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Former BitMEX CEO Sentenced to Probation for AML Violations

The former CEO of BitMEX was sentenced to probation after pleading guilty to violating the Bank Secrecy Act by willfully failing to implement an anti-money laundering program at the exchange.

U.S. District Judge John G. Koeltl sentenced Arthur Hayes, the founder and former CEO of the cryptocurrency exchange BitMEX, to two years of probation at a federal court in New York. Hayes will spend the first six months of the sentence in home detention.

A picture of Arthur Hayes | Bloomberg

Arthur Hayes | Bloomberg

“While building a cryptocurrency platform that profited him millions of dollars, Arthur Hayes willfully defied U.S. law that requires businesses to do their part to help in preventing crime and corruption,” U.S. Attorney Damian Williams said. “He intentionally failed to implement and maintain even basic anti-money laundering policies, which allowed BitMEX to operate as a platform in the shadows of the financial markets.”

In September 2020, the United States government indicted Hayes and two BitMEX co-founders, Benjamin Delo and Sam Reed. On February 24, 2022, Hayes and Delo pleaded guilty to violating the Bank Secrecy Act (the “BSA”) by willfully failing to establish, implement, and maintain an anti-money laundering (“AML”) program at BitMEX. Reed entered a guilty plea in March 2022.

A picture of No real-name or other advanced verification is required on BitMEX. After an email confirmation, you may deposit and trade immediately.

No real-name or other advanced verification is required on BitMEX. After an email confirmation, you may deposit and trade immediately.

According to the indictment, the co-founders, including Hayes, effectively turned BitMEX into a money-laundering platform. The company never filed a suspicious activity report, as required by law, after identifying a suspected case of money laundering or other criminal activity. In one example provided by prosecutors, government officials had notified Hayes that someone was laundering the proceeds of a cryptocurrency hack through the platform.

Hayes derived substantial profits from BitMEX due to U.S.-based trading and aggressively advertised the company’s lack of an AML or KYC program. At various points in time, BitMEX’s website stated that “No real name or other advanced verification is required on BitMEX.” Through August 2017, the platform’s registration page explicitly stated that first and last names were “not required” to register."

Prosecutors said that BitMEX also functioned as a vehicle for sanctions violations. Hayes and Delo communicated with a BitMEX user based in Iran, a country sanctioned by OFAC.

BitMEX had a legal obligation to institute AML or KYC programs since it allowed U.S.-based users to access the platform. Hayes and Delo withdrew from the U.S. market in September 2015, but the withdrawal was a “sham,” according to an announcement from the Department of Justice. The controls used by BitMEX to block customers in the U.S. were an “ineffective facade,” prosecutors claimed. Hayes and Delo repeatedly stated that BitMEX did not serve customers in the U.S. but derived substantial profits from U.S.-based trading on the platform. Additional evidence supporting the BSA violation charge included BitMEX’s use of U.S.-based cryptocurrency “influencers” for advertisement purposes and television appearances in the U.S. for promotional purposes.

A picture of BitMEX is owned and operated by HDR Global Trading Limited, a Republic of Seychelles company

BitMEX is owned and operated by HDR Global Trading Limited, a Republic of Seychelles company

Part of BitMEX’s compliance statement indicates their willingness to screen for transactions involving the proceeds of crime for darknet markets and stolen funds:

Regulators globally have made substantial progress by agreeing new global standards that will prevent virtual assets and Virtual Asset Service Providers (“VASPs”) from being misused for transactions with links to crime or terrorism. To that end, one of the key missions for HDR is to significantly reduce money laundering and terrorist financing risks through the development of a robust Anti-Money Laundering (“AML”) Programme.

HDR has no tolerance for knowingly, or through willful negligence, facilitating activities related to money laundering, terrorist financing or financial crimes more broadly. HDR will not enter into, or maintain, business relationships with customers who HDR has identified as outside of its AML risk-tolerance, or who have been identified as, or are associated with, sanctioned parties.

HDR’s AML Programme articulates its commitment to take reasonable measures to detect and deter money laundering, terrorist financing, and other financial crimes. Additionally, it outlines HDR’s commitment to comply with economic and trade sanctions administered and enforced by governments and supranational bodies.

Transaction screening is another effective way to detect accounts that HDR suspects may involve the proceeds of crime including, but not limited to, activities related to child abuse, darknet markets, sanctions, terrorist financing, scams and stolen funds. HDR will make appropriate filings to relevant authorities and place restrictions on accounts where necessary.

The plea agreement suggested a sentence of six to 12 months in prison. BSA violations carry a maximum penalty of 10 years in prison. However, the Probation Department recommended a probationary sentence instead of incarceration. Although prosecutors rejected the Probation Department’s report, asking the court to sentence Hayes to prison to serve as an example for other “off-shore exchanges,” Koeltl sentenced Hayes to two years of probation. The judge said Hayes should be treated as an individual instead of an example for other exchanges.

Hayes has 30 days to decide where he wants to live for the six-month home detention part of the sentence. His attorney said that Hayes had recently purchased a house in Florida but might prefer to stay somewhere else. After finishing the home detention segment, Hayes will be allowed to leave the country and complete the remainder of the probation sentence from his houses abroad, remotely checking in with his probation officer.

Although the conditions of probation almost always probit the probationer from contacting or associating with other felons, the judge allowed Hayes to remain in contact with the BitMEX co-founders.

Hayes and Delo both agreed to pay a fine of 10 million dollars. Additionally, BitMEX recently accepted a settlement with the Department of Treasury in which BitMEX “neither admitted nor denied that it had conducted more than $200 million in suspicious transactions” and that BitMEX had “failed to file suspicious activity reports on nearly 600 specific suspicious transactions.”

