BitMEX accused of money laundering, market manipulation in new lawsuit

Quick Take

  • A new lawsuit accuses crypto derivatives exchange BitMEX of illegal activities like money laundering
  • A spokesperson of BitMEX parent company HDR Global Trading told The Block: “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.”

     

A new lawsuit has been filed against the parent of crypto derivatives exchange BitMEX, HDR Global Trading Limited, as well as ABS Global Trading and its co-founders Arthur Hayes, Ben Delo and Samuel Reed, accusing them of illegal activities such as money laundering.

The 106-page lawsuit, filed on Saturday by plaintiff BMA LLC in the U.S. District Court for the Northern District of California, alleged that BitMEX was designed to engage in illegal activities such as racketeering, money laundering and market manipulation, earning the defendants "billions of dollars in illicit profits." Crypto publication ForkLog first published the complaint.

The plaintiff further alleged that BitMEX operates an unlicensed money transmitting business. "According to Defendants' own data, Defendants' unlicensed money transmitting business admittedly processed, on average, $3 billion of illegal and unlicensed money transfers each day, all in violation of United States federal statute..., which is the record volume for such unlawful activity in the entire history of the monetary regulation in the United States," read the lawsuit.

HDR is incorporated and registered in the Seychelles, but maintains offices in San Francisco, Hong Kong and Singapore, said the plaintiff, adding: "The San Francisco office of Defendant HDR is the largest of all three by both the employee headcount and technical staff headcount."

The lawsuit alleges that HDR is operating in the U.S. via its California-based wholly-owned subsidiary and alter ego, co-defendant ABS.

"Defendants Hayes, Delo and Reed have created Defendant ABS as a false 'shell' company as part of a broader United State federal and state law, regulation and tax dodge designed to tell regulators and tax authorities that BitMEX has no California or United States operations or investors," read the suit. "However, in reality, California is where most or all of its technology and services are managed and developed, and where almost all of the key personnel who perform those functions live, work and run BitMEX's operations."

Commenting on the complaint, an HDR spokesperson told The Block:

"We're aware of a complaint filed by 'BMA LLC', formerly known as 'Bitcoin Manipulation Abatement, LLC', in the US District Court for the Northern District of California. 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."

"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," the spokesperson added. "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."

This story has been updated to attribute the publication of the lawsuit's complaint.


© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Related Reading

Get Your Crypto
Daily Brief

Delivered daily, straight to your inbox.

More