Arthur Hayes is beginning to see the bigger picture for BitMEX founder. 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 in home confinement, but that’s it. Banker and entrepreneur Hayes will never be allowed to enter a cell. But, who would expect the opposite?
The top federal prosecutor in Manhattan, Damian Williams, commented in a statement that Hayes “allowed BitMEX to operate as a platform in the shadows of the financial markets.” That’s BloombergThis publication summarises the situation in:
“On Friday a federal judge sentenced Hayes to two years’ probation, after Hayes and BitMEX’s other founders were charged in 2020 with violating the Bank Secrecy Act, which requires the establishment of such safeguards, including verifying the identities of an exchange’s customers.”
His company, BitMEX, also “agreed to pay $100 million to settle civil allegations that it allowed illegal trades for years and violated rules requiring anti-money-laundering programs, without admitting to or denying the claims.” Some people are completely against the sentence, as they believe it sets a dark precedent.
Objections To Arthur Hayes’ Sentence
This publication quotes Samuel Raymond, assistant US Attorney who said that John Koeltl was the US District Judge.
“This is a very serious offense. These were serious consequences. When individuals like Mr. Hayes operate platforms without anti-money-laundering programs or know-your-customer programs, they become a magnet for people to launder money.”
Considering criminals are highly incentivized to circumvent the AML measures and KYC procedures, we can categorically say that John Koeltl’s assumptions are skewed. However, that doesn’t justify not complying with the law. According to Samuel Raymond, not sending Hayes to prison “would send a message to him that the cost of doing business is merely a fine, and he could continue to violate the law for huge amounts and pay any fine.”
Are You Concerned About Other BitMEX Co-Founders
The article is about Hayes, so, it doesn’t go into detail about the others. This is how it summarizes their position:
“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 close it all off, James Benjamin, Hayes’ lawyer, states the obvious. “Did BitMEX do a perfect and seamless job on its path from startup to a mature fintech company? The answer is no. There were some bumps in the road.”
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Arthur Hayes: The Terra Luna Collapse
Terra, as many crypto-experts know, was an impending disaster. He was a disaster waiting to happen. The Luna Couple is the latest articleArthur Hayes attempted to solve the problem of algo-stablecoins.
”Algorithmic stablecoins are not much different than fiat debt-backed currencies, save for one crucial factor. Terra, and other similar entities cannot make anyone use UST at all prices. They must convince the market with their fancy designs that the governance tokens backing the protocol will have a non-zero value that rises more quickly over time than the amount of fiat-pegged tokens issued.”
The model was clearly a failure. The vulnerability was so big that maybe it wasn’t even a coordinated attack. The Terra Luna scheme wasn’t long for this world, in any case.
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