BitMEX Mastermind Arthur Hayes Pleads Guilty and Avoids Going to Jail


The picture is becoming clearer for BitMEX co-founder Arthur Hayes. The judge called what he did “a willful violation of the Bank Secrecy Act,” but he still got two years probation. Hayes will serve the first six months of that sentence on home confinement, but that’s about it. The banker and businessman will not set foot in a cell. However, why would anyone expect otherwise?

Related Reading | Arthur Hayes’ Crystal Ball Predicts: Bitcoin and Ethereum Will See Carnage in June

Manhattan’s top federal prosecutor, Damian Williams, commented in a statement that Hayes “allowed BitMEX to operate as a platform in the shadows of the financial markets.” That is according to Bloombergpost that summarizes the situation thus:

“On Friday, a federal judge sentenced Hayes to two years of probation, after Hayes and the other BitMEX founders were charged in 2020 with violating the Bank Secrecy Act, which requires the establishment of such safeguards, including the verification of the identities of the clients of an exchange”.

His company, BitMEX, also “agreed to pay $100 million to settle civil charges that it allowed illegal transactions for years and violated regulations requiring anti-money laundering programs, without admitting or denying the claims.” Some people are completely against the ruling, as they believe it sets a dark precedent.

Objections to the sentence of Arthur Hayes

The post quotes Assistant US Attorney Samuel Raymond, who told US District Judge John Koeltl.

“It is a very serious crime. There were real consequences. When people like Mr. Hayes operate platforms without anti-money laundering or know-your-customer programs, they become a magnet for people to launder money.”

Considering that criminals have many incentives to circumvent AML measures and KYC procedures, we can categorically say that John Koeltl’s assumptions are biased. However, that does not justify not complying with the law. According to Samuel Raymond, not sending Hayes to prison “would send him a message that the cost of doing business is simply a fine, and he could continue to break the law for large amounts and pay any fine.”

What about the other co-founders of BitMEX?

The article is about Hayes, so it doesn’t go into detail about the others. He summarizes his situation as follows:

“Hayes and co-founder Benjamin Delo pleaded guilty in February, and Samuel Reed in March, each agreeing to forfeit $10 million. Delo is scheduled to be sentenced next month and Reed in July.”

To wrap things up, James Benjamin, Hayes’ attorney, states the obvious. “Did BitMEX do a perfect and smooth job on its way from startup to mature fintech company? No, he did not do it. There were some bumps in the road.”

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LUNA price chart on FTX | Source: LUNA/USD on TradingView.com

Arthur Hayes on the collapse of Terra Luna

As many crypto experts knew, Terra was a disaster waiting to happen. In its latest article on the collapse of the MoonArthur Hayes tried to explain the underlying problem with algo-stablecoins.

Related Reading | BitMEX CEO Arthur Hayes Goes Wild Amid CFTC Investigation Rumor

“Algorithmic stablecoins are not much different than debt-backed fiat currencies, except for one crucial factor. Terra and others like it cannot force anyone to use UST at any price. They must convince the market with their elegant designs that the governance tokens supporting the protocol will have a non-zero value that will increase faster over time than the number of fiat tokens issued.”

Obviously, the model failed. The vulnerability was so great that it might not even have been a coordinated attack. The Terra Luna scheme didn’t last long on this world, in any case.

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