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- Donald Trump pardoned three BitMEX co-founders and a former executive.
- They had pleaded guilty to violating the Bank Secrecy Act and paid fines.
- The move follows BitMEX’s $100 million settlement for compliance failures.
Donald Trump granted pardons to BitMEX co-founders Arthur Hayes, Benjamin Delo, and Samuel Reed, along with former executive Gregory Dwyer. They had admitted to violating the Bank Secrecy Act by failing to establish anti-money laundering and know-your-customer programs.
The U.S. Department of Justice accused them of operating BitMEX as an unregulated financial platform. While they asserted that they had blocked access to U.S. users, prosecutors said the company continued to serve them. The executives pleaded guilty and consented to pay $30 million in penalties.
They received probation instead of prison. Trump’s decision comes months after BitMEX settled with regulators. In 2021, the company agreed to pay a $100 million penalty to settle charges it failed to meet compliance requirements.
BitMEX’s Beginnings and Growth
BitMEX was founded in 2014 as a derivatives exchange for cryptocurrencies. Prosecutors alleged the company ignored laws meant to fight financial crimes. The website allowed trading by individuals without checking their identities, with only an email address required to sign up.
Regulators had charged BitMEX executives with knowingly allowing U.S. traders to access the platform despite regulations prohibiting it. Prosecutors had complained that company policies designed to exclude U.S. users were inadequate and ineffective. The issue led to criminal and civil penalties against the founders.
The court sentenced Hayes to six months of home detention, followed by two years of probation. It sentenced Delo and Reed to 30 and 18 months of probation, respectively. Dwyer also received probation and agreed to pay a $150,000 fine. The case was one of the first major legal actions against a crypto exchange. It highlighted the importance of regulatory compliance in the digital asset sector.
Trump’s Pattern of High-Profile Pardons
The pardons have stirred controversy within the cryptocurrency community. Some see them as a sign that BitMEX was unfairly targeted. Others state that the case shows the need for more regulation of the crypto industry.
Trump’s action follows another well-publicized pardon. Trump also pardoned Trevor Milton, the former Nikola CEO convicted of securities fraud. The court had sentenced Milton to four years in prison, but he remained free on appeal.
The crypto market continues to face pressure from regulators. U.S. regulators continue to place stricter regulations on crypto asset businesses. Exchanges must comply with anti-money laundering standards to avoid legal consequences.
BitMEX’s case serves as a caution to other platforms in the industry. Regulators have shown that they will take action against companies that fail to adhere to financial regulations. The industry is still in a state of regulatory limbo as governments around the world push for more clearly defined rules.
Trump’s pardons remove the legal restrictions on the BitMEX founders. They can now move forward without the burden of criminal records. The crypto industry, though, still grapples with how to comply with U.S. regulations. The incident is a reminder of the legal risks of operating an exchange without proper guardrails.
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