BitMEX officials allegedly 'looted' $440 million from exchange
Plaintiffs in a civil lawsuit filed this spring allege that the leadership of HDR Global — the parent company of crypto derivatives exchange BitMEX — withdrew significant sums of money once they learned about investigations and pending charges from U.S. regulators and law enforcement.
The allegations were included in an October 30 court filing.
That filing is the latest in a months-long lawsuit filed in May, which, as
previously reported by The Block, accused HDR and co-founders Arthur Hayes, Ben
Delo and Samuel Reed of market manipulation and money laundering. In a
statement at the time, HDR said that "we will be defending ourselves
vigorously against this spurious claim."
BitMEX and its leadership was the target of a U.S.
government indictment, which alleged violations of the Bank Secrecy Act, first
unveiled on October 1. The Commodity Futures Trading Commission has also
pressed civil charges. Reed, BitMEX's CTO, was arrested that morning and was
later released on a $5 million bond.
In the new filing, the plaintiffs alleged that "[b]eing
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 a 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."
"These fraudulent distributions of proceeds of illegal
acts were made on the following dates, which are after Defendants learned about
the Government investigations and after receiving a draft complaint in this
action in 2019: October 15, 2019, November 19, 2019 [and] January 2020,"
the filing went on to allege, referring to the transactions as "profit
distributions."
The filing claimed:
"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 $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 Plaintiffs’ and Government’s recovery of any future
judgments."
Beyond these specific allegations, the plaintiffs accused
the defendants' legal representatives of seeking to delay the proceedings of
the lawsuit.
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