Trump Pardons BitMEX Co-Founders After $100M Fine

In a notable move, former U.S. President Donald Trump granted pardons to three co-founders of the cryptocurrency exchange BitMEX: Arthur Hayes, Benjamin Delo, and Samuel Reed. These individuals, along with a fourth high-ranking former employee, Gregory Dwyer, had previously pleaded guilty in 2022 to one count each of violating the Bank Secrecy Act. This act involves willfully failing to establish, implement, and maintain an Anti-Money Laundering program at BitMEX. The pardons also extended to the exchange's operating entity, HDR Global.

The pardons come as a significant development in the legal saga surrounding BitMEX, which has been under scrutiny for its compliance with financial regulations. The co-founders had admitted to their roles in the violations, with Hayes and Delo pleading guilty in February 2022, and Reed following suit a few weeks later. The legal battle had led to Hayes stepping down from his role as CEO of BitMEX amid the ongoing legal proceedings.

Prosecutors had accused the co-founders of effectively running the BitMEX exchange as a money laundering platform and alleged that its purported withdrawal from the U.S. market was a sham. Authorities also alleged that BitMEX did not effectively use its anti-money laundering (AML) and know-your-customer (KYC) measures. BitMEX was founded in 2014, and prosecutors alleged that executives were aware that the exchange was required to implement strict AML and KYC protocols because it served customers in the U.S. However, it ignored and flouted these requirements, requiring customers to only provide an email address to access BitMEX’s services.

Trump issued the pardons on Thursday, over three months after BitMEX was sentenced to pay a fine of $100 million for violating the Bank Secrecy Act by failing to establish and maintain anti-money laundering and know-your-customer programs. The three co-founders had received criminal sentences and probation, and were mandated to pay $30 million in civil fines. The legal battle had led to Hayes stepping down from his role as CEO of BitMEX amid the ongoing legal proceedings.

Hayes thanked Trump for the pardon, tweeting, “Thank you, POTUS.” Delo also issued a statement stating that the pardon vindicates their position and that the U.S. Department of Justice wrongfully targeted the exchange and its founders. Delo alleged that BitMEX was wrongfully made an example of for political reasons and was used to send out inconsistent regulatory signals. “As the most successful crypto exchange of its kind, we were wrongfully made to serve as an example, sacrificed for political reasons, and used to send inconsistent regulatory signals. I’m sincerely grateful to the President for granting this pardon to me and my co-founders. A legal wrong has been righted today, and despite the distress I have been through over the past few years, I’m pleased to have cleared my name and to be able to continue my life and philanthropic work without the burden of an unfounded conviction.”

The reasons behind Trump's decision to pardon the BitMEX co-founders remain unclear, especially considering that the three men had already been sentenced to a combination of home arrest or probation in 2022. Additionally, they were ordered to pay $30 million in penalties as part of a civil case with the U.S. Commodity Futures Trading Commission (CFTC). The exchange's cases with U.S. authorities also included an agreement to pay $100 million in consent payments to both the CFTC and the U.S. Financial Crimes Enforcement Center in 2021. In January, a judge imposed a $100 million fine and two years of unsupervised probation on HDR Global Trading Limited, BitMEX’s parent company.

Trump's pardons are part of a series of controversial federal pardons issued during his presidency. These include pardons to individuals facing charges related to the January 6, 2021, rioting at the U.S. Capitol and Silk Road founder Ross Ulbricht, who was in prison for more than 11 years. The pardons have sparked discussions about the legal and ethical implications of such actions, particularly in cases involving financial crimes and regulatory violations. The pardons come as a significant development in the legal saga surrounding BitMEX, which has been under scrutiny for its compliance with financial regulations. The co-founders had admitted to their roles in the violations, with Hayes and Delo pleading guilty in February 2022, and Reed following suit a few weeks later. The legal battle had led to Hayes stepping down from his role as CEO of BitMEX amid the ongoing legal proceedings.