Monday 22 February 2021
As Bitcoin continues its steady march upwards (last week it passed $50,000 USD) we’re all going to have to get more familiar with the term ‘Bitcoin Billionaire’. One of the first people in the world to achieve this was Arthur Hayes, the founder of BitMEX, a crypto exchange through which more than $3 trillion has flowed.
Hayes has been charged by the US Justice Department for failing to maintain an anti-money laundering program in violation of the Bank Secrecy Act. These charges have caused a lot of controversy in the crypto community. The big banks and Wall Street institutions have regularly breached money laundering laws and have avoided prosecution entirely (let alone the bank executives being personally prosecuted).
Compare the treatment of HSBC’s actual laundering of $881 million for the Sinaloa and Norte de Valle cartels to BitMEX’s not maintaining an anti-money laundering program. In an ideal world, both breaches would be prosecuted. However, the crypto world has been outraged by HSBC getting away with a deferred prosecution agreement while BitMEX sees their four most senior executives get personally indicted.
Hayes remains free, living in Asia out of the reach of US prosecutors. Yet, this story remains a cautionary tale for crypto entrepreneurs. Until regulators have clear guidance and a framework by which to regulate cryptocurrencies, we should expect more stories like those of Arthur Hayes.