Two BitMex founders can be jailed for 5 years after pleading a US BSA violation

BitMex founders Arthur Hayes and Benjamin Delo pleaded guilty to violating the US Bank Secrecy Act (BSA) on Thursday. Authorities said the derivatives trading platform is “essentially a money laundering platform” as it deliberately failed to implement AML and KYC programs.

Arthur Hayes (left) and Benjamin Delo (right)

The two executives admitted to “a deliberate failure to establish, implement and maintain an anti-money laundering (AML) program.”

Under the terms of the plea agreement, Hayes and Delo both agreed to pay a fine of $10 million each. They face prison terms of up to five years.

New York’s Southern District Attorney Damian Williams stated:

“Arthur Hayes and Benjamin Delo built a company designed to meet those commitments, but they deliberately failed to implement and maintain even basic anti-money laundering policies.

They allow BitMEX to act as the underground platform of the financial markets.

Today’s guilty plea reflects the Attorney General’s commitment to continue investigating and prosecuting money laundering in the crypto space.”

The DOJ also said Hayes and Delo had contacted users based in Iran, an OFAC-sanctioned jurisdiction, and allowed them to use the platform.

Authorities also refuted claims by the two executives that no Americans were using the platform, adding that Delo had altered internal tracking information to incorrectly reflect users’ nationalities.

In October 2020, the DOJ alleges that Hayes, Delo and co-defendant Sam Reed attempted to circumvent US AML regulations by establishing an offshore that would allow US users to transact.

Then came the Commodity Futures Trading Commission (CFTC), which filed federal lawsuits against BitMEX and its founders. After a 10-month legal battle, BitMEX agreed to a settlement and will pay the CFTC a $100 million fine.

According to court documents, Hayes resigned as CEO of BitMEX, a role later filled by Alexander Höptner.

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