Posted 6 months ago | by @devadmin
Those “scam wicks” are coming back to haunt Bitmex, as the once biggest derivative exchange is grappling with a new lawsuit alleging manipulation, The Block reported.
The new lawsuit alleges that Bitmex was involved in racketeering, money laundering, and market manipulation. The plaintiff in the complaint Dmitry Dolgov, is a resident of Moscow, Russia. His lawyer, Pavel Pogodin of Consensus Law, told The Block: “We are seeking compensatory damages in the amount to be proven at trial and $50,000,000 in punitive damages.
The complaint was filed in the Northern District of California on Wednesday. Dolgov alleges that HDR Global Trading Limited, the parent company of BitMEX, as well as the exchange’s founders Arthur Hayes, Ben Delo, and Samuel Reed and others, engaged in and facilitated racketeering activities, which “earned Defendants billions of dollars in illicit profits.”
The complaint comes following BitMEX and its founders charged by the Commodity Futures Trading Commission (CFTC) and the Department of Justice (DOJ), as Bitboy Crypto previously reported.
Audrey Strauss, the acting U.S. Attorney for the Southern District of New York announced that Hayes, Delo, Reed and Gregory Dwyer (BitMEX’s first employee) were being charged with violating the Bank Secrecy Act and conspiracy to violate the act.
The CFTC charged BitMEX with executing futures transactions on an unregistered board, offering illegal options, failing to register as a futures commission merchant, failing to register as a designated contract market, failing to implement proper know-your-customer rules and other counts, according to the attached legal filing.
The new lawsuit a whopping 188-pages claims that the defendants ignored know your customer (KYC) or anti-money laundering (AML) requirements and accepted “unlimited funds from anyone, without a single question asked.” Due to this lack of oversight by the exchange a host of bad actors including, “hackers, tax evaders, money launderers, smugglers, drug dealers all flocked to BitMEX flooding the platform with hot money,” the lawsuit claims.
Dolgov’s lawsuit also claims that “BitMEX directly participates in and financially benefits from market manipulation and profits indirectly from money laundering through its internal trading desk, describing a specific example, he writes:
“A money launderer (Defendants) would open two exchange accounts – a helper account on one or more exchanges used by BitMEX to calculate its index price (Coinbase Pro, Kraken and BitStamp) and a winner account on BitMEX,” the lawsuit explains. “The money launderer (Defendants) would then enter into a large leveraged derivatives position on BitMEX and immediately execute market orders from the helper account with maximum slippage to move the index price in a favorable direction.”
Bitcoin is currently trading at [FIAT: $11,300 ] DOWN -1.4% according to Coingecko at the time of this report.