After several failed attempts at settlement, the money laundering trial of the BitMEX exchange’s former executives is finally set to go ahead. New York District Judge John Koeltl took the decision on 11th May 2021. CEO Arthur Hayes, co-founder Benjamin Delo and CTO Samuel Reed will stand as accused, and need to spend the coming months preparing their defence for the charges made against them. Let’s take a look at the facts of the case.
In 2014, Mr. Hayes, Mr. Delo and Mr. Reed founded BitMEX. The problem is that they did not bother to register with the US Commodity Futures Trading Commission (CFTC) before allowing US-based traders onto their platform. With the backing of the US Department of Justice, this regulator decided to press charges against the exchange’s executives on 1st October 2020. On top of failure to register, the trio are accused of having violated the Bank Secrecy Act and anti-money laundering laws. This means the executives are accused of having knowingly worked with US-based traders, without complying with the requirements in place to protect them. The indictment also alludes to acts of corruption by Mr. Hayes.
It is alleged that Hayes boasted of bribing the Seychelles regulators (where the exchange is based), while acknowledging that it would have been much more complicated to do in the USA. Faced with a looming scandal that threatened the exchange, there was a management team reshuffle at BitMEX. Mr. Hayes resigned from his position as CEO, followed by the departure of his co-defendants, Mr. Delo and Mr. Reed. They will now have to appear in court on 28th March 2022 following the latest court ruling in the case.
CipherTrace Chief Financial Analyst John Jefferies tells us that BitMEX has been under CFTC investigation since early 2019. The exchange was given ample time to comply with the CFTC requirements – effectively to exclude US-based users – but chose to do nothing. This neglect could ultimately cost these former leaders dearly. They face a maximum sentence of five years in prison and a fine of $250,000 (~£177,000) if found guilty. Their representatives will, however, be able to file potential motions before the start of the trial, in June and September 2021.
This case is a wake-up call for any projects in the crypto space looking to make a quick buck outside the regulatory framework of certain countries. The anonymity and lack of transparency surrounding some financial dealings in the crypto industry have attracted criminals from around the world. This prompted the United States to update its anti-money laundering and anti-terrorist financing laws. If platforms try to ignore the requirements set out by regulators, they will face the full force of its authorities. Keep checking CoinTribune regularly to keep up to date with the latest developments in this case!
Hi! Привет! Salut ! Je m’intéresse à deux choses : la crypto et les langues. Je suis donc heureux de faire partie de l’équipe multinationale du CoinTribune, où je peux partager mes connaissances de la crypto avec des gens des quatre coins du monde – l’un article après l’autre.
The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.
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