Arthur Hayes sentenced to six months by the US. He is the co-founder as well as former chief executive of the cryptocurrency exchange BitMEX has pleaded guilty to violating the US. Bank Secrecy Act by operating a Bitcoin exchange without a license from the US. Treasury, US. prosecutors said.
Court order in the US. District Court for the Southern District of New York. The order indicates that Arthur Hayes will also pay a $10 million fine and serve six months of probation following his house arrest for failing to establish an anti-money laundering program at BitMEX, which he founded with Benjamin Delo and Samuel Reed in 2014. Hayes was sentenced in federal court in Manhattan on Friday.
BitMEX is one of the largest and most popular crypto exchanges globally, with an estimated $3 billion daily trading volume. BitMEX has the highest volume of any exchange in the world at any given time, according to technewzbuz.com. Headquartered in Hong Kong, BitMEX was founded by Arthur Hayes, and many have credited the company’s success to Hayes’ entrepreneurial and leadership qualities.
According to the statement by a top federal prosecutor – Damian Williams – in Manhattan, “While building a cryptocurrency platform that profited him millions of dollars, Arthur Hayes willfully defied US. law that requires businesses to do their part to help in preventing crime and corruption.”
Today, the United States Department of Justice announced that prison term, saying a $10m fine was not enough to deter other cryptocurrency companies from similar behavior.
In a rather surprising story, the US. Department of Justice has cracked down on what it deems to be a Bitcoin exchange. Delo and Reed, both of whom plead guilty to violating the US. Bank secrecy act, await sentencing. A Bitcoin exchange, or at least that was the original idea behind Liberty Reserve, is a website that allows users to exchange one currency for another. However, Liberty Reserve involved both a fiat currency and a virtual currency, and the website did not get approval from the US. Treasury, so they decided to prosecute. This case could have implications for other Bitcoin exchanges and provide some limitations to the act of running.
Delo and Reed also have pleaded guilty to violating the US. Bank Secrecy Act by operating a BitMEX exchange without a US. Treasury license and awaiting sentencing. Delo and Reed operated a virtual currency exchange in the US. without being registered with the US. Treasury. It violates the Bank Secrecy Act (BSA), which requires all companies that handle government or financial institution currency to register with the US. Treasury’s Financial Crimes Enforcement Network (FinCEN).
Arthur Hayes, Delo, and Reed were charged in 2020 for not providing a “know your customer” requirement as required by federal law. The three were fined a total of $10 billion. It was the largest fine ever handed out for financial crimes. It was the first time the federal government used these laws after a financial firm.