BitMEX’s Founders Fined $10M Each for Bank Secrecy Act Violations

Arthur Hayes and Benjamin Delo, founders of BitMEX crypto derivative exchange, have pleaded guilty to violating the Bank Secrecy Act (BSA) by failing to implement U.S. Anti-Money Laundering (AML) measures on its platform.

BitMEX Founders Agrees to Pay $10 Million Each

After pleading guilty on Thursday before U.S. District Judge John G. Koeltl, both founders agreed to pay a $10 million criminal fine each for violations. They could face 5 years in prison. However, any sentencing of the defendants will be determined by the judge.

According to court filings by the U.S. Department of Justice (DOJ), Arthur Hayes, and Benjamin Delo failed to file any suspicious activity reports or implement AML or Know Your Customer (KYC) measures on their platform. The filings alleged that the duo was aware that BitMEX was used in carrying out money laundering acts from September 2015 until their indictment in September 2020.

“They willfully failed to implement and maintain even basic anti-money laundering policies.  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,” U.S. Attorney Damian Williams said.

In addition, BitMEX violated the Office of Foreign Assets Control (OFAC) sanction by serving customers in Iran.

BitMEX Regulatory Challenges

It’s not just the DOJ, the crypto derivative platform has also faced scrutiny from the US Commodity Futures Trading Commission (CFTC) and the Financial Crimes Enforcement Network (FinCEN).

Both regulators’ probe into BitMEX also started in 2020 with a charge for violating the commission’s regulations, including operating an unregulated exchange and failure to implement AML and KYC requirements.

Charges were also filed against the owners of BitMEX, including Arthur Hayes, Ben Delo, and Samuel Reed, for their role in setting up different firms that operated in an unregulated exchange.

However, back in August 2021, the exchange agreed to pay a $100 million criminal fine to settle the charges with the fine being shared 50/50 between both regulators.

BitMEX has also in the past faced regulatory challenges with the UK’s Financial Conduct Authority (FCA). The regulator noted that the exchange is operating without its authorization.