Prosecutors Label BitMEX a Money Laundering Exchange
According to a press release by the United States Department of Justice (DOJ) on Thursday (February 24, 2022), Hayes and Delo violated the BSA by “willfully failing to establish, implement, and maintain an anti-money laundering (AML) program at BitMEX.” Authorities said that between September 2015 and September 2020, the co-founders failed to carry out robust AML and KYC verifications on BitMEX.
Prosecutors said that both Hayes and Delo refused to take action in 2018 when there were allegations that BitMEX was used to launder ill-gotten funds from a crypto hack. According to court filings, the defendants neither alerted authorities about any suspicious activity nor implemented AML and KYC policies in response to the report.
The press release further noted that both Hayes and Delo continued to serve customers in the United States, despite stating that they had withdrawn services in the U.S. market.
Apart from unlawfully allowing Americans to transact on the crypto exchange, Hayes and Delo also allowed customers based in Iran, a jurisdiction sanctioned by the Office of Foreign Assets Control (OFAC), to use the BitMEX platform.
According to a statement from U.S. Attorney Damian Williams:
“The opportunities and advantages of operating in the United States are legion, but they carry with them the obligation for those businesses to do their part to help in driving out crime and corruption.”
Williams added:
“Arthur Hayes and Benjamin Delo built a company designed to flout those obligations; 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. Today’s guilty pleas reflect this Office’s continued commitment to the investigation and prosecution of money laundering in the cryptocurrency sector.”
Meanwhile, Hayes and Delo admitted to the one-count charge for violating the BSA, with the defendants agreeing to each pay a $10 million fine. While the offense carries a penalty of up to five years in prison, the judge will ultimately determine the sentence.
BitMEX’s Relationship with U.S. Regulators
These latest developments follow charges brought against BitMEX by U.S. regulators in 2020 when the Commodity and Futures Trading Commission (CFTC) accused the owners of BitMEX of illegally operating an unregistered crypto derivatives exchange in the United States while breaking multiple CFTC rules, which included the failure to implement AML procedures.
Later in August 2021, 10 months after the CFTC’s charges, BitMEX reached a resolution with the derivatives market regulator and the Financial Crimes Enforcement Network (FinCEN), agreeing to pay $100 million to resolve the charges.
