BitMEX Co-Founders Plead Guilty to Money Laundering Charges

BitMEX founders have pleaded guilty to violating the Bank Secrecy Act and potentially face a maximum prison sentence of five years.

BitMEX Executives May Face Prison Time

According to a Thursday press release from the U.S. Department of Justice, two of the three co-founders of Bitcoin derivatives trading exchange BitMEX—Arthur Hayes and Benjamin Delo—have pleaded guilty to violating the Bank Secrecy Act and facilitating money laundering. 

Founded in 2014, Seychelles-headquartered BitMEX has been one of the biggest Bitcoin derivatives trading platforms. Hayes and Delo had previously served as BitMEX’s CEO and COO respectively, before stepping down from their leadership positions due to legal troubles. 

The press release states that BitMEX executives offered trading services to U.S. citizens and intentionally did not comply with the required anti-money laundering and Know Your Customer protocols. By doing so, BitMEX facilitated money laundering and helped entities circumvent economic sanctions, the press release read.

The two defendants pleaded guilty at a U.S. court for the Southern District of New York and agreed to pay fines of $10 million individually. 

In October 2020, the U.S. Department of Justice charged BitMEX co-founders Arthur Hayes, Benjamin Delo, and Samuel Reed for illegally offering Bitcoin trading to U.S. residents. The same year, the Commodity Futures Trading Commission led an enforcement action against the exchange but later settled with a $100 million penalty. 

Damian Williams, U.S. Attorney for the Southern District of New York, said while operating BitMEX and offering services to American citizens, Hayes and Delo “willfully failed to implement and maintain even basic anti-money laundering policies.” Williams added:

“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.”

Violating the Bank Secrecy Act carries a maximum penalty of 5 years in prison. But whether or not the executives will face jail time is yet to be determined by the court. 

In response to its co-founders pleading guilty to DOJ charges, BitMEX put out a statement assuring users of the platform’s functionality. In a Twitter post, the exchange said: “It’s business as usual, all funds are safe, and there is no impact to the functionality of the platform. All BitMEX operations, including deposits, withdrawals, and trading, are functioning normally.”

Disclosure: The author does not own any cryptocurrency mentioned in the piece.