BitMEX co-founders, Arthur Hayes and Benjamin Delo, who are fugitives from the U.S. Department of Justice (DoJ), were further indicted for aiding and abetting the violation of U.S. sanctions against Iran.
If the pair are found guilty of this crime, they will likely serve 20 years in prison. This is the main reason why they are on the run.
U.S. President Donald Trump re-imposed sanctions on Iran after he pulled out of the Iran Nuclear Deal in May 2018.
The Commodity Futures Trading Commission (CFTC) filed a civil enforcement action against “five entities and three individuals that own and operate BitMEX for operating an unregistered exchange and failing to implement the necessary anti-money laundering (AML) procedures.
Co-founders Hayes, Delo, and Samuel Reed are named as defendants in the complaint, alongside the following entities: 100x Holding limited, ABS Global Trading Limited, HDR Global Trading Limited, Shine Effort Inc Limited, and HDR Global Services (Bermuda) Limited (BitMEX).
Per the statement, the derivative trading platform processed bitcoin transactions worth $11 billion and pocketed more than $1 billion in transaction fees, while “conducting significant aspects of its business from the U.S. and accepting orders and funds from U.S. customers.”
“For the United States to be a global leader in this space, it is imperative that we root out illegal activity like that alleged in this case. New and innovative financial products can flourish only if there is market integrity. We can’t allow bad actors that break the law to gain an advantage over exchanges that are doing the right thing by complying with our rules,” said CFTC Chairman Heath Tarbert.
BitMEX co-founders on the run
The complaint alleges that Hayes was made aware of BitMEX being used to launder money obtained from a hack and failed to implement formal AML procedures against this development.
The trading platform allowed Iran-based customers under U.S. sanctions to transact on the platform between November 2017 and April 2018.
Hayes and Delo personally communicated with customers whose identities were tied to Iran. Again, BitMEX was lax in implementing formal AML procedures in response to the activities of the Iranian customers.
DOJ indictment against Arthur Hayes alleges, in addition to money laundering offenses, that Hayes and Delo personally aided and abetted violation of U.S. sanctions against Iran. Under 50 U.S.C. § 1705(c), this carries 20 years in prison. This is why they are on the run. #BitMEX pic.twitter.com/bHDq1QZrUQ
— Pavel Pogodin, Esq. (@ppogodin) December 23, 2020
Reed, who is also the CTO of BitMEX was arrested and later released on a $5 million bail. He surrendered his passport and is prohibited from having any contact with Hayes and Delo.