Lawsuit Claims BitMEX Officials ‘Looted’ $440 Million Despite Knowledge of Probe

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In Brief
  • BitMEX has been hit with a lawsuit alleging it engaged in market manipulation and unregistered trading.

  • The complaint also alleges that BitMEX executives routed $440 million away to avoid seizure.

  • The complaint was filed by traders Yaroslav Kolchin and Vitaly Dubinin.

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A civil lawsuit alleges that BitMEX’s co-founders directed roughly $440 million away from the exchange despite knowledge of investigations. It also suggests that the funds were moved to limit seizure by authorities.

A civil lawsuit dated Oct. 30 alleges that BitMEX executives engaged in market manipulation and unregistered trading. Furthermore, it claims that BitMEX’s co-founders sought to move approximately $440 million out of BitMEX, knowing that civil and criminal charges were unfolding.

The complaint was filed by traders Yaroslav Kolchin and Vitaly Dubinin against the founders of BitMEX parent company HDR Global Trading Limited. Among other serious accusations, it refers to BitMEX co-founders Arthur Hayes, Benjamin Delo, and Samuel Reed as “notorious fraudsters.” The lawsuit uses the indictments by the Department of Justice and the U.S. Commodity Futures Trading Commission (CFTC) as exhibits.

Fund distribution pattern: Case No. 3:20-cv-3345-WHO

The suit claims that the executives caught wind of the impending charges in 2019 and sought to move funds away to minimize the amount seized by authorities. It then says that these funds were distributed between the three co-founders and Sean O’Sullivan Ventures.

Regulators Ramping Up Investigations

BitMEX first faced this legal case in May, with the plaintiff BMA LLC accusing it of money laundering, wire fraud, and civil conspiracy. Claims in the suit included exacerbating price fluctuations and causing the most liquidations. Shortly after the initial announcement of the indictments, CEO Arthur Hayes stepped down as CEO.

The newest development is a serious escalation of the circumstances of BitMEX, which saw an exodus of users following the indictments. Investors withdrew over 37,000 BTC while open interest dropped by 16%, according to Arcane Research.

SEC Commissioner Hester Peirce, who supports digital currencies, said that the BitMEX arrests are a sign of increasing regulatory scrutiny. Speaking on the Unconfirmed podcast, Commissioner Peirce said that unregistered securities via ICOs and celebrity promotions are under examination.

Binance Faces Accusations

Binance, the world’s largest cryptocurrency exchange, is also facing problems. Forbes released a report on Oct. 29 pointing to a leaked document alleging that Binance was looking to circumvent U.S. regulations.

It claimed that a “Tai Chi entity” was used to execute a bait and switch and funnel profits towards Binance. The exchange firmly denied these accusations, also stating that the report had inaccuracies.

Binance officials said that the document was merely a strategy document that “anyone can produce.” Binance U.S. CEO Catherine Coley has also responded to the allegations, saying that the U.S.-arm has made no payments to Binance.


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Rahul Nambiampurath is an India-based Digital Marketer who got attracted to Bitcoin and the blockchain in 2014. Ever since, he's been an active member of the community. He has a Masters degree in Finance. <a href="">Email me!</a>

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