NEW YORK, NY – May 5, 2022 – Arthur Hayes, along with co-founders Benjamin Delo and Samuel Reed, will collectively pay $30 million to settle charges brought by the Commodity Futures Trading Commission (CFTC). The U.S. District Court for the Southern District of New York entered consent orders against the three men on Thursday, finding they violated regulations related to the operation of the BitMEX cryptocurrency derivatives trading platform.
Each of the three co-founders is individually responsible for a $10 million civil monetary penalty. The orders also permanently enjoin Hayes, Delo, and Reed from further violations of the Commodity Exchange Act (CEA) and CFTC regulations.
The CFTC’s complaint, originally filed in October 2020, alleged that BitMEX and its founders operated the platform while conducting significant business from the U.S., unlawfully accepting orders and funds from American customers for cryptocurrency derivatives trading, including Bitcoin, Ether, and Litecoin. The platform operated without proper registration or compliance measures.
According to the court findings, from November 2014 through October 2020, Hayes, Delo, and Reed controlled BitMEX and failed to implement effective controls to prevent unlawful conduct. Specifically, BitMEX operated as an unregistered futures commission merchant (FCM) and failed to adhere to crucial regulatory requirements, including implementing a Customer Information Program (CIP), Know-Your-Customer (KYC) procedures, and an adequate Anti-Money Laundering (AML) program. The platform also operated a facility for trading swaps without approval as a Designated Contract Market (DCM) or Swap Execution Facility (SEF).
This settlement follows a previous consent order in August 2021, resolving the action against the BitMEX entities themselves, which included a $100 million civil monetary penalty and injunctions.
In a parallel criminal action, Hayes, Delo, and Reed, along with another individual, were indicted by the U.S. Attorney’s Office for the Southern District of New York on charges of violating the Bank Secrecy Act and conspiracy to commit the same offense. All three have since pleaded guilty and are awaiting sentencing.
Source: CFTC.gov
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