BitMEX Co-founder Ben Delo Faces Class-Action Lawsuit Over Alleged Price Manipulation
Summary:
Ben Delo, co-founder of cryptocurrency exchange BitMEX, has been targeted for a class-action lawsuit filed by the exchange users who accuse him of price manipulation. Delo had previously argued that U.S jurisdictions didn't apply to him, but this was overturned by a U.S. District Judge. The lawsuit alleges Delo created a system which allowed for market manipulations that were profitable for BitMEX. The suit was originally filed in 2020 against Delo and his co-founders, accusing them of running a special trading desk that used customer data to profit from liquidations. In June 2022, Delo received a 30-month probation sentence after admitting to failing to establish an Anti-Money Laundering program at BitMEX.
Ben Delo, co-founder of cryptocurrency exchange BitMEX, will be contending with a class-action lawsuit brought on by his exchange users. He stands accused of having a significant role in an alleged scheme to manipulate prices. In May, Delo, who is a British national, argued against the lawsuit's validity on the grounds that U.S. courts hold no jurisdiction over him. However, U.S. District Court Judge Andrew Carter of New York dismissed this argument in an order issued on April 3 and made public on April 8.
Judge Carter's order justified this by stating that the plaintiffs had made a compelling case that Delo sought to benefit from the U.S. judicial system. It also alleged Delo was instrumental in the alleged manipulative practices and devised a liquidation process enabling BitMEX to profit from these manipulations.
The class-action lawsuit was initially filed in April 2020 by a group of BitMEX users against BitMEX and its co-founders, Delo, Arthur Hayes, and Samuel Reed. They accused the trio of running a "God Access" trading desk, giving them unrestricted access to BitMEX customer accounts and their trade data.
The suit further claims that the co-founders used this data to determine which trading actions would result in the most user liquidations, earning the exchange profits. They allegedly executed trades to ensure these outcomes. Sources suggest the existence of this trading desk was only disclosed by BitMEX in April 2018 following pressure from an independent analyst.
While the exchange defended this as an impartial market-making role, the suit suggests ongoing dishonest trading against customers via anonymous accounts. In addition, Judge Carter's order suggests additional evidence portrays Delo in roles directly linked to significant financial and trading decisions at BitMEX.
The order added that Delo not only traded on the platform but also gained from such undisclosed benefits. On April 3, Judge Carter refused BitMEX and HDR Global Trading's motion to dismiss the case, ruling that the lawsuit had plausibly alleged the illegal trading desk's existence within BitMEX’s New York office.
In June 2022, Delo was sentenced to 30 months of probation after admitting in February to failing to uphold Anti-Money Laundering (AML) protocols at BitMEX, breaching the Bank Secrecy Act (BSA). His co-founders, Hayes, and Reed, also pleaded guilty. Hayes received a two-year probation term coupled with a six-month home confinement order, while Reed was given 18 months probation.
Published At
4/9/2024 9:03:30 AM
Disclaimer: Algoine does not endorse any content or product on this page. Readers should conduct their own research before taking any actions related to the asset, company, or any information in this article and assume full responsibility for their decisions. This article should not be considered as investment advice. Our news is prepared with AI support.
Do you suspect this content may be misleading, incomplete, or inappropriate in any way, requiring modification or removal?
We appreciate your report.