Bitcoin billionaire Arthur Hayes was sentenced to two years of probation with home detention for six months in a federal courthouse in New York on Friday, according to multiple media outlets.
This was after Hayes, a co-founder and former chief executive of cryptocurrency derivatives exchange BitMEX, pleaded guilty to a breach of the Bank Secrecy Act (BSA), according to the Wall Street Journal (WSJ) and the South Morning China Post (SMCP).
The SMCP reported that this is the first time the U.S. government has invoked criminal provisions of the BSA against a cryptocurrency derivative platform. Hayes and co-founder Ben Delo pleaded guilty in February after they were convicted of “willfully failing to establish, implement and maintain an anti-money-laundering programme at BitMEX.”
According to prosecutors, Hayes “made himself rich by closely studying—then studiously ignoring—U.S. anti-money-laundering laws and regulations meant to stop financial institutions from moving funds for criminals and terrorists,” the Wall Street Journal reported.
The outlet added that the 36-year-old entrepreneur has already paid a $10 million penalty in connection with a settlement with the U.S. Commodity Futures Trading Commission.
The court presided over by U.S. District Judge John Koeltl said that although the offense was very serious, it did not warrant more than one year of imprisonment. The prosecution argued for more than one year sentence.
Hayes co-founded cryptocurrency derivatives exchange BitMEX in 2014. The business headquartered in Seychelles started slow but things changed in late 2015 when it started offering customers five times more than other competitors were offering. By 2017, Hayes and his team had to hire some 30 people to cope with the explosion in trading. They moved into a new office and by 2018, it had become a high-stakes marketplace, moving billions every day.
“We are the biggest trading platform in the world, by volume. That’s anyone who trades a crypto product,” Hayes told Vanity Fair recently. In 2018, BitMEX was declared the world’s largest cryptocurrency exchange. Hayes leased the 45th floor of Cheung Kong Center, the most expensive real estate in Hong Kong and home to Goldman Sachs, Barclays, Bloomberg, and Bank of America, according to Vanity Fair.
BitMEX started recording staggering trading on its platform. In June 2019, it said in a statement that it had set a new daily record, trading at $16 billion. Two days later, Hayes claimed the company recorded one trillion dollars in one year.
But while BitMEX was recoding massive trading success, the FBI was investigating several breaches. In October 2020, the FBI indicted Hayes, Delo and Reed for violating and conspiring to violate the Bank Secrecy Act by failing to establish a compliant anti-money-laundering program.
Hayes was in Singapore when he was indicted by U.S. authorities. Bloomberg reported in April last year that he turned himself in to face U.S. charges that he failed to take steps to prevent BitMEX from being used for money laundering.
He reportedly surrendered to U.S. authorities in Hawaii six months after he was indicted. He now has plans to return to his home in Singapore when his house arrest stateside ends, the Wall Street Journal said.