According to the DOJ, the BitMEX founders also enabled customers from Iran to utilize the platform, despite the fact that Iran is a sanctioned country.
Hayes resigned as BitMEX’s chief executive officer immediately after the lawsuit was filed.
The two men “created a business with the express purpose of violating those responsibilities” and “willfully failed” to adopt and maintain fundamental anti-money laundering practices, Willliams stated.
Prosecutors claim that the company’s leadership ignored reports that BitMEX was being used to launder illegal proceeds and shift money in violation of US sanctions.
Out Of Reach Of Regulators
According to authorities, the two publicly divulged that they were keeping the exchange’s activities out of the United States — and so out of reach of the country’s very strict banking regulations — but had full knowledge that US consumers were using BitMEX.
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Hayes accepts responsibility for his conduct, according to a representative, and looks forward to the day when he can “put this matter behind him.”
A representative for Delo said the platform’s “lack of an adequate consumer identification procedure” is regrettable.
Hayes and Delo were charged in October 2020, along with co-founder Samuel Reed and employee Gregory Dwyer, with failing to implement a federally mandated “know your customer” (KYC) standard.
The BitMEX founders agreed to pay up to $100 million in August 2021 to settle separate allegations brought by the Financial Crimes Enforcement Network and the CFTC for illegally taking consumer funds to trade bitcoin and other crypto while the platform was not registered to do so.
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