BitMEX founder admits to violating Bank Secrecy Act

The founder of cryptocurrency exchange BitMEX has admitted violating the Bank Secrecy Act following a lengthy legal process with the U.S. Department of Justice (DOJ).

American Arthur Hayes and British Hong Kong native Benjamin Delo have admitted to their “willful failure to establish, implement and maintain anti-money laundering (AML) programs” at crypto derivatives and futures exchange BitMEX.

BitMEX is a Seychelles-based crypto trading platform offering up to 100x crypto futures, derivatives and margin trading. The exchange used to offer its services to Americans without any know-your-customer (KYC) or AML verification procedures. The U.S. Department of Justice’s announcement on the case on Feb. 24 said this lack of compliance essentially caused BitMEX to become a “money laundering platform.”

Arthur Hayes and Benjamin Delo both pleaded guilty before their trial in March and agreed to each pay $10 million in criminal fines.

Damian Williams, an attorney for the U.S. Department of Justice, said that with cryptocurrency businesses operating in the U.S., “these businesses have an obligation to do their part to help drive out crime and corruption.” He went on to say that BitMEX is “a platform in the shadow of financial markets.” ,and:

"Arthur Hayes and Benjamin Delo created a company that disregarded these obligations; and failed to enforce and maintain even the most basic anti-money laundering policies."

Adding fuel to the Justice Department’s case was his suggestion that Hayes paid bribes to the local government of Seychelles when BitMEX completed its relocation to the local government in 2020. He allegedly bragged that the bribe only cost him a coconut.

Although BitMEX was based in the United States from 2015 to 2020, Arthur Hayes and Benjamin Delo insist that no Americans use the platform. The DOJ disproved that claim. By January 2021, the exchange reported that it had verified 100% of its users through the KYC-AML process.

Since conducting a comprehensive review of all of its users, BitMEX’s share of Bitcoin futures open interest (OI) has dwindled to relatively insignificant proportions. In February 2021, OI was only about $3.5 billion, nearly a third of which came from BitMEX. However, according to CoinGlass, there is now $15.18 billion in OI, of which only $482 million (3%) comes from BitMEX.