BitMEX founders Hayes, Delo plead guilty to anti-money laundering violations

Lavina Daryanani
Bribe concept. Dollar banknotes, handcuffs and gavel on dark black table

On Thursday, BitMEX co-founders Arthur Hayes and Benjamin Delo confessed that they failed to establish an anti-money-laundering program at the cryptocurrency exchange. By admitting so, they have dodged away their trial on federal charges that were scheduled to begin in New York next month.

Both the founders pleaded guilty on Thursday to a single charge of violating the Bank Secrecy Act. Under the plea deal, the parties agreed that the federal sentencing guidelines call for a sentence of 6-12 months each. Hayes and Delo also consented to pay a fine of $10 million. If convicted at trial, they would have faced as much as five years in prison.

As per Manhattan U.S. Attorney Damian Williams, whose office led the prosecution, both the execs built the company to “flout” obligations. He added,

“They willfully failed to implement and maintain even basic anti-money laundering policies. They allowed BitMEX to operate as a platform in the shadows of the financial markets.”

Peeking into what happened in 2020

Hayes, a former equities trader for Citigroup Hong Kong, founded BitMEX in 2014 with Delo, an Oxford graduated computer scientist. Both the executives along with their first employee [Reed] were charged in October 2020 over their failure to implement programs to prevent money-laundering or verify the identities of their customers. As per the prosecutors, Hayes and Delo set up BitMEX in Seychelles in part to avoid regulatory scrutiny.

Here, it is also worth recalling that the crypto market was in utter shock in March 2020 when Bitcoin’s price briefly plunged to under $4,000 per bitcoin. The same managed to spark fears of a crypto wipeout.

The sudden fall was, however, led by BitMEX, with the price of the asset dipping to a low of $3600 on the exchange before it was shut down for maintenance. Back then Bitcoin was actually worth $5,000.

What the BitMEX founders’ spokespersons say

Per a spokesperson’s statement on Thursday, “Mr. Hayes accepts responsibility for his actions and looks forward to the time when he can put this matter behind him.

A representative for Delo said in a statement that “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. Together with BitMEX’s agreement with the CFTC and FinCEN last year, all financial benefits from activity in the U.S. have been paid to U.S. authorities.”