The three co-founders of crypto exchange platform BitMEX have been found guilty by the CFTC for illegally operating a crypto derivatives platform and violating money-laundering rules and asked to pay a fine of $30 million.
Arthur Hayes, Benjamin Delo and Samuel Reed must each pay $10 million dollars according to a Consent Order ruled by a federal judge of The U.S. District Court for the Southern District of New York.
“This is another example of the Commission taking decisive action where appropriate to ensure that digital asset derivatives trading platforms comply with the Commodity Exchange Act and Commission regulations,” said Chairman Rostin Behnam.
The case against the accused had been filed by the Commodity Futures Trading Commission (CFTC) for violations of federal commodities law. The consent order also bars them from further violations of the Commodity Exchange Act and CFTC regulations.
In a run down of the case, the Commission blamed the defendants of “operating the BitMEX platform while conducting significant aspects of BitMEX’s business from the U.S., and unlawfully accepting orders and funds from U.S. customers to trade cryptocurrencies.”
The case against the three co-founders was originally filed by the CTFC in October 2020. In a settlement in August 2021, the firm was found guilty for trading and processing swaps without holding the necessary licenses.
The firm also operated as a Futures Commision Merchant without CTFC registration and failed to implement a Customer Information Program and Know-Your-Customer procedures as part of Anti-Money Laundering schemes.
The firm was asked to pay a monetary fine of $100 million to the Financial Crimes Enforcement Network (FinCEN) and barred from offering derivatives in the United States.
“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,” said Commissioner Caroline D. Pham.
The three co-founders are also going through a trial for violating the Bank Secrecy Act. The case was filed by the Department of Justice (DOJ). BitMEX founders were accused of failing to put in place and maintain appropriate compliance programs to identify customers and prevent money laundering.
Sometime later, the third co-founder was also found guilty of violating the Bank Secrecy Act (BSA) by “willfully failing to establish, implement and maintain” an anti-money laundering program at BitMEX.
