BitMEX Hit with Another Lawsuit for Fraud, Market Manipulation

BitMEX, a leading crypto derivatives platform, has been slapped with a fresh lawsuit in the United States, accusing it of “racketeering”, “wire fraud”, and “Money Laundering Money Laundering Money laundering is a blanket term to describe the process by which criminals disguise the original ownership and proceeds of criminal conduct by making such proceeds appear to be derived from a legitimate source.Money laundering is an issue that traverses countless industries and sectors, which includes the financial services space. Though criminal money may be successfully laundered without the assistance of the financial sector, billions of dollars’ worth of criminally derived money are laund Money laundering is a blanket term to describe the process by which criminals disguise the original ownership and proceeds of criminal conduct by making such proceeds appear to be derived from a legitimate source.Money laundering is an issue that traverses countless industries and sectors, which includes the financial services space. Though criminal money may be successfully laundered without the assistance of the financial sector, billions of dollars’ worth of criminally derived money are laund Read this Term”, among many others.

The lawsuit was filed by BMA LLC in a California district court on May 16.

Filed against HDR Global Trading, the parent of BitMEX, the lawsuit also named the three co-founders of the Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term - Arthur Hayes, Ben Delo, and Samuel Reed - along with ABS Global Trading, and collectively accused all of them of the violations.

According to the court documents, the derivatives exchange is involved in “a myriad of illegal activities” including racketeering, wire fraud, money laundering, “monetary transactions in property derived from specified unlawful activity”, “conducting, controlling, managing, supervising, directing, or owning all or part of an unlicensed money transmitting business”, “interstate transportation of stolen property”, and “cryptocurrency market manipulation,” thus violating a number of United States laws.

Operating illegally or just neglecting loopholes?

Citing “several sources close to the company,” the lawsuit also detailed that 15 percent of the total crypto trades for 2019 on BitMEX, that accounted around $138 million, came from the traders based in the United States.

Notably, BitMEX does have money transmission licenses in the US and is not allowed to offer any services in the country.

“Defendants, and each of them, specifically designed BitMEX to financially benefit from the alleged racketeering activity and other unlawful conduct, earning Defendants billions of dollars in illicit profits,” the plaintiff accused.

The US Commodities and Futures Trading Commission (CFTC) reportedly initiated a probe into the exchange last year, but its findings are unknown.

The plaintiff also accused the exchange set its index price based on the prices of “two or three illiquid spot exchanges, enabling manipulators and money launderers to avoid detection by providing them with the ability to open unlimited number of anonymous document check-free trading accounts without any trading and withdrawal limits, weaponizing deliberate server freezes.”

BitMEX's response

A spokesperson from BitMEX confirmed to Finance Magnates that the exchange is aware of the lawsuit and is preparing to fight it in the court.

"Having reviewed a draft version of their complaint, which is clearly rehashed from information culled from the internet, we confirm we will be defending ourselves vigorously against this spurious claim," the spokesperson stated.

"BMA has recently emerged as a serial filer of claims against companies operating in the cryptocurrency space, and is widely recognized for operating just like a patent troll. We will deal with this complaint through a normal litigation process and are entirely confident the court will see the claim for what it is."

Notably, the exchange has recorded massive liquidation in many market fluctuations and also lost its dominance in the crypto futures market to Binance recently.

Meanwhile, BitMEX and its co-founders are also facing another lawsuit by multiple initial investors of the exchange for $540 million for violation of their contract, Finance Magnates reported.