Trump pardons BitMEX crypto trade convicts

Arthur Hayes, chief executive officer of BitMEX, speaks during the Consensus: Invest event in New York, U.S., on Tuesday, Nov. 28, 2017. 

Michael Nagle | Bloomberg | Getty Images

President Donald Trump granted pardons to three co-founders of the BitMEX global cryptocurrency exchange, as well as to a former high-ranking employee of the company, CNBC has learned.

The co-founders, former BitMEX CEO Arthur Hayes, Benjamin Delo and Samuel Reed, and former head of business development Gregory Dwyer, previously pled guilty to one count of violating the Bank Secrecy Act related to failure to maintain anti-money laundering and know-your-customer programs.

The founders received criminal sentences of probation of varying lengths and were ordered to pay civil fines totaling $30 million related to a lawsuit by the Commodity Futures Trading Commission.

Dwyer, who received a sentence of 12 months of probation, agreed to pay $150,000 in fines.

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Prosecutors accused the men of effectively operating BitMEX as a “money laundering platform” and that its purported withdrawal from the U.S. market was “a sham.”

Trump issued the pardons on Thursday, more than 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.

Hayes, in a tweet on Friday, wrote, “Thank you POTUS,” using the term for “President of the United States.”

Delo, in a statement, said, “The US Department of Justice wrongfully targeted BitMEX and its co-founders.”

“This full and unconditional pardon by President Trump is a vindication of the position we have always held – that BitMEX, my co-founders and I should never have been charged with a criminal offense through an obscure, antiquated law,” Delo said.

“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,” Delo said. “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.”

Hayes, Delo and Reed founded BitMEX in 2014. Prosecutors said the executives knew that the exchange was required to implement an anti-money laundering plan because it served U.S. customers “but chose to flout those requirements, requiring only that customers provide an email address to use BitMEX’s services.”

“Indeed, senior executives each knew that customers residing in the U.S. continued to access BitMEX’s trading platform through at least in or about 2018, and that BitMEX policies nominally in place to prevent such trading were toothless or easily overridden to serve BitMEX’s bottom line goal of obtaining revenue through the U.S. market without regard to U.S. criminal laws,” the Manhattan U.S. Attorney’s Office said in a statement in January.

Delo, the former chief operating officer and chief strategy officer of BitMEX, had been sentenced to 30 months of probation after his guilty plea in U.S. District Court in Manhattan.

Hayes was sentenced to six months of home confinement, followed by two years of probation.

Reed, who is the exchange’s former chief technology officer, was sentenced to 18 months of probation.

Trevor Milton, the founder and former CEO of electric truck maker Nikola, revealed Thursday night that Trump had pardoned him for his criminal conviction for securities fraud. Milton had been sentenced to four years in prison in that case, but remained free on appeal.