Bitmex CEO amidst regulatory mess as $540 million lawsuit looms


As Bitcoin rapidly continues to recover from the pre halving sell-off, popular crypto exchange BitMEX and its founder Aurthur Hayes is amidst regulatory trouble. The plaintiffs claiming to be early investors in the now widely popular crypto derivatives platform have filed an amended lawsuit which is now public.

Ghosts from the past?

The lawsuit was originally filed back on December 4, 2019, by Frank Amato, investment manager of Grasshopper Capital, and RGB Coin Ltd. Both the parties have claimed that they were BitMEX’s first seed investors and sued the platform for $300 million.

The plaintiffs claimed that they invested $30,000 in BitMEX back in 2015, and their investment was supposed to be converted to equity following the exchange’s first fundraising event. According to the initial lawsuit they weren’t given the equity.

Hence, Amato and RGB Coin pressed charges against the exchange to recover the value of their equity which is worth more than $50 million in 2020, along with $250 million in punitive damages.

Now, per the amended lawsuit filed last month, both the parties were joined by another investor named Elfio Guido Capone, claiming to be another seed investor, raising the total estimated value of the equity rights amount to more than $90 million, along with $450 million in punitive damages.

The filing states:

“Through this action, Plaintiffs accordingly seek (a) damages representing the value of their equity interest in BitMEX, which is conservatively estimated, jointly, to exceed $90,000,000, (b) damages from the failure to pay Plaintiffs’ dividends during the period, and (c) punitive damages in an amount to be determined, but in excess of $450,000,000.”

The lawsuit further adds that the defendant contacted the plaintiffs via LinkedIn stating that BitMEX was looking for “equity investors.” The plaintiffs were promised that they would be able to purchase 0.5% of BitMEX’s equity for $50,000 with the same rights as that of the other co-founders.

The plaintiffs now argue that took “incredible risk” and became BitMEX’s first outside investors, but defendants “cynically seek to deny Plaintiffs their rights or returns.”

“BitMEX’s executives, especially Defendant Hayes, also have taken other actions, including violating state securities laws, that undermine and depress the value of Plaintiffs’ ownership,” the filing added.

Amidst regulatory scrutiny

As previously reported by The Daily Chain, the current lawsuit comes weeks after the United Kingdom’s Financial Conduct Authority (FCA) stated that BitMEX has been looking to attract UK investors and even targeting them without having the proper authorization to do so in the UK.

The statement from the FCA noted:

“We believe this firm has been providing financial services or products in the UK without our authorization. Find out why to be especially wary of dealing with this unauthorised firm and how to protect yourself from scammers.”

Anna Larsen
Anna Larsen has been a Crypto enthusiast since 2016. Fascinated by the technology and its usecases she decided to pursue a career in content creation related to this space. The journey has been exciting ever since.

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