BitMEX Founder Delo Surrenders to Face U.S. Laundering Charges

Chris Dolmetsch, Bloomberg News

A 'mining rig' used to mine cryptocurrency. Photographer: Bloomberg Creative Photos/Bloomberg , Photographer: Bloomberg

(Bloomberg) -- One of the founders of pioneering crypto-derivatives exchange BitMEX surrendered to authorities to face charges that he schemed to avoid U.S. anti-money laundering laws.

Benjamin Delo was arraigned before U.S. Magistrate Judge Sarah L. Cave in New York during a remote proceeding on Monday. He pleaded not guilty and was released on a $20 million bail bond.

An Oxford-educated computer scientist who previously created high-frequency trading systems for JPMorgan Chase & Co, Delo founded BitMEX with Arthur Hayes and Samuel Reed in 2014. Once the world’s largest crypto-derivatives exchange, Bitmex invented perpetual Bitcoin futures that were easy for retail investors to understand and gained popularity for letting investors leverage their bets.

All three were charged in October by federal prosecutors in New York with flouting banking laws while serving U.S. customers. The government said the executives ignored requirements that it register with the Commodity Futures Trading Commission and set up programs to make sure it wasn’t used for illegal purposes.

Patrick Smith, an attorney for Delo, didn’t immediately respond to a voice-mail message and an e-mail sent after normal business hours seeking comment on the charges.

Federal prosecutors said earlier this month that Hayes was in Singapore and has discussed surrendering in Hawaii in early April. Reed was arrested in Massachusetts last year. A fourth defendant, Gregory Dwyer, the exchange’s first employee and head of business development, is still at large.

The case is U.S. v Hayes, 20-cr-500, U.S. District Court, Southern District of New York.