BitMEX founders Arthur Hayes and Benjamin Delo pleaded guilty to violating the U.S. Bank Secrecy Act (BSA) in federal court on Thursday, the U.S. Department of Justice said Thursday.
Hayes and Delo were accused of violating the BSA by operating BitMEX, a crypto spot and derivatives trading platform, to operate with poor anti-money laundering (AML) protocols.
The two each pleaded guilty to one count of violating the BSA on Thursday. They could face a maximum of five years in prison, though their actual sentences will be decided by a federal judge later.
The DOJ and the Commodity Futures Trading Commission (CFTC) both brought federal charges against BitMEX and its founders in 2020. The CFTC and the Financial Crimes Enforcement Network settled their own charges with BitMEX last year, with the company paying a $100 million penalty to the two regulatory agencies.
The DOJ alleged in October 2020 that Hayes, Delo and fellow company owner Samuel Reed “attempted to evade” U.S. AML regulations by setting up shop offshore but allowing U.S. customers to transact on the platform. The CFTC’s charges added on to this, claiming BitMEX allowed U.S. customers to trade crypto derivatives products despite BitMEX not registering as a derivatives platform with the federal regulator.
It was not immediately clear whether Reed and Gregory Dwyer, BitMEX’s first employee who was also charged in 2020, also plan to plead guilty to the charges.
“As a result of its willful failure to implement AML and KYC programs, BitMEX was in effect a money laundering platform. For example, in May 2018, Hayes was notified of allegations that BitMEX was being used to launder the proceeds of a cryptocurrency hack,” the DOJ said in a press release published Thursday.
BitMEX also allowed customers from Iran, a sanctioned jurisdiction, to use the platform, the DOJ said.
Hayes stepped down as BitMEX’s CEO shortly after the charges were brought.
In a statement sent after the publication of this article, Hayes said he accepted responsibility for his actions "and looks forward to the time when he can put this matter behind him."
In a statement sent through a spokesperson, Delo said "he regrets that BitMEX, the cryptocurrency derivatives platform he co-founded, lacked an adequate customer identification program. Ben voluntarily appeared in the US to address these charges."
Taylor Bossung, a spokesperson for BitMEX, said, "We are aware of developments in the DOJ case but will not be commenting on an ongoing legal matter to which no BitMEX entity is a party. It's business as usual, all funds are safe, and there is no impact to the functionality of the platform including deposits and withdrawals."
UPDATE (Feb. 24, 2022, 23:10 UTC): Adds statements from Hayes, Delo and BitMEX.
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