BitMEX Founders Agree $20 Million Fine Over AML Breaches

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  • BitMEX co-founders Arthur Hayes and Benjamin Delo have pled guilty to violating the Bank Secrecy Act
  • Hayes and Delo will pay a $10 million fine each for intentionally refusing to implement an AML.KYC policy
  • Two other executive still face trial

Arthur Hayes and Benjamin Delo, two of the three BitMEX co-founders, have pleaded guilty to violating the Bank Secrecy Act and operating what the Department of Justice (DOJ) called a “money laundering platform.” The pair, who launched the BitMEX exchange in 2014 alongside Samuel Reed, allowed anonymous trading on the platform which the DOJ said undermined anti-money laundering (AML) protocols and fined the pair $10 million each for their crimes. Hayes and Delo both pled not guilty last year at their first court hearings but have changed their tune on the eve of their trial, seemingly in the face of overwhelming evidence against them.

Hayes and Delo Change Their Tune

Delo, Hayes, and Reed were all charged with violating the bank secrecy act in the way they operated BitMEX, and in October 2020 all three were charged with a range of offenses by the Commodity Futures Trading Commission (CFTC). Reed was arrested shortly after the charges were made, with Delo holding out until bail in the UK was agreed, pleading not guilty in March 2021. Hayes held out until the following month before appearing in a virtual court in Hawaii, where he too pled not guilty.

After initially vowing to fight the charges, the pair have apparently taken legal advice to settle the case, which the DOJ announced yesterday. Damian Williams, the United States Attorney for the Southern District of New York, announced that Hayes and Delo had pled guilty to “violating the Bank Secrecy Act…by willfully failing to establish, implement, and maintain an anti-money laundering…program at BitMEX.”

BitMEX Famous for its Anonymity

BitMEX was famous for its lax AML/KYC operations, and indeed is why it was so popular, with the DOJ accusing Delo of intentionally failing to implement these procedures, which are a legal requirement for platforms serving U.S. customers.

The pair will have to pay a $10 million fine each for their actions, while the fate of Samuel Reed remains unclear; he was due to face trial alongside Hayes and Delo and, having not pled guilty, will seemingly do so. Dwyer, whose whereabouts were unknown for a time, will face trial in October for his part in designing the platform.