Thursday, June 8, 2023

BitMEX Admits Bank Secrecy Act


For their roles in violating the Bank Secrecy Act and operating a “money laundering platform,” Arthur Hayes and Benjamin Delo will both have to pay a fine.

The creators of BitMEX, a cryptocurrency exchange, have admitted to breaking the Bank Secrecy Act. Indeed, it came after a protracted legal battle with the United States. Justice Department (DOJ).

Arthur Hayes, an American, and Benjamin Delo, a British Hong Konger, both admitted to breaking the law. At its crypto derivatives and futures exchange, BitMEX, they wilfully failed to establish, implement, and maintain an anti-money laundering policy.

BitMEX is a crypto trading platform situated in the Seychelles that sells crypto futures, derivatives, and margin trading up to 100x. The exchange used to provide services to Americans without any know-your-customer (KYC) or anti-money laundering (AML) checks.

Additionally, the case was included in the DOJ’s release on February 24. It claimed that BitMEX’s lack of regulatory compliance had effectively turned it into a money-laundering platform.

Bitmex Guilty Pleas

Hayes and Delo both entered guilty pleas before the March trial date. Consequently, they’ve agreed to each pay $10 million in criminal fines.

On the other hand, Damian Williams is the counsel for the Department of Justice. He stated that running a crypto firm in the United States entails a great deal of responsibility. It is the responsibility of those businesses to contribute to the fight against crime and corruption. He went on to say that BitMEX was a platform that worked in the depths of financial markets.

Furthermore, Arthur Hayes and Benjamin Delo created a corporation specifically to avoid these duties. They purposefully failed to put in place and maintain even the most basic anti-money laundering policies.

Added Fuel on the Case

An event has bolstered DOJ’s case. Hayes was accused of bribing the Seychelles local administration, according to reports. It happened in 2020, when BitMEX completed its relocation. He allegedly boasted that bribing just cost him a coconut.

From roughly 2015 through 2020, BitMEX’s headquarters were in the United States. Hence, Hayes and Delo claimed that no Americans used the platform. The assertion was found to be untrue by the Department of Justice. In January 2021, the exchange claimed to have vetted all of its users through a KYC-AML process.

Since adequately validating all of its users, BitMEX’s fraction of Bitcoin futures open interest (OI) has plummeted to insignificance. There was just roughly $3.5 billion in OI in February 2021. BitMEX accounted for over a third of the total. However, according to CoinGlass data, there seems to be $15.18 billion in OI. BitMEX contributes only $482 million, or 3% of the total.


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