Today, Arthur Hayes, CEO of BitMEX, was sentenced for violating the Bank Secrecy Act. He received six months of home detention and two years of probation, in addition to the $10 million fine he agreed to pay. This is the result of “his willful failure to establish, implement, and maintain an anti-money laundering” program at BitMEX.

“It really is amazing. If you read the statements made by the government, you’d never guess Hayes would receive what amounts to a slap on the wrist. The fact that his sentence did not include jail time sends a signal to digital exchange operators that it is okay to act in wanton disregard of the law,” said Richard Gardner, CEO of Modulus, a US-based developer of ultra-high-performance trading and surveillance technology that powers global equities, derivatives, and digital asset exchanges.

U.S. Attorney Damian Williams said, “While building a cryptocurrency platform that profited him millions of dollars, Arthur Hayes willfully defied U.S. law that requires businesses to do their part to help in preventing crime and corruption.  He intentionally failed to implement and maintain even basic anti-money laundering policies, which allowed BitMEX to operate as a platform in the shadows of the financial markets. This Office will continue to vigorously enforce United States law intended to prevent money laundering through financial institutions, including cryptocurrency platforms.”

“Let’s be honest about what happened here. BitMEX served as a money laundering platform because the exchange’s executives opted against implementing an AML program. And yet, we constantly hear from government officials that money laundering is a major threat in the digital assets space. Now, when the government has the ability to make an example out of an executive who purposely subverted the law, the court system balked, essentially giving him a free pass. A $10 million fine is nothing to a major exchange executive,” said Gardner.

“For years, I’ve been advocating that the industry needs greater regulation. In order for long-term success and stability, the government must come together with the industry and develop a commonsense rulebook --- one which protects the populace while ensuring that blockchain entrepreneurs, including exchange operators, can continue to innovate and create value,” offered Gardner.

Modulus is known throughout the financial technology segment as a leader in the development of ultra-high frequency trading systems and blockchain technologies. Modulus has provided its exchange solution to some of the industry’s most profitable digital asset exchanges, including a well-known multi-billion-dollar cryptocurrency exchange. Over the past twenty years, the company has built technology for the world’s most notable institutions, with a client list which includes NASA, NASDAQ, Goldman Sachs, Merrill Lynch, JP Morgan Chase, Bank of America, Barclays, Siemens, Shell, Yahoo!, Microsoft, Cornell University, and the University of Chicago.

“However, this sentence is a signal to exchange operators that regulations and the law don't matter. It dares them to operate in the shadows and make as much money as possible, even if it's in willful violation of the law. It sends the wrong message, and the industry, quite honestly, deserves better from our DOJ,” said Gardner.