BitMEX officials allegedly 'looted' $440 million from exchange after learning about U.S. charges, per lawsuit filing

Plaintiffs in a civil lawsuit filed this spring allege that the leadership of HDR Global — the parent company of crypto derivatives exchange BitMEX — withdrew significant sums of money once they learned about investigations and pending charges from U.S. regulators and law enforcement.

The allegations were included in an October 30 court filing. That filing is the latest in a months-long lawsuit filed in May, which, as previously reported by The Block, accused HDR and co-founders Arthur Hayes, Ben Delo and Samuel Reed of market manipulation and money laundering. In a statement at the time, HDR said that "we will be defending ourselves vigorously against this spurious claim."

BitMEX and its leadership was the target of a U.S. government indictment, which alleged violations of the Bank Secrecy Act, first unveiled on October 1. The Commodity Futures Trading Commission has also pressed civil charges. Reed, BitMEX's CTO, was arrested that morning and was later released on a $5 million bond. 

In the new filing, the plaintiffs alleged that "[b]eing keenly aware of the Commodity Futures Trading Commission (“CFTC”) and Department of Justice (“DOJ”) investigations and imminently forthcoming civil and criminal charges, and while preparing to go on a lam from the U.S. authorities, Defendants Hayes, Delo and Reed looted about $440,308,400 of proceeds of various nefarious activities that took place on the BitMEX platform, from accounts of Defendant HDR, Exhibits E, F, G."

"These fraudulent distributions of proceeds of illegal acts were made on the following dates, which are after Defendants learned about the Government investigations and after receiving a draft complaint in this action in 2019: October 15, 2019, November 19, 2019 [and] January 2020," the filing went on to allege, referring to the transactions as "profit distributions."

The filing claimed:

"From this information, it appears that Defendants were actively and deliberately looting Defendant HDR and trying to make its funds unavailable for the collection of future judgments against it. Specifically, the aforesaid profit distributions at a rate of $440,308,400.00 in just three months were clearly not performed in the ordinary course of business of Defendant HDR, as they represent $1,761,233,600 annual profit distribution rate, which money Defendant HDR simply does not earn. Therefore, these extraordinarily large distributions were clearly designed to loot Defendant HDR of its assets and hinder Plaintiffs’ and Government’s recovery of any future judgments."

Beyond these specific allegations, the plaintiffs accused the defendants' legal representatives of seeking to delay the proceedings of the lawsuit.

In an email to The Block, a spokesperson for HDR Global said  "Pavel Pogodin of 'Consensus Law' has filed a series of increasingly spurious claims against us, and others in the cryptocurrency sector. We will deal with this through the normal litigation process and remain entirely confident the courts will see his claims for what they are."

Read the full court filing below:

Filing by MichaelPatrickMcSweeney on Scribd

This piece has been updated with comments from an HDR Global Trading spokesperson