Benjamin Delo, one of the co-founders of Bitcoin Mercantile Exchange (BitMEX), was sentenced on June 15, 2022 in the US District Court for the Southern District of New York to 30 months’ probation after pleading guilty in February 2022 to one count of violating the Bank Secrecy Act (BSA). Delo, who served as BitMEX’s chief operating officer and chief strategy officer, was accused of willfully failing to implement an anti-money laundering compliance program at BitMEX, a convertible virtual derivative exchange.
On September 21, 2020, Delo and three other BitMEX executives — Arthur Hayes, Samuel Reed, and Gregory Dwyer — were indicted by federal prosecutors for refusing to comply with the BSA during the six-year period since the company was founded. The indictment alleged that BitMEX executives intended to make BitMEX exempt from the application of US law by incorporating in Seychelles, but then actively solicited and serviced US customer accounts, bringing the company within the purview of the BSA. According to the indictment, the executives deliberately failed to take other risk-based measures designed to prevent money laundering or terrorism financing on their platform, refused to establish a know-your-customer program, failed to check for US-based IP addresses, and did not file any suspicious activity reports even after being notified by federal authorities that the BitMEX platform was being used to launder the proceeds of a cryptocurrency hack.
On August 10, 2021, the Financial Crimes Enforcement Network and the Commodity Futures Trading Commission imposed a $100 million civil money penalty as part of a global settlement reached with five companies charged with operating BitMEX. On February 24, 2022, Delo and Hayes pleaded guilty to one count each of violating the Bank Secrecy Act, followed by Reed who pleaded guilty to violating the BSA on March 9, 2022. Hayes was sentenced on May 20, 2022 to two years’ probation, with the first six months to be served on home detention, and Reed is scheduled to be sentenced on July 13, 2022. Dwyer, whose case was severed from the other defendants, faces trial in October 2022.
SDNY Docket Entries | Unsealed Indictment | Dwyer Order