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BitMEX Faces Lawsuit for Money Laundering, Market Manipulation, Cyber Crimes

UTC by Steve Muchoki · 3 min read
BitMEX Faces Lawsuit for Money Laundering, Market Manipulation, Cyber Crimes
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BitMEX, one of the largest crypto derivatives exchanges in the world, and its executives are facing a lawsuit accusing them of engaging in money laundering, wire fraud, racketeering and also unlicensed money transmission.

In a controversial lawsuit, BitMEX, one of the leading crypto derivatives exchanges, has been accused by BMA LLC of engaging in cyber-crimes including money laundering, wire fraud, racketeering and also engaging in unlicensed money transmission. According to the lawsuit filed in the United States District Court for the Northern District of California on May 16, BitMEX is alleged to be deliberately designed from the ground to facilitate a myriad of illegal activities.

The lawsuit further accuses BitMEX’s parent company, HDR Global Trading, and also its top executives of engaging in similar charges as the company is accused of. Some of the executives mentioned in the lawsuit include Arthur Hayes, Ben Delo and also Samuel Reed.

The plaintiff cited several sources who disclosed that almost 15% of BitMEX’s 2019 trading volume is attributable to the U.S. traders. Approximately, the figure would trickle down to $138 billion, enhancing the magnitude of the case in the media.

Details of the Lawsuit against BitMEX 

The lawsuit is derived from the fact that BitMEX has been allegedly processing on average $3 billion in money transfers daily without having a license to permit them in the U.S. “This represents the record volume for such unlawful activity in the entire history of the monetary regulation in the United States,” the plaintiff claims.

In addition, BMA LLC accuses the defendants of conspiring to conduct the money transfer business through a pattern of racketeering activity. What stood out is the accusation of cryptocurrency manipulation, which is a huge challenge in that sector.

Since there is no central body to regulate the cryptocurrency market, huge market players take advantage of that window to manipulate the market in their favor. It is a billion-dollar industry that promises to make huge profits for any investor in a short period.

This is seen by the comparison of profits made by most traditional stocks in the past decade and profits made by Bitcoin and most altcoins in the same period. Notably, the return rate for most cryptocurrency has been in the thousands of percentage, whereas the traditional stocks are struggling to maintain even a single rally.

According to the lawsuit, BitMEX provides traders with extremely high leverage amounting to hundreds for a very volatile derivative. BMA LLC accuses the defendants of allowing money launderers to operate illegally with an unlimited number of anonymous and unverified accounts, which in essence do not have trading or withdrawal limits.

The lawsuit also claims that the defendant deliberately freezes servers and also uses fraudulent system overload to accept or reject specific trading orders during volatile markets. All these are done to trigger maximum liquidations, resulting in most retailers losing their money.

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