BitMEX accused of racketeering, wire fraud in new lawsuit

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A new lawsuit from Bitcoin Manipulation Abatement LLC (BMA) has been filed against BitMEX’s parent company, BitMEX’s holding company, and BitMEX’s co-founders. BMA claimed BitMEX “was deliberately designed from ground up with the purpose to engage in, facilitate, aid, abet, counsel, induce and/or procure a myriad of illegal activities.”

The Lawsuit

BMA, which is also taking Ripple to court, filed the lawsuit against BitMEX last May 16 in the U.S. District Court for the Northern District of California. It names BitMEX parent company HDR Global, BitMEX holding company ABS Global Trading, and BitMEX co-founders Arthur Hayes, Ben Delo, and Samuel Reed as defendants.

Among the accusations being made, BMA claims that BitMEX conducted, or conspired to conduct, racketeering, wire fraud, and money laundering, and conducted, controlled, managed, supervised, directed, or owned all or part of an unlicensed money transmitting business.

 BitMEX response–who is Bitcoin Manipulation Abatement LLC?

HDR Global Trading acknowledged the recent filing against them, saying: “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.”

This lawsuit against BitMEX and company is the second lawsuit BMA has filed against a digital currency company this month. At the beginning of May, BMA filed a lawsuit against Ripple claiming that the company violated California laws on seven counts and had conducted an unregistered securities sale back in 2013.

BMA also filed a $150 million lawsuit against FTX exchange back in November 2019, accusing the exchange of market manipulation and selling unlicensed securities.

There is not much public information available about BMA. Other than the three lawsuits that have been filed, all that is known about BMA is that they are registered in Puerto-Rico and that only one director appears on their corporate registry—Pavel Pogodin.

The BitMEX bucket shop

Despite BitMEX not being a licensed money transmission business in the U.S., roughly 15%, or $138 billion, of BitMEX’s 2019 trading volume came from traders located in the United States. BitMEX’s United States userbase accounts for about $3 billion in BitMEX money transfers each day. With numbers like that, it is only a matter of time until law enforcement cracks down on BitMEX and forces them to comply or cease and desist.

BitMEX not abiding by the legal infrastructure in place, and not registering with the correct United States government agencies, holds the entire cryptocurrency industry back—regardless of how much money they generate each day. To make matters worse, BitMEX supports digital currencies that the SEC has already pressed charges against for hosting unregistered securities sales in the form of an ICO, such as EOS—who settled with the SEC back in September over their illegal securities sale. The way BitMEX conducts itself gives the entire digital currency space a bad rap. For the digital asset industry to truly mature and professionalize, bucket shops like BitMEX need to comply with the law.