BitMEX lawsuits puts a big shadow on one of the largest operators in the sector! Bitmex lawsuits first originated in December of 2019 when early investors Frank Amato and RGB Coin sued the company over equity that was promised to them by BitMEX. The first suit alleges that the equity was never granted.
BitMEX was hit with another suit earlier this month, accusing BitMEX of deliberate manipulation of the cryptocurrency ecosystem. The suit also alleges racketeering, wire fraud, money laundering, and more.
The second suit was brought forth by BMA LLC, apparently a one-man company based out of Puerto Rico – they’re known for filing similar suits against other companies like Ripple.
From the complaint, BitMEX is alleged to have facilitated manipulation of the digital currency markets and specifically benefitted from such manipulation. One of BitMEX’s offerings is a highly leveraged trade option, up to 100x. Users can effectively trade hundred times as many bitcoins as they actually need to put up as collateral – effectively allowing traders to profit at a high level from minor fluctuations in digital currency prices.
The suit accuses BitMEX of deliberately basing the index price of its futures offerings on smaller, illiquid exchanges that they could easily manipulate. This allowed traders to profit and leverage their trades successfully.
The suit also claims that BitMEX surreptitiously trades against their clients, citing their only-recently updated terms of service. The new TOS discloses that BitMEX engages in a for-profit trading business and uses the products on BitMEX to do so – unbeknownst to other traders on the platform.
The suit claims that the behavior is unlawful, criminal, and accuses the exchange of 13 causes of action, including Racketeering, Conspiracy to commit racketeering, manipulation and or deceptive action in the sale of any commodity in interstate commerce, price manipulation, aiding and abetting the manipulation of Bitcoin, civil conspiracy to defraud, and others.
BMA is asking the Court for compensatory damages, treble damages, attorneys fees, and punitive damages.
BitMEX is expected to respond to the allegations.
The suit tests the grey area that BitMEX has been operating in since its founding 2014. BitMEX does not hold a license to provide its services to US-based citizens, and officially, US citizens are barred from using the platform.
This grey area has already tested US regulators – the Commodity Futures Trading Commission (CFTC) was investigating BitMEX back in 2019. The CFTC has yet to announce any resolution to the investigation.
Regardless of what happens with this lawsuit, perhaps the courts will bring clarity on the general status of businesses like BitMEX and cut back on the grey area in which they are operating.
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