Bitmex Sued For Alleged Illegal Activities

The plaintiff claims that HDR Global Trading is involved in money laundering.

Money and Bitcoin ‘laundering’
Bitmex is a popular cryptocurrency derivatives exchange

On May 16th, 2020, a lawsuit was filed against HDR Global Trading: the parent company of Bitmex.

Bitmex is a Seychelles-based digital currency derivatives exchange that sees billions of dollars in trading volume daily.

In addition to HDR, the lawsuit was also filed against ABS Global Trading and its co-founders Samuel Reed, Arthur Hayes and Ben Delo. The defendants have been accused of engaging in illegal activities, including money laundering.

The suit claims that Bitmex was intentionally developed to participate in illicit financial activities, such as money laundering, racketeering, and market manipulation.

One allegation is that Bitmex artificially boosted the price of Bitcoin. It accused the exchange of trading against customers, tying its future indices to illiquid spot market exchanges, and then manipulating and capitalising on schemes by staging technical glitches to prevent customers from exiting their positions.

The 106-page lawsuit was filed by the plaintiff, BMA LLC, in the US District Court for the Northern District of California. The plaintiff claims that Bitmex is running a money transmitting business that is unlicensed and unregulated.

HDR Global is incorporated and registered in the Seychelles, with business offices based in Hong Kong, San Francisco and Singapore.

The lawsuit also claims that HDR has been operating secretly in the US through ABS, which is headquartered in California and a wholly-owned subsidiary.

An HDR spokesperson informed The Block that the company was ready to address the complaint.

“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.” the statement read.

“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.”

Not much is known about BMA LLC. The firm, formerly known as Bitcoin Manipulation Abatement, is controlled by Pavel Pogodin. The Puerto Rican company also filed a lawsuit against Ripple several weeks ago.

In November 2019, BMA and Pogodin accused FTC of price manipulation before they moved to voluntarily dismiss it a little over a month later.

Before that, BMA launched proceedings against Ripple Labs and Brad Garlinghouse for allegedly violating US Securities laws in its XRP token sale.

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