BitMEX Founders Pled Guilty in the US, Agreed to Pay $10M Each

Arthur Hayes and Benjamin Delo, two of the founders of offshore cryptocurrency exchange BitMEX, pleaded guilty on Thursday for the violation of the United States Bank Secrecy Act by failing to establish anti-money laundering provisions.

Both of them have agreed to pay $10 million each as a criminal fine under the terms of their plea agreement. In addition, they are looking at a maximum jail term of 5 years, but the judge will decide on the sentencing.

Deliberate Lapses

BitMEX was established in 2014 and gained popularity for offering 100x leverage Leverage In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders Read this Term on cryptocurrency derivative instruments. The exchange officially withdrew its services from the US markets around September 2015, but the prosecutors said that both Hays and Delo knew that the move was a sham. The controls put in place by the exchange to prevent US customers from trading were ineffective.

According to the prosecutors, BitMEX knew about the US-based trading and was collecting substantial profits from their activities. They even lured US customers through influencer marketing Marketing Marketing is defined as the business process of identifying, anticipating and satisfying customers' needs and wants.This is a crucial element of any operation or brokerage in the financial services space. Well-funded marketing campaigns are instrumental to the survival and longevity of these companies in an increasingly competitive industry.Within the forex space, marketers perform a wide range of functions to help procure, secure, or retain clients.In particular, newer forex brokers also have t Marketing is defined as the business process of identifying, anticipating and satisfying customers' needs and wants.This is a crucial element of any operation or brokerage in the financial services space. Well-funded marketing campaigns are instrumental to the survival and longevity of these companies in an increasingly competitive industry.Within the forex space, marketers perform a wide range of functions to help procure, secure, or retain clients.In particular, newer forex brokers also have t Read this Term under their affiliate program.

Delo was even accused of changing BitMEX’s internal tracking information to show some popular customers’ countries other than the US.

At the time, Hayes and Delo held top executive positions at the exchange. Moreover, the criminal allegations on them forced the exchange to bring new faces to the top management.

“Arthur Hayes and Benjamin Delo built a company designed to flout [crime and corruption preventing] obligations; they willfully failed to implement and maintain even basic anti-money laundering policies,” said US Attorney Damian Williams. “They allowed BitMEX to operate as a platform in the shadows of the financial markets.”

Hayes and Delo were charged by the US prosecutors in October 2020, alongside another Co-Founder, Samuel Reed, and employee, Gregory Dwyer. Furthermore, the exchange settled with the US authorities in separate civil charges, paying $100 million.