BitMex to face $300 million lawsuit from investors

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Cryptocurrency exchange BitMex and its founder, Arthur Hayes, are facing legal action from an early investor in the company, following allegations of fraud against the investor.

Bloomberg reported BitMex and its founder are being sued for $300 million by RGB Coin and Frank Amato, after papers were filed with the Superior Court of the State of California in San Francisco earlier this month.

Amato claims that he and his company were the first seed investors in BitMex back in 2015, investing $30,000 in the then startup. The capital was allegedly intended to be converted into equity, which would have been worth $50 million at today’s valuation.

However, according to the lawsuit, the equity was never issued. Amato claims BitMex gave him false information to solicit the original investment, which forms the basis of the claim.

The remaining $250 million being chased in the lawsuit is punitive damages, on top of the $50 million equity valuation. The estimated value of the equity values BitMex at over $1 billion.

“Through this action, Plaintiffs seek damages representing the value of their equity interest in BitMEX, which is conservatively estimated to exceed $50,000,000, together with punitive damages of $250,000,000. Plaintiffs also seek injunctive relief and other remedies, together with their attorneys’ fees and costs.”

It is not clear whether the plaintiff would be awarded punitive damages at this level should the case go in his favor, though an adverse result could present a significant issue for the exchange.

The lawsuit is only the latest issue to beset the crypto exchange in recent months. In November, a major data leak at the exchange saw masses of user emails leaked publicly, while back in July, the exchange saw mass withdrawals after regulators in the United States announced they were investigating the exchange.

BitMex has yet to respond to requests for comment on the matter, though it is thought the firm will be preparing to defend against the claims from former trader Amato and RGB Coin.