The image is getting clearer for BitMEX co-founder Arthur Hayes. The choose referred to as what he did “a willful violation of the Bank Secrecy Act,” however he nonetheless obtained two years probation. Hayes will serve the primary six months of that sentence in residence confinement, however that’s it. The banker and entrepreneur won’t set foot in a cell. Why was anybody anticipating in any other case, although?
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The prime federal prosecutor in Manhattan, Damian Williams, commented in an announcement that Hayes “allowed BitMEX to operate as a platform in the shadows of the financial markets.” That’s in keeping with Bloomberg, publication that summarizes the state of affairs as:
“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 firm, BitMEX, additionally “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 persons are fully in opposition to the sentence, as they consider it units a darkish precedent.
Objections To Arthur Hayes’ Sentence
The publication quotes assistant US Attorney Samuel Raymond, who advised 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 programs or know-your-customer programs, they become a magnet for people to launder money.”
Considering criminals are extremely incentivized to bypass the AML measures and KYC procedures, we are able to categorically say that John Koeltl’s assumptions are skewed. However, that doesn’t justify not complying with the regulation. According to Samuel Raymond, not sending Hayes to jail “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.”
What About The Other BitMEX Co-Founders?
The article is about Hayes, so, it doesn’t go into element concerning the others. It summarizes their state of affairs as follows:
“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 shut all of it off, James Benjamin, Hayes’ lawyer, states the apparent. “Did BitMEX do a perfect and seamless job on its path from startup to a mature fintech company? No, it did not. There were some bumps in the road.”
LUNA value chart on FTX | Source: LUNA/USD on TradingView.com
Arthur Hayes On The Terra Luna Collapse
As many crypto-experts knew, Terra was a catastrophe ready to occur. In his newest piece concerning the Luna collapse, Arthur Hayes tried to elucidate the underlying drawback with algo-stablecoins.
Related Reading | BitMEX CEO Arthur Hayes Goes Mum amid CFTC Probe Rumor
”Algorithmic stablecoins usually are not a lot totally different than fiat debt-backed currencies, save for one essential issue. Terra and others prefer it can’t pressure anybody to make use of UST at any value. They should persuade the market with their fancy designs that the governance tokens backing the protocol could have a non-zero worth that rises extra shortly over time than the quantity of fiat-pegged tokens issued.”
Obviously, the mannequin failed. The vulnerability was so huge that possibly it wasn’t even a coordinated assault. The Terra Luna scheme wasn’t lengthy for this world, in any case.
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