One of the co-founders of the BitMEX exchange has been sentenced to probation for 30 months. Benjamin Delo was sentenced in a New York federal court this week, and just like his fellow co-founder Arthur Hayes, he has managed to avoid jail time for violating the Bank Secrecy Act (BSA).
The sentencing is the culmination of a regulatory action that started in 2020 when U.S. regulators charged Delo, Hayes, and fellow co-founder Sam Reed of violating the BSA while at the helm of BitMEX, which was then one of the largest derivatives exchanges in the industry. They were accused of facilitating money laundering on their platforms by neglecting basic know-your-customer (KYC) and anti-money laundering (AML) programs.
Delo, alongside Hayes, pleaded guilty to the charges in February, admitting to “willfully failing to establish, implement, and maintain an anti-money laundering (AML) program at BitMEX.” As CoinGeek reported, sources revealed that part of the plea deal involved assurances that the two would not be going to prison for the five years that such crimes come with. They also paid $10 million fines each.
Three weeks after Hayes was sentenced to two years’ probation and six months in home confinement, Delo got his day in court on Wednesday. The British computer scientist was sentenced to 30 months probation, dodging jail time and even the home confinement that his ex-colleague got.
‘The government exaggerated our crimes’
Commenting on the sentencing, which New York Judge John G. Koeltl handed down, a spokesperson for New York law firm Smith Villazor, which represented Delo, stated, “Ben is pleased to finally draw a line under this matter and looks forward to returning his focus, time, and energy to his philanthropic work.”
Judge Koeltl ruled against the prosecutors in both the Hayes and Delo cases. In Hayes’ case, the prosecutors were pushing for jail time, claiming that this would deter any similar actions in the digital asset industry. In the Delo case, the prosecutors were pushing for the Briton to at least get home confinement like his partner in crime, but Judge Koeltl ruled against this as well.
Delo’s legal team praised the judge for ruling against the prosecutors for what it believes was a minor compliance lapse.
“We are pleased that the Court appropriately rejected the government’s cynical attempt to exaggerate the seriousness of the Bank Secrecy Act charge in this case. Today’s sentence of probation recognized that this case involved a compliance lapse that led to a regulatory violation—and nothing more.”
The argument that what BitMEX did was not such a big deal is one that Hayes also presented in his defense. As CoinGeek reported, Hayes claimed that while he acknowledged that he broke the law, everyone in the digital asset industry was doing it as well. In addition, he argued that what he did was child’s play compared to what other digital asset-related criminal enterprises like Silk Road did. And after all, the government had made its point and proven that it could go after digital asset companies, his lawyers added.
Sam Reed remains the only co-founder yet to have his day in court, but he’s likely to get a slap on the wrist similar to the other two. He pleaded guilty to violating the BSA a month after Hayes and Delo.
The BitMEX mess also brought down Greg Dwyer, the former head of operations at the exchange, which is incorporated in Seychelles. As CoinGeek reported, Dwyer’s trial was pushed to October this year after he managed to buy himself more time, arguing that he hadn’t had enough time to prepare for it as he was fighting extradition from his home in Bermuda to the United States.
Once again, Judge Koeltl ruled against Manhattan prosecutors who had argued that affording Dwyer more time would give him an unfair advantage over the other three.
BitMEX has continued to operate post-Hayes and has been trying to reinvent itself as a compliant exchange under the leadership of Alexander Hoptner, the former CEO of Germany’s second-largest stock exchange. However, it’s not been rosy for Hoptner. In April this year, the exchange laid off a quarter of its staff members following the failed acquisition of one of Germany’s oldest banks.
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