BitMEX Co-founder’s ‘Coconut Bribery’ Statement Labeled ‘Joke’ by Jury

The crypto-verse owing to its relatively young nature with respect to the traditional markets has seen many controversies over the years.

In a recent tussle between authorities and crypto exchange BitMEX’s co-founder Arthur Hayes, a US District Judge blocked prosecutors from presenting the ‘coconut bribery comment’ during the criminal trial of Hayes. 

A Bloomberg piece reported that a Manhattan federal judge held Thursday that a joke about bribing regulators made by Arthur Hayes, the former CEO of BitMEX, won’t be seen by a jury at his upcoming New York trial. 

What’s The Matter?

In October last year, Arthur Hayes, Benjamin Delo, and Samuel Reed were charged by the US Department of Justice with violating the Bank Secrecy Act and conspiracy to violate the act.

The charges were shortly followed by the arrest of former CTO Reed, while Hayes gave himself up in Hawaii in April, following the surrender of co-founder Delo a month earlier.

The joke about using a coconut to bribe officials in Seychelles was made by Hayes during a debate with economist Nouriel Roubini at the Asia Blockchain Summit in July 2019. When asked about operating in jurisdictions with little oversight, and about the Seychelles regulators operating ‘on a different scale’ than those in other countries, Hayes responded by saying:

‘It just costs more to bribe them.’

Furthermore, when Hayes was questioned about the amount he paid to bribe regulators in Seychelles, he said, ‘a coconut.’

Around the same time, authorities came down strongly against Hayes as assistant FBI Director William Sweeney Jr. in a statement pointed out that Hayes said that the company was incorporated in a jurisdiction outside the US because bribing regulators in that jurisdiction cost just ‘a coconut’.

Hayes’s statements were then used by prosecutors as evidence of the co-founder’s wish to avoid regulation after Hayes was accused in 2020 of allowing money laundering on BitMEX.

Here’s What Happens Next

Judge John Koeltl was quoted as saying that Hayes ‘spoke in a plainly jocular fashion’ and that the video of his comments is ‘highly inflammatory’ because it suggests that there is bribery involved. 

BitMEX, a cryptocurrency exchange, and derivative trading platform, has reportedly been under investigation by the CFTC since at least July 2019 while Hayes and others accused face charges of evading US anti-money laundering rules. 

Last year in August, BitMEX reached a settlement with the CFTC and the Financial Crimes Enforcement Network, agreeing to pay a civil money penalty of as much as $100 million to resolve the charges related to investigations. 

For now, Hayes is scheduled to go on trial on the aforementioned charges on March 30, this year, along with co-founders Benjamin Delo and Samuel Reed.

At the time of writing, the larger crypto market took a tumble as Bitcoin slipped below $38K while ETH saw the lower $2,800 level.