Arthur Hayes, a BitMEX co-founder, and former Chief Executive Officer has surrendered to the authorities to be tried at the U.S. court for failing to act and stop the first crypto exchange he created from being used for money laundering. Hayes, who resided in Singapore, turned himself in yesterday to the U.S. agency in Hawaii.
Last year, the New York federal agencies charged him and his “conspirators” with the act of violating the U.S. anti-money laundering act. The U.S. federal prosecutors arraigned Hayes yesterday before a federal court in Honolulu, and subject to the prior agreement between both parties, the judge granted him a $10 million bond bail before further court proceedings in New York.
Hayes surrenders to police
Hayes’ lawyers told the court that their client is “a self-made businessman who is a victim of wrongful accusations.” Having surrendered voluntarily, he will appear at the court to defend himself against the unfounded allegations when the need arises; his lawyers tell the court.
The suspect has once worked with Citigroup Inc. as an equities trader. In 2014, he launched BitMEX in Seychelles in collaboration with Benjamin Delo, a computer scientist from Oxford who had earlier created advanced trading techniques for JP Morgan. The third accused is Samuel Reed, a web app programmer.
This case is one of the several lawsuits which indicate that the U.S. is now strict with its monitoring of crypto exchanges, despite rising investors’ increasing interest in them. Earlier this year, Coinbase confirmed that it was answering questions from the U.S. Commodities Futures Trading Commission.
Last month, some anonymous sources revealed that the CFTC had begun investigations into Binance’s dealings. Investors are attracted to futures that advertise crypto investments that allow them to take advantage of the high leverage. Hence, BitMEX capitalized on this and gained investors’ attention. It once became popular that it was ranked the number one crypto-futures exchange worldwide.
Violating the U.S. laws
The CFTC investigations into BitMEX activities began in 2019 when the regulatory body intended to determine if the crypto exchange violated the U.S. laws which forbid U.S. clients from trading on the BitMEX exchange platform.
Prosecutors told the court that the platform failed to register with and get approval from the CFTC to ensure it wasn’t used for money laundering before offering its services to U.S. clients. In contradiction to the U.S. law, Hayes, conspiring with other firm members’ management, deliberately defied the law and failed to comply with the said regulations.
But Hayes argued that the exchange was headquartered in Seychelles and not the U.S. Each of the suspects– Hayes, Delo, and Reed was accused of flouting the Bank Secrecy Act and conspiring to flout the law. Each of the two offenses attracts a 5- year jail term.
In October last year, Reed was apprehended in Massachusetts, while Delo surrendered to the authorities in March this year, claiming that he was innocent of all the charges leveled against him. They were both released on bond after pleading not guilty. Meanwhile, Gregory Dwyer, the exchange’s head of operations, is still at large.