Founder And CEO Of Off-Shore Cryptocurrency Derivatives Platform Sentenced For Violating The Bank Secrecy Act - justice.gov, archive.is, archive.org

Comments
Do you really want to comment here? not rules
8cfecb73
2633f350 Sat, May 21, 2022

I don’t like to sound cliche, but I honestly think the only reason they hit them hard is because dude is black. This continues to be a real thing in USA. Racism, mysogoni, 99% of the USA population has these horrid traits. I love selling fent cut pills, decrease the population of USA drastically and surgically, as only dumb junkies will be caught in the cross fire.

922b9948
c6f57510 Sat, May 21, 2022

Nice bait, nigger faggot

4a52c9f4
033383f0 Sat, May 21, 2022

probation
hit hard

you’re just as retarded as the rest of your comment would suggest

fa959c7e
54971630 Sat, May 21, 2022

Not sure what your trying to say here but if you think it’s only white people you are killing by distributing fentanyl in the US, you are sadly mistaken, you’re killing plenty of black people to… what a twisted and idiotic rationale, you should ingest a few of those pills you are selling to try and get a bit smarter as your dead corpse will likely have a higher IQ than your body 🧟‍♂️

https://store.samhsa.gov/sites/default/files/SAMHSA_Digital_Download/PEP20-05-02-001_508%20Final.pdf

75cd9c52
a88be860 Sat, May 21, 2022

LOL. I do not care who dies, just making money. Thus far, I have successfully redistributed thousands of these M30s. I actually light up a candle for every death I know was from me. I have lots of half burnt candles. Doing better than C19, as I am sure I have caused over 100 deaths in my community.
I live in Las Vegas Nevada USA. Easy to kill many people here as many are not even from this city and go back home in a coffin with no recourse or action taken place.

6db76c1e
2ba462c0 Sat, May 21, 2022

I see, your IP address is indeed from Nevada, could you provide us with your vendor name so we know you’re not just blowing smoke up our asses?

f178e503
d3e8d770 Sun, May 22, 2022

You should also take a selfie while holding your ID card to prove you are not white. Upload it on Imgur and send us the link.

af4d0054
aa0bcc70 Sat, May 21, 2022

black KING din do nothin wrong

d29408ca
18ec1530 Sat, May 21, 2022

AYO FUCK THEY DID MY BOY DIRTY HE WAS JUS TAKIN A DUMP AT D SAME OFFICE

AND FUCK ALL YOU RACIST CRACKERS YOU JUST JEALOUS U AINT GOT A RECORD DEAL AN HE DO

I KNOW FLOYED AN HE WOUDA KILLED IT IN THE BOOTH LEAVIN YAL BREATHLESS

c0bf295d
eba83ca0 Sat, May 21, 2022

Haha he knows Floyd, perhaps he was the fentanyl dealer that dealt Mr. Floyd the lethal dose they found in his blood, man this was a difficult article for the black posters on here, get your shit together niggas, communicate with real English language and try not to contradict yourself every other broken sentence… better yet, just say nothing at all and you will look a lot smarter and make more money which is probably what you care about anyway. Just keeping it real with my kin folks on here hahaha hilarious some of this shit though, niggaz hahaha goofy ass niggaz

09a4921c
bf521210 Sun, May 22, 2022

We all know if the great Martyr Mr. Floyd would have stood and put hands behind back like Mr. Shouvin did after he was rail roaded then we wouldn’t be in this shit. At least fetanyl got one shit bag….. Lmfao

9c934e9b
bd37a340 Sun, May 22, 2022

You see the Nevada IP address? If you post it the LE monitoring this site would likely track him down.

91be5f15
37c9c8f0 Mon, May 23, 2022

Thanks DNL, ain’t no snitch nigga…

bba456ca
aeb4a9e0 Sun, May 22, 2022

Thanks George Bush for amending the BSA using that shitty Patriot Act to include, “financial institutions to establish anti-money-laundering programs by establishing internal policies, procedures, and controls, designating compliance officers, providing ongoing employee training, and testing their programs through independent audits” what an asshole. Richard Nixon would have been proud! God damn criminals and their expensive paintings haha too bad NFTs came along 🖼

7cb962aa
511cf230 Mon, May 23, 2022

nothing to do with george bush.. any president would have done the same.
the reason they blew up those 4 buildings (with 3 planes btw!!) was to create patriot act and monitor us hard
it was planned a long time ago nothing to do with bush

2eff59d7
d1c99cf0 Mon, May 23, 2022

I do want to stuff M30’s down fent dealers necks, got all the drugs tainted, drop your shit for opioids first my nigga, test that shit boy, with a drop kit, Chinese mother fuckers done fucked up the coke trade too…

4942ae2a
c1d76d70 Mon, May 23, 2022

CHING CHONG HERRO I PURT FENT IN UR SHODA HAR HAR U DIE RMAO

833a1e8a
d259cd90 Mon, May 23, 2022

find the odd one out
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72a1fe6e
85f2c400 Mon, May 23, 2022

OY VEY DNL THES COMMENTS ARE ANTI SEMITIC SHUT THEM DOWN RIGHT NOW THE GOYIM KNOW WILLIAMGIBSON IS DEAD

OYYYY VEY ITS ANUDDAH SHOAH JUST LIKE WHEN MY GRAND PAPPY WAS GETTING FUCKED WITH THE EBIL NAZIS DILDO MACHINE

00a6ec0f
2d196350 Mon, May 23, 2022

williamgibson is retarded only thing he had going for him was gustav and all of the phishing sites he runs

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