BitMEX founders plead guilty to money laundering and could be arrested

BitMEX founders Arthur Hayes and Benjamin Delo pleaded guilty to violating the anti-money laundering (AML) provisions of the United States Bank Secrecy Act.

As revealed by the United States Department of Justice (DOJ), the founders of the Seychelles-based cryptocurrency exchange have pleaded guilty to facilitating acts of money laundering.

Officials said the derivatives trading platform was “in fact a money laundering platform” due to its intentional failure to implement AML and KYC (Know Your Customer) programs.

According to the DOJ, both Hayes and Delo confirmed that BitMEX had weak AML and KYC precisely to allow criminals to use the platform to launder money.

The confession is the first of its kind in the history of cryptocurrencies.

BitMEX case

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

Then, under the terms of the plea agreement, Hayes and Delo agreed to pay a fine of $10 million each. They can still face a maximum of five years in prison.

“Arthur Hayes and Benjamin Delo built a company designed to flout those obligations; they deliberately failed to implement and maintain even basic anti-money laundering policies. They allowed BitMEX to operate as a platform in the shadows of financial markets. Today’s guilty pleas reflect this Office’s ongoing commitment to the investigation and prosecution of money laundering in the cryptocurrency industry,” said Damian Williams, the U.S. Attorney for the Southern District of New York.

Also, the DOJ said they communicated with users based in Iran, an OFAC-sanctioned jurisdiction. They would have allowed Iranians to use the platform even after confirming its suspected origin.

Authorities also overturned the two executives’ claims that no Americans were using the platform. They also added that Delo falsely altered the tracking information to indicate the customer’s country as different from the US.

But this is not the first accusation they have faced. After all, in October 2020, the DOJ alleged that Hayes, Delo, and indicted co-defendant Sam Reed tried to flout US AML regulations. According to the indictment, they would have established an off-shore entities allowing users from the country to carry out transactions.

After a 10-month legal battle, BitMEX agreed to pay a $100 million fine to the CFTC.

After the lawsuits, Hayes stepped down as CEO of BitMEX. Then the role was taken over by Alexander Höptner.