BitMEX Co-Founder Avoids Jail Time, Sentenced To 30 Months Probation

BitMEX co-founder Benjamin Delo has been sentenced to 30 months of probation without home confinement after violating the Bank Secrecy Act (BSA) at the cryptocurrency exchange.

Arthur Hayes, Benjamin Delo and Samuel Reed, the three co-founders of cryptocurrency exchange and derivative trading platform BitMEX, have pleaded guilty to violating BSA.

New York federal court Wednesday sentenced Delo to a probation period.

"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," told a spokesperson from Smith Villazor, the firm representing Delo to CoinDesk.

Delo, along with BitMEX founder Arthur Hayes and Reed pleaded guilty after the Department of Justice (DOJ) accused them of "willfully failing to establish, implement, and maintain an anti-money laundering (AML) program at BitMEX" earlier this year.

The initiation of the case dates back to two years when the three co-founders and the exchange's first employee, Greg Dwyer, were accused of operating a “money-laundering platform” from September 2015 through to September 2020. The exchange's failure of implementing AML and Know-Your-Customer (KYC) programs was a major argument that DoJ had put forth.

Interestingly, such cases have a maximum prison time of five years but the co-founders were able to reach an agreement following which the DOJ pushed for a 6-12 month prison sentence. However, the case ended with Hayes getting six months of home detention with a two-year probation.

"Today’s sentence of probation recognized that this case involved a compliance lapse that led to a regulatory violation and nothing more,” a spokesperson representing Smith Villazor told BlockWorks. “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."

All the three co-founders have also agreed to pay about $10 million in criminal fines in a parallel civil case filed in February with the Commodity and Futures Trading Commission (CFTC) which was also a part of the agreement with the DoJ.

Additionally, BitMEX has now been cleared of all regulatory cases.