No prison for BitMEX co-founder

BitMEX co-founder Arthur Hayes will not go to prison for violating the US Bank Secrecy Act. 

The former CEO of the cryptocurrency exchange was sentenced to six months home detention and two years probation.

Arthur Hayes, former BitMEX CEO, avoids prison

After resigning as CEO of BitMEX over a complaint by the US CFTC (Commodity Futures Trading Commission), which accused the famous US exchange of operating without proper authorization, Arthur Hayes returned to the US in October 2020 to stand trial.

The manager was facing a severe sentence, but while admitting his guilt, he managed to avoid prison, receiving a mild sentence that includes six months of home detention and two years of probation, as well as the payment of a $10 million fine.

The federal judge who handed down the sentence found the manager guilty of violating the Bank Secrecy Act (BSA), which imposes strict rules on the identity of customers and their transactions for anti-money laundering purposes.

Assistant US Attorney Samuel Raymond made the following comments to US District Judge John Koeltl before Koeltl handed down the sentence:

“This is a very serious offense. There were real consequences. When individuals like Mr. Hayes operate platforms without anti-money-laundering programs or know-your-customer programs, they become a magnet for people to launder money”.

The cases that pushed the BitMEX platform to trial

According to the federal judge, the platform operated in a shady manner in the financial markets, violating several US laws. 

BitMEX, which as of this year is a sponsor of AC Milan, freshly crowned Italian champions, was one of the first platforms to offer derivative contracts in cryptocurrencies. 

BitMEX has long been in the eye of the storm in many countries for its way of operating, which is considered to be disrespectful of financial regulations.

In January 2020, AMF, the authority that regulates the financial markets in Quebec, Canada, deemed the platform’s activities to be illegal in the country, preventing it from operating in Quebec. 

In Japan, the decision to shut down all activities had been made by the company itself, after the passing of a law establishing precise rules on cryptocurrency trading, which the exchange was evidently unable to comply with.

Hayes, aged 36, willingly accepted the ruling, commenting that:

“I know that my best years are ahead of me. I will always have to live with the consequences of these actions. I am ready to turn the page and start again”.

His lawyer, James Benjamin, called Hayes an “intellectual powerhouse” and a “charismatic leader” after the verdict and commented on the sentence, saying that prosecutors had attempted to use this case as a kind of “referendum on abstract principles they seek to endorse,” pursuing a “draconian sentence” to vindicate US policy”.

The trial of the second defendant in the case, the other co-founder of the exchange Benjamin Delo, is due to take place in July.