Founder And CEO Of Off-Shore Cryptocurrency Derivatives Platform Sentenced For Violating The Financial institution Secrecy Act | USAO-SDNY


Damian Williams, the USA Legal professional for the Southern District of New York, introduced that Arthur Hayes was sentenced right this moment to 6 months of residence detention, in connection together with his violation of the Financial institution Secrecy Act (the “BSA”), via his willful failure to determine, implement, and keep an anti-money laundering (“AML”) program on the cryptocurrency firm he co-founded and owned, Bitcoin Mercantile Alternate or “BitMEX”.  U.S. District Decide John G. Koeltl imposed right this moment’s sentence.

U.S. Legal professional Damian Williams stated:  “Whereas constructing a cryptocurrency platform that profited him thousands and thousands of {dollars}, Arthur Hayes willfully defied U.S. legislation that requires companies to do their half to assist in stopping crime and corruption.  He deliberately did not implement and keep even primary anti-money laundering insurance policies, which allowed BitMEX to function as a platform within the shadows of the monetary markets. This Workplace will proceed to vigorously implement United States legislation supposed to forestall cash laundering via monetary establishments, together with cryptocurrency platforms.”

In accordance with the Indictment, public courtroom filings, and statements made in courtroom:

ARTHUR HAYES, along with BENJAMIN DELO and SAM REED, who’ve additionally pled responsible and are scheduled to be sentenced within the near-future, was one of many three co-founders and the CEO of BitMEX. 

BitMEX is a web based cryptocurrency derivatives change that, throughout the related time interval, had U.S.-based operations and served 1000’s of U.S. clients, however false representations on the contrary by the corporate, together with HAYES.  From at the very least September 2015, and persevering with at the very least via the time of the Indictment in September 2020, HAYES willfully precipitated BitMEX to fail to determine and keep an AML program, together with a program for verifying the establish of BitMEX’s clients (or a “know your buyer” or “KYC” program).  Because of its willful failure to implement AML and KYC applications, BitMEX was in impact a cash laundering platform.  For instance, in Could 2018, HAYES was notified of allegations that BitMEX was getting used to launder the proceeds of a cryptocurrency hack.  Neither HAYES nor the corporate filed a suspicious exercise report thereafter, nor did they implement an AML or KYC program in response. 

HAYES did not institute AML or KYC applications at BitMEX regardless of intently following U.S. regulatory developments that made clear their authorized obligation to take action if BitMEX operated in the USA, which it did.  Regardless of repeatedly stating that BitMEX didn’t serve U.S. clients, together with to members of the press and others outdoors of BitMEX, HAYES knew that BitMEX’s purported withdrawal from the U.S. market in or about September 2015 was a sham, and that “controls” BitMEX put in place to forestall U.S. buying and selling have been an ineffective facade that didn’t, in reality, forestall customers from accessing or buying and selling on BitMEX from the USA. 

HAYES derived substantial income from BitMEX, on account of U.S.-based buying and selling, and aggressively marketed the corporate’s lack of an AML or KYC program.  At numerous deadlines, BitMEX’s web site said that “No actual identify or different superior verification is required on BitMEX.”  By way of at the very least August 2017, the platform’s registration web page explicitly said that first and final identify have been “not required” to register.

Due to the dearth of KYC, the complete scope of legal conduct on BitMEX might by no means be identified. The corporate, nonetheless owned by HAYES and his co-defendants, accepted a settlement with the Division of Treasury through which the Firm neither admitted nor denied that that it had carried out greater than $200 million in suspicious transactions, and that the Firm had did not file suspicious exercise reviews on almost 600 particular suspicious transactions.

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HAYES, 36, of Miami, Florida, was sentenced to 6 months of residence detention and two years of probation.  Hayes additionally agreed to pay a positive of $10 million {dollars} representing his pecuniary achieve from the offense.

Mr. Williams praised the excellent investigative work of the Federal Bureau of Investigation’s New York Cash Laundering Investigation Squad, and thanked the attorneys and investigators on the Commodity Futures Buying and selling Fee whose experience and diligence have been integral to the event of this case.

The prosecution is being dealt with by the Workplace’s Cash Laundering and Transnational Legal Enterprises Unit.  Assistant U.S. Attorneys Jessica Greenwood, Samuel Raymond, and Thane Rehn are accountable for the prosecution. 



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