The US Department of Justice (DOJ) has revealed that Arthur Hayes and Benjamin Delu, founders of Seychelles-based cryptocurrency exchange BitMEX, have pleaded guilty to violating the Banking Secrecy Act.
US authorities said the derivatives trading platform was in fact a money laundering platform due to its willful failure to implement anti-money laundering programs and KYC procedures.
The two executives, who are accused of violating bank secrecy law by operating BitMEX and their willful failure to create, implement and maintain an anti-money laundering (AML) program, have admitted.
Under the terms of the plea agreement, Hayes and Dillow agreed to pay a criminal fine of $10 million each.
They could also face a maximum of five years in prison.
Damian Williams, United States Attorney for the Southern District of New York stated:
Arthur Hayes and Benjamin Delow built a company designed to abandon those legal obligations as they deliberately failed to implement and maintain even basic anti-money laundering policies.
They allowed BitMEX to act as a platform in the shadows of the financial markets.
Today’s guilty plea reflects this office’s ongoing commitment to investigating and prosecuting money laundering in the cryptocurrency sector.
The Justice Department also said that the two defendants had contact with users residing in Iran, which is punishable by OFAC, and allowed them to use the platform even after doing so.
Authorities also dismissed claims by two executives that no Americans used the platform and added that Dubow fraudulently altered internal tracking information to reflect that customer’s country of residence as outside the United States.
In October 2020, the Department of Justice alleged that Hayes, Dillo and co-defendant Sam Reed attempted to violate US anti-money laundering regulations by creating an offshore store that would enable state users to conduct transactions outside the oversight of legal agencies.
After a 10-month legal battle, BitMEX has agreed to settle and will pay a $100 million fine to the CFTC.
Following court filings, Hayes stepped down as CEO of BitMEX, to take over by Alexander Hauptner.
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