On Oct 1, Arthur Hayes, Benjamin Delo,  and Samuel Reed, the founders of BitMEX were indicted in New York. They were charged with money laundering and money manipulation. And yet again, BitMEX is embroiled in another case. Plaintiffs have alleged that HDR Global, the parent company of BitMEX crypto exchange withdrew $440M from the exchange. This is after learning about the investigations and pending charges from the U. S. regulators and law enforcement. 

The new charges were included in the charges filed in the court last October 30. Plaintiffs BMA LLC Yaroslav Kolchin and Vitaly Dubinin requested a court order to attach the assets of BitMEX. BMA LLC is a Puerto Rican company that has also filed a case against Ripple. 

The U. S. government alleged that BitMEX and its owners violated the Bank Secrecy Act.

The Commodity Futures Trading Commission (CFTC) has also charged BitMEX and its owners for illegally operating a cryptocurrency derivatives trading platform and money laundering. In a press release, Division of Enforcement Director James McDonald said that CFTC has clearly stated the registration requirements are a cornerstone of the regulatory framework that protects Americans and U.S. financial markets. He also added :

“Effective anti-money laundering procedures are among the fundamental requirements of intermediaries in the derivatives markets, whether in traditional products or in the growing digital asset market. This action shows the CFTC will continue to work vigilantly to protect the integrity of these markets.”

Reed was arrested on Oct 1 but was later released after posting a $5M bond.

As stated in the new filing, the plaintiffs alleged that “Being keenly aware of the Commodity Futures Trading Commission (“CFTC”) and Department of Justice (“DOJ”) investigations and imminently forthcoming civil and criminal charges, and while preparing to go on the lam from the U.S. authorities, Defendants Hayes, Delo, and Reed looted about $440,308,400 of proceeds of various nefarious activities that took place on the BitMEX platform, from accounts of Defendant HDR, Exhibits E, F, G. The looted funds were divided among Defendants and their associates.

The fraudulent distribution took place on October 15, 2019,  November 19, 2019, and January 2020.

As further stated in the filing :

“From this information, it appears that Defendants were actively and deliberately looting Defendant HDR and trying to make its funds unavailable for the collection of future judgments against it. Specifically, the aforesaid profit distributions at a rate of $440,308,400.00 in just three months were clearly not performed in the ordinary course of business of Defendant HDR, as they represent a $1,761,233,600 annual profit distribution rate, which money Defendant HDR simply does not earn. Therefore, these extraordinarily large distributions were clearly designed to loot Defendant HDR of its assets and hinder the Plaintiffs’ and Government’s recovery of any future judgments.”

The plaintiffs also accused the defendants’ legal counsel of making efforts to delay the proceedings of the case.

After getting indicted for two charges and the filing of a new one, what will happen to BitMEX now? Will this affect the relationship between cryptocurrency investors and crypto exchanges? Would you like to share your insight on this? Feel free to leave your comment and let us hear your thoughts regarding this matter.