BitMEX Mastermind Arthur Hayes Pleads Guilty, Avoids Jail

The picture is becoming increasingly clear for BitMEX co-founder Arthur Hayes. The judge called what he did “a deliberate violation of the Bank Secrecy Act”, but he was still given two years’ probation. Hayes will serve the first six months of that sentence under house arrest, but that’s all. The banker and entrepreneur do not set foot in a cell. Why did anyone expect otherwise?

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Manhattan’s top federal prosecutor Damian Williams noted in a statement that Hayes “allowed BitMEX to operate as a platform in the shadows of the financial markets.” that is according to Bloombergpublication summarizing the situation as follows:

On Friday, a federal judge sentenced Hayes to two years’ probation after Hayes and the other founders of BitMEX were charged in 2020 with violating the Bank Secrecy Act, which requires instituting such safeguards, including verifying identity. of the customers of a trade show.”

His company, BitMEX, also agreed to pay $100 million to settle civil charges that it allowed years of illegal trade and violations of rules requiring anti-money laundering programs, without admitting or denying the claims. Some people are completely against the verdict, thinking it sets a dark precedent.

Objections to the Sentence of Arthur Hayes

The publication cites Assistant US Attorney Samuel Raymond, who told US District Judge John Koeltl.

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

Since criminals are strongly incentivized to circumvent the AML measures and KYC procedures, we can categorically say that John Koeltl’s assumptions are skewed. However, that does not justify non-compliance with the law. According to Samuel Raymond, not sending Hayes to jail “would send him a message that the cost of doing business is just a fine, and that he could continue to break the law for huge amounts and pay any fine.”

What about the other BitMEX co-founders?

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

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

To cap it all off, Hayes’ attorney James Benjamin says the obvious. “Has BitMEX delivered a perfect and seamless job on its path from startup to a mature fintech company? No, it didn’t. There were some bumps in the road.”

LUNA price chart on FTX | Source: LUNA/USD on

Arthur Hayes on the collapse of Terra Luna

As many crypto experts knew, Terra was a disaster waiting to happen. In his final piece on the collapse of LunaArthur Hayes tried to explain the underlying problem with algo stablecoins.

Related literature | BitMEX CEO Arthur Hayes Becomes Mom Amid CFTC Probe Rumour

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

The model has clearly failed. The vulnerability was so great that it might not even have been a coordinated attack. At least the Terra Luna plan didn’t last long for this world.

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