The FBI arrested a New York resident for defrauding investors of at least $43 million in a multi-year Ponzi scheme that included a Las Vegas hospitality business and crypto trading operation.
Sam Bankman-Fried Sentencing: U.S. Attorney Damian Williams’ Statement
AirBit Club ‘ponzi’ co-founder gets 12 years prison
Convicted fraudster Pablo Renato Rodriguez will also need to serve three years of supervised release after he finishes his 12 year imprisonment sentence.
FTX’s Bankman-Fried seeks gag order for all witnesses in criminal case
Lawyers representing SBF have agreed to a gag order preventing him from making comments that could sway his criminal trial but says it should apply to other witnesses too.
Ex-NFL team owner Reggie Fowler gets 6 years for crypto ‘shadow banking’
U.S. Attorney Damian Williams said Fowler’s lies exposed the U.S. financial system to “serious risk.”
OneCoin head of compliance facing 40-year sentence after US extradition
The alleged fraudster was accused of doing the “exact opposite” of her job title, which was to ensure OneCoin was complying with laws.
AirBit Club execs face decades in prison after pleading guilty to $100M fraud
Co-founder Rodriguez and senior promoters Millan, Aguilar and Chairez all recently pled guilty to the charges, while the other founder, Dos Santos pled guilty in October, 2021.
SBF won’t be able to play League of Legends under proposed bail changes
Sam Bankman-Fried is, for the most part, still able to freely access the internet through various devices. Prosecutors want to change that.
US Feds put together ‘FTX task force’ to trace stolen user funds
United States Attorney Damian Williams said the office is working “around the clock” to respond to the implosion of FTX.
BitMEX Mastermind Arthur Hayes Pleads Guilty, Avoids Jail Time
The picture is getting clearer for BitMEX co-founder Arthur Hayes. The judge called what he did “a willful violation of the Bank Secrecy Act,” but he still got two years probation. Hayes will serve the first six months of that sentence in home confinement, but that’s it. The banker and entrepreneur will not set foot in a cell. Why was anyone expecting otherwise, though?
Related Reading | Arthur Hayes’ Crystal Ball Predicts: Bitcoin And Ethereum To See Carnage In June
The top federal prosecutor in Manhattan, Damian Williams, commented in a statement that Hayes “allowed BitMEX to operate as a platform in the shadows of the financial markets.” That’s according to Bloomberg, publication that summarizes the situation as:
“On Friday a federal judge sentenced Hayes to two years’ probation, after Hayes and BitMEX’s other founders were charged in 2020 with violating the Bank Secrecy Act, which requires the establishment of such safeguards, including verifying the identities of an exchange’s customers.”
His company, BitMEX, also “agreed to pay $100 million to settle civil allegations that it allowed illegal trades for years and violated rules requiring anti-money-laundering programs, without admitting to or denying the claims.” Some people are completely against the sentence, as they believe it sets a dark precedent.
Objections To Arthur Hayes’ Sentence
The publication quotes assistant US Attorney Samuel Raymond, who told US District Judge John Koeltl.
“This is a very serious offense. There were real consequences. When individuals like Mr. Hayes operate platforms without anti-money-laundering programs or know-your-customer programs, they become a magnet for people to launder money.”
Considering criminals are highly incentivized to circumvent the AML measures and KYC procedures, we can categorically say that John Koeltl’s assumptions are skewed. However, that doesn’t justify not complying with the law. According to Samuel Raymond, not sending Hayes to prison “would send a message to him that the cost of doing business is merely a fine, and he could continue to violate the law for huge amounts and pay any fine.”
What About The Other BitMEX Co-Founders?
The article is about Hayes, so, it doesn’t go into detail about the others. It summarizes their situation as follows:
“Hayes and co-founder Benjamin Delo pleaded guilty in February, and Samuel Reed in March, each agreeing to forfeit $10 million. Delo is scheduled to be sentenced next month and Reed in July.”
To close it all off, James Benjamin, Hayes’ lawyer, states the obvious. “Did BitMEX do a perfect and seamless job on its path from startup to a mature fintech company? No, it did not. There were some bumps in the road.”
LUNA price chart on FTX | Source: LUNA/USD on TradingView.com
Arthur Hayes On The Terra Luna Collapse
As many crypto-experts knew, Terra was a disaster waiting to happen. In his latest piece about the Luna collapse, Arthur Hayes tried to explain the underlying problem with algo-stablecoins.
Related Reading | BitMEX CEO Arthur Hayes Goes Mum amid CFTC Probe Rumor
”Algorithmic stablecoins are not much different than fiat debt-backed currencies, save for one crucial factor. Terra and others like it cannot force anyone to use UST at any price. They must convince the market with their fancy designs that the governance tokens backing the protocol will have a non-zero value that rises more quickly over time than the amount of fiat-pegged tokens issued.”
Obviously, the model failed. The vulnerability was so big that maybe it wasn’t even a coordinated attack. The Terra Luna scheme wasn’t long for this world, in any case.
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