Arthur Hayes. Source: CryptoHayes / Twitter

A US District Judge blocked prosecutors from presenting the so-called “coconut comment” during the criminal trial of BitMEX Co-founder 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.

Hayes “spoke in a plainly jocular fashion” Koeltl is quoted as saying, adding that the video of his comments is “highly inflammatory” because it suggests that there is bribery involved. However, the judge stated:

“There’s no evidence of bribery in the Seychelles, and plainly the relevance of the segment is outweighed by the danger of unfair prejudice.”

The decision concerns a comment joke made by Hayes during a debate with a crypto skeptic, economist Nouriel Roubini at the Asia Blockchain Summit in July 2019, about using a coconut to bribe officials in the Seychelles. 

Asked about operating in jurisdictions with little oversight, and about the Seychelles regulators operating “on a different scale” than those in other countries, Hayes said that “it just costs more to bribe them” – and as to the amount Hayes paid to bribe regulators in the Seychelles, he said, “a coconut.”

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

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

As reported, in October 2020, US prosecutors filed criminal charges accusing the three founders and BitMEX’s Head of Business Development Gregory Dwyer of evading money laundering rules. A year later, Dwyer agreed to be extradited to the US.

Last August, BitMEX reached a settlement with the Commodity Futures Trading Commission and the Financial Crimes Enforcement Network, agreeing to pay a civil money penalty of as much as USD 100m to resolve the charges related to investigations by the two agencies.

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Learn more:
Crypto Exchanges in 2022: More Services, More Compliance, and Competition
Arthur Hayes Tells Crypto Traders ‘It Pays to Wait,’ Stronger USD Coming

BitMEX’s Arthur Hayes Surrendered and Released as Planned
BitMEX’s One-Stop Crypto Shop in DACH Region Plan Gets a Banking Twist

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