BitMEX co-founder Ben Delo is facing a class-action lawsuit by the exchange’s users following a US federal judge’s decision that Delo played a crucial role in an alleged price manipulation scheme.
Last May, Delo, a British national, attempted to dismiss a case in the United States, arguing that American courts did not have the authority to hear his case. However, Judge Andrew Carter of the New York District Court rejected this claim in an order signed on April 3 and made public on April 8.
In simple terms, the judges’ statement means that the plaintiffs have provided enough evidence to prove that Delo deliberately took advantage of the advantages offered by the American court system.
Delo played a crucial role in the suspected manipulation schemes, not only overseeing them but also devising a liquidation system that benefited BitMEX from such manipulative activities.
In April 2020, a number of BitMEX users initiated a legal action against BitMEX and its founders, Delo, Arthur Hayes, and Samuel Reed. The reason for the lawsuit was their allegation that these individuals operated an exclusive trading desk, which reportedly held the power to access and manipulate the customer accounts on the BitMEX platform with seemingly limitless authority, akin to having divine or “God Access.”
The threesome employed user data to identify markets with the potential to eliminate the most accounts, thereby generating a profit for the exchange, and proceeded to execute transactions to bring about this outcome according to the allegations in the lawsuit.
In April 2018, BitMEX disclosed the existence of their trading desk following scrutiny from an external investigator. The exchange defended this desk as performing a neutral market-making function. However, the lawsuit alleges that instead of acting impartially, BitMEX continued to trade against its clients using fake accounts.
The judge’s lawsuit not only involved designing BitMEX’s liquidation process but also revealed that Delo held a significant role at the exchange, enabling him to endorse “crucial financial and trading determinations,” such as managing the trading desk.
In simpler terms, the decree noted that Delo directly used the platform, gaining hidden advantages that were not disclosed.
On April 3rd, Judge Carter refused to throw out a lawsuit against BitMEX and its Seychelles-parent company HDR Global Trading. The reason was that the complaint provided enough evidence that BitMEX’s trading desk was based in their New York office.
In June 2022, Delo received a probation sentence lasting 30 months following his guilty plea in February of that year. He admitted to neglecting the required Anti-Money Laundering (AML) program at BitMEX, breaching the Bank Secrecy Act (BSA).
Additionally, Hayes and Reed admitted their guilt in conjunction with Delo. The court imposed a two-year probation sentence on Hayes, which included six months of house arrest. In contrast, the judge handed down an 18-month probation term to Reed.
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2024-04-09 09:14