BitMEX Co-founder Gets 30-Month Probation for Violating Bank Secrecy Act
The probation sentencing the BitMEX co-founder excludes him from house arrest and resolves all pending regulatory cases.
BitMEX co-founder Benjamin Delo has received a 30 months-probation sentence for violating the Bank Secrecy Act (BSA), an anti-money laundering law. According to New York-based law firm Smith Villazor LLP representing Delo, the June 15th sentence concludes Delo’s part in the legal saga that began back in 2020. The ruling essentially absolved Delo of jail time.
In a different case recently brought by the Commodities Futures Trading Commission (CFTC), Delo and co-founder Arthur Hayes agreed to pay $10 million each as part of a settlement. With the sentencing complete, Delo can travel back to Hong Kong where he resides. In addition, the BitMEX co-founder’s two-and-a-half-year probation does not include home confinement. This is in stark contrast to Hayes’ sentence, which includes the same probation period and a six-month house arrest.
Following Delo’s sentencing, prosecutors argued that the BitMEX co-founder should have received a year in prison, or a ruling identical to Hayes’. BSA violations usually carry a maximum sentence of five years whenever the case goes to trial. However, because the BitMEX duo reached a plea agreement, the DOJ pushed for 6 to 12 months of prison time.
The BitMEX co-founder expressed regret and vowed to abide by all regulations provided by the justice system. Last year, BitMEX entered a $100 million settlement with the CFTC and Financial Crimes Enforcement Network (FinCEN). In an official blogpost at the time, CEO Alexander Hoptner said the exchange will continue to actively engage with regulators around to world to help shape the future of crypto and derivates.
BitMEX Co-founder Legal Team, Presiding Judge Comment in Wake of Probation Sentencing
Representatives from Smith Villazor LLP issued a statement on the case through a spokesperson. Part of it read:
“Today’s sentence of probation recognized that this case involved a compliance lapse that led to a regulatory violation and nothing more.”
Furthermore, Delo’s legal team said it was satisfied with the court. The team said it is happy the court ignored the government’s attempt to “exaggerate the seriousness” of the case. According to the law firm’s spokesperson:
“The government’s campaign – both in the courtroom and in the press – to malign Ben with highly inflammatory and misleading language concerning Ben’s conduct gained no traction with the court.”
Presiding Judge John Koeltl also commented on Delo’s charge, referring to the BitMEX co-founder’s violations as “very serious”. He also stated that the crypto exchange’s co-founder was complicit by not implementing an Anti-Money Laundering (AML) program.
Koeltl also expressed the same sentiment about Delo concerning the exchange’s enforcement of the Know Your Customer (KYC) policy. However, the presiding judge acknowledged that BitMEX later took the necessary steps to correct the issue and ensure total compliance. In January 2021, BitMEX announced that it successfully completed its user verification program. The completion made BitMEX the “largest crypto derivatives exchange in the world with a fully verified active user base.”
Delo admitted his lapse in judgment.
“When I look back, I see a fundamental failure to address a flaw in our systems,” said he.