BitMEX Hit with a Lawsuit for Market Manipulation and Fraud

Cryptocurrency exchange BitMEX was recently hit with a new lawsuit that accused the platform of market manipulation and fraud.

Several allegations against the platform

The lawsuit was filed against HDR Global Trading, the parent company of BitMEX. It named the company’s three co-founders as defendants- Arthur Hayes, Samuel Reed, and Ben Delo. ABS Global Trading has also been named in the lawsuit which alleges several violations like wire fraud, racketeering, and money laundering against the defendants. It was filed in a California district court by BMA LLC.

The documents submitted in court suggest that the exchange is engaged in “a myriad of illegal activities”, “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.”

It suggests that the exchange is violating US law. BitMEX doesn’t have regulatory approval to operate in the US.

The platform gets US volume

The lawsuit suggests that some sources close to the company have confirmed that it received 15% of its total crypto trades from the US. The total trading volume was worth $138 million. The plaintiff said that BitMEX was designed to benefit from racketeering activity and illegal activities which have provided them billions of dollars in profits.

BitMEX was under a CFTC investigation last year but the results of the probe are still unknown. The plaintiff further alleges that the index prices on the exchange are based on data available from two to three illiquid spot exchanges. This helps money launderers and manipulators to work without getting detected. It also gives them the ability to open numerous anonymous trading accounts, which don’t have trading or withdrawal limits. These accounts never have document checks and often use deliberate server freeze to their advantage.

A BitMEX spokesperson said that the exchange is aware of the lawsuit and is getting ready for a court battle. He added that the plaintiff has made a case based on rehashed information available on the internet. The spokesperson added that BMA has serially filed claims against crypto companies and is a patent troll. The company plans on dealing with it via the regular litigation process.