The three co-founders of BitMEX crypto derivatives exchange have been sentenced to pay a total of $30 million in civil monetary penalties by the United States District Court in New York.
According to a statement released by the Commodity Futures Trading Commission (CFTC) on May 5, Hayes, Benjamin Delo, and Samuel Reed were each penalized $10 million in consent payments for violating parts of the Commodity Exchange Act and CFTC regulations between November 2014 and October 2020.
On Oct. 1, 2020, the CFTC filed a lawsuit against the exchange and its three co-founders. The defendants were accused of “operating the BitMEX platform while conducting significant aspects of BitMEX’s business from the United States, and unlawfully accepting orders and funds from U.S. customers to trade cryptocurrencies,” including Bitcoin (BTC), Ether (ETH), and Litecoin (LTC) derivatives, according to the Commission’s summary of the case.
Operation of a facility to trade or process swaps without CFTC approval to operate as a Designated Contract Market or a Swap Execution Facility, according to the CFTC.
They had also failed to create a Customer Information Program, Know-Your-Customer processes, or an acceptable Anti-Money Laundering program, according to the complaint, and had operated as a Futures Commission Merchant without CFTC registration.
In a second statement released on May 5, CFTC Commissioner Carline D. Pham stated that her agency is committed to prosecuting “wrongdoers with an unfair advantage” who operate in violation of the law.
“By enforcing individual accountability for registration, market conduct, and anti-money laundering rules—fundamental aspects of the U.S. regulatory framework—the CFTC is ensuring that BitMEX’s management is held responsible after last year’s $100 million dollar settlement with corporate defendants.”
In a separate lawsuit filed by the DOJ, Hayes and Delo pleaded guilty to violating the Bank Secrecy Act in February. They agreed to “willfully neglecting to establish, implement, and maintain an Anti-Money Laundering (AML) program,” according to the plea agreement.
Last year, Coinscreed reported that BitMEX agreed to pay the CFTC and the Financial Crimes Enforcement Center (FinCEN) $100 million in consent payments to settle a separate case in which the CFTC and FinCEN claimed that exchange operators HDR Global Trading Limited, 100x Holding Limited, ABS Global Trading Limited, Shine Effort Inc Limited, and HDR Global Services Limited illegally operated the exchange.
