New York Judge Rules BitMEX Co-Founder Must Face Lawsuit for Illegal Access to Customer Accounts

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Based on a recent decision made by a US federal judge in New York, Benjamin Delo, one of the co-founders of a derivatives exchange, is required to respond to a class-action lawsuit. The judge, Andrew Carter, has ruled that Delo’s involvement in a price manipulation scheme at the exchange makes him a necessary party to the case.

Judge Carter Refuses to Dismiss BitMEX Co-founder’s Lawsuit

Judge Carter’s ruling is a response to Delo’s filing last May, which asked for a dismissal of the case. Delo, who is a British citizen, had filed to dismiss, arguing that courts in the US do not have the required jurisdiction over him. However, the Judge refused the motion to dismiss. According to Judge Carter, “plaintiffs have sufficiently alleged that Delo has purposely availed himself of the benefits of the forum – the United States”.

In April 2020, a group of BitMEX users filed a lawsuit against the cryptocurrency exchange and its founders – Arthur Hayes, Samuel Reed, and Delo. The complaint alleged that these individuals ran an exclusive trading desk which granted them extraordinary privileges, allowing them to view customer account information. With this insider knowledge, they reportedly assessed which accounts to liquidate in order to maximize profits for the exchange. These actions were taken with the intention of generating revenue through targeted trades.

According to the court document, the co-founders ran BitMEX with Delo overseeing their New York-based team. The lawsuit further reveals that Delo made trips to New York and employed a flashy Lamborghini for promotional purposes within the state.

Based on the court decree, it is claimed that Delo gained advantages through his personal trades on BitMEX. Furthermore, Delo is accused of creating the liquidation system and holding responsibility for significant financial and trading determinations at BitMEX.

Exchange Accused of Wire Fraud, Money Laundering, Others

In 2020, a lawsuit was brought against BitMEX with the claims that the cryptocurrency exchange had been operating without a license for money transmission in the US. The lawsuit further alleged that BitMEX engaged in illegal activities such as wire fraud, racketeering, and money laundering. The plaintiffs asserted that BitMEX intentionally facilitated these crimes by providing daily trading volumes of approximately $3 billion without proper regulatory oversight. Additionally, the exchange reportedly took advantage of insufficient crypto regulations by giving traders excessive leverage for derivatives on volatile markets. Furthermore, BitMEX was accused of allowing unverified and anonymous accounts to trade and withdraw cryptocurrencies without limitations.

In the original lawsuit, it is claimed that BitMEX intentionally creates artificial system congestion and server malfunctions to process or decline trading orders during market volatility. This reportedly was done with the aim of instigating the most extensive liquidations possible, resulting in significant losses for traders. (Paraphrased version)

In June 2022, a New York federal court passed a judgment granting Delo probation for 30 months for breaching anti-money laundering (AML) laws and the Bank Secrecy Act (BSA). This decision enabled Delo to go back to his home in Hong Kong without undergoing house arrest. In contrast, Delo’s co-founder Hayes received a more severe sentence, which included six months of house confinement. The prosecution had proposed that Delo serve one year in prison or be subjected to the same conditions as Hayes.

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2024-04-09 12:19