Turkish Crypto Exchange Thodex CEO Faruk Özer Sentenced to 11,196 Years in Prison for Collapse
CFTC Initiates Enforcement Sweep Targeting Opyn and Other DeFi Operations
Coinbase-Backed Insurance Disruptor OpenCover Launches on Layer 2 Blockchain
After pleading guilty in February to accusations that he deliberately failed to develop an anti-money laundering (AML) policy at BitMEX, former CEO Arthur Hayes is expected to be sentenced in a federal courthouse in New York on Friday.
Prosecutors claim that BitMEX's absence of know-your-customer (KYC) procedures allowed it to thrive as a hub for illegal activity such as money laundering and sanctions evasion.
Hayes, his BitMEX co-founders Samuel Reed and Ben Delo, as well as the company's first employee, Gregory Dwyer, were charged with one count of breaking the Bank Secrecy Act (BSA) and one count of conspiracy to do so in October 2020.
The Commodity Futures Trading Commission (CFTC) and the Financial Crimes Enforcement Network (FinCEN) filed civil proceedings against the four men, as well as BitMEX and other business entities, resulting in monetary fines. BitMEX was fined $100 million by the regulators, with Hayes, Reed, and Delo each having to pay $10 million.
The criminal offenses carry a maximum penalty of five years apiece, but Hayes' plea agreement with prosecutors reduced the recommendations to six to twelve months. He will be sentenced in the Southern District of New York, which is located in the heart of Manhattan.
Hayes, a U.S. citizen and longstanding Singapore resident, surrendered to US authorities in Hawaii last April as part of a bargain negotiated by his lawyers and federal prosecutors. His mother co-signed a $10 million bond with him, which was secured by $1 million in cash.
There are two sides to every tale
Hayes' lawyers requested mercy in a 65-page sentencing statement given to the court on May 4: probation with no jail time or house arrest. They also demanded that Hayes be allowed to travel overseas and live in other countries.
A letter from his mother was also included in the submission. Hayes' lawyers argued that the allegations had already upended the former BitMEX CEO's life, claiming that they had "an enormous and well-publicized impact on Mr. Hayes' personal life and on the BitMEX firm that he co-founded."
They also claimed that Hayes is unlikely to commit another crime.
However, the government holds a different viewpoint. Prosecutors requested "a hefty sentence of incarceration, over the appropriate Sentencing Guidelines range of [six] to 12 months" in a sentencing document issued on May 12.
Hayes allegedly flaunted BitMEX's contempt for KYC and AML requirements on the exchange's website, in blog postings, and in media interviews, according to prosecutors.
Prosecutors claim that this attracted "exactly the nefarious actors that the BSA aims to avoid" - and netted Hayes more than $100 million.
Hayes' fame in the crypto community, as well as his proclivity for speaking to journalists about his philosophy (and his luxurious life on the run), appears to be a sore point for prosecutors:
Prosecutors noted that "the defendant chose to utilize his power to promote a vision for the crypto business that was in direct violation of the law and aimed to subvert government restrictions." "The defendant regularly chastised and derided KYC rules, indicating that he had no intention of complying with them."
======