Arthur Hayes’ ‘Coconut Bribery Comment’ Blocked by Judge

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A US District Judge prevented prosecutors from making the “coconut comment” during the criminal trial against BitMEX Cofounder Arthur Hayes, and other crypto exchange executives.

The government will not be able to use this argument during the trial in March, District Judge John Koeltl said on Thursday, Bloomberg reported.

According to Koeltl, Hayes spoke in a “plainly jocular manner” and that his comments are “highly inflammatory” as it suggests that there was bribery. The judge said:

“There is no evidence of corruption in the Seychelles and it is clear that the importance of the segment outweighs the risk of unfair prejudice.”

This decision is based on a comment made by Hayes in a debate with an economist Nourielroubini during the Asia Blockchain Summit in July 2019. It concerns Hayes’ joke about using a coconut as a bribe to officials in Seychelles.

Hayes was asked about operating in jurisdictions that have little oversight and the Seychelles regulators operating on a “different scale” to those in other countries. He said that it “just costs more” to bribe them and that the amount Hayes paid for the Seychelles regulators was “a coconut.”

Prosecutors used this evidence to show Hayes’ desire to skirt regulation after he was charged in 2020 with BitMEX money laundering.

Hayes, along with Benjamin Delo and Samuel Reed, is set to face trial on March 30.

According to reports, US prosecutors brought criminal charges against Gregory Dwyer, BitMEX’s Head for Business Development, and the founders of BitMEX. They also accused Dwyer, Dwyer, and Dwyer of violating money laundering regulations. Dwyer was released from prison a year later.

BitMEX and the Commodity Futures Trading Commission and the Financial Crimes Enforcement Network reached a settlement last August. They agreed to pay a civil penalty up to USD 100m for the resolution of the charges arising from investigations by the agencies.

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