Originally posted on 01/05/2021 @ 00:23
Former BitMEX chief Arthur Hayes has surrendered to US authorities in Hawaii after allegations that he failed to enforce money laundering rules on the exchange. The former founder and head of the Bitcoin exchange BitMEX has handed himself and his company over to the US authorities for violating banking secrecy.
He faces US accusations that he failed to take steps to prevent the ground-breaking cryptocurrency exchange he co-founded from being used for money laundering. Prosecutors accuse Hayes and his business partners of violating banking secrecy by failing to introduce and maintain a “weed-out” for bad actors and dirty money as part of their money laundering efforts. Instead, he and other BitMEX executives actively worked on the compliance program, boasting of flouting the law, prosecutors said..
Benjamin Delo surrendered to US authorities, and Arthur Hayes agreed to perform the same maneuver in April. Under this very unusual agreement, Mr. Hayes will return to his Singapore residence and keep his passport to travel from Singapore to New York if he is required to attend court or meet with a lawyer. However, he will be allowed to remain in Singapore until his trial and will only return if he is required to appear for court dates or counseling. He will contact law enforcement within 24 hours, pledging not to possess firearms and to keep all his passports when traveling between Singapore or New Jersey and the United States.
The kind of counterparties you’re dealing with are people who are either religious or hateful, “Hayes said. Hayes stayed in finance for a while and later moved to Citi, but throughout it all he felt he was missing out on the golden age of investment banking. Eight years ago, without a job, Hayes decided to set up his own business, combining his expertise in designing new types of financial instruments with a newfound passion for cryptocurrencies. The kind of person who knows how to recognize the low-hanging fruit, so obvious that everyone else has somehow missed it, can make you laugh while the windows vibrate.
In an unrelated case, the CFTC is reportedly investigating whether the world’s largest cryptocurrency exchange, Binance, served as a settlement channel for American clients seeking to trade derivatives and threw US citizens off the platform before it was set up. In March, Bloomberg reported that Binance Holdings Ltd. is also being investigated by the CFTC, according to people familiar with the matter. The platforms, named Hayes and Delo Reed, offered illegal crypto- and derivatives trading to US clients. By the way, one could argue that the good times are over for Bitcoin, too: regulations have been tightened in Asia, and arbitration deals could be done more for Hayes’s use.
The CFTC has also charged the company’s owners with money laundering, wire transfer fraud, securities fraud and money laundering. Also named in the indictment are two of Binance’s co-founders, Delo Reed and Andrew Reed, as well as a third person.
Hayes, Delo and Reed are charged with violating banking secrecy and conspiracy to violate the Foreign Corrupt Practices Act (FPCA) and the Securities Exchange Act of 1934 (SEC). Reed was arrested on the day the charges were announced in October and has been a free man ever since, having posted $5 million bail. Reed will be arrested in 2020 if he is arrested, according to the U.S. Attorney’s Office for the Southern District of New York. On Wednesday, he stood up and promised to fight back against what he called unfounded and excessive charges from U.S. authorities.
Hayes’ legal team released a statement saying: ‘Arthur Hayes is a self-proclaimed entrepreneur falsely accused of a crime he did not commit. Hayes surrendered to FBI agents in Hawaii on Wednesday morning under proposed bail conditions. He will be remanded in custody under an agreement outlined by his lawyer James Benjamin in a motion filed with the court on March 16. Delo wants to defend himself against the allegations: “These allegations are unfounded and exaggerated by the US authorities.
CEO Hayes is based in Hong Kong and is the founder and Chairman of the Board of Directors of Exchange Traded Fund (Exchange) Ltd., as well as a member of the Board of Directors of Delo Capital.
As a trade unionist, he fought to eliminate racial segregation and discrimination in hiring and promotion across all industries, championed higher welfare benefits and improved conditions for workers, and offered African-American women workers the opportunity to serve as leaders in the labor movement. His long career in union activism began when he helped organize the American Federation of State, County and City Employees. (AFL – CIO), which he joined in 1943. In 1949 he became the UPWA’s foreign affairs representative and in 1952 its national secretary.