U.S. federal court rules that BitMEX users may file a class-action lawsuit against BitMEX co-founder Ben Delo.
In denying Delo’s motion to dismiss the case for lack of jurisdiction, Judge Andrew Carter of the New York District Court found that Delo was an integral part of an alleged conspiracy to manipulate prices.
The ruling that Judge Carter issued on April 3 and published on April 8 states that Delo is subject to U.S. jurisdiction because he knowingly used federal benefits.
According to the judgement, BitMEX was able to benefit from the alleged manipulation since Delo was instrumental in coming up with the idea and designing the liquidation mechanism.
Several BitMEX customers sued the company in April 2020, naming BitMEX, Delo, Arthur Hayes, and Samuel Reed as defendants.
Claiming to have “God access” to client accounts, the three individuals ran a trading desk, according to the lawsuit.
They claimed to take advantage of this access by using client data to set up transactions that would sell off a lot of customers and make the exchange a source of revenue.
The complaint states that BitMEX first acknowledged the trading desk’s existence in April 2018 in response to demand from a third-party analyst.
According to the exchange, the desk’s job is to act as an impartial market maker. But the lawsuit says BitMEX kept trading against its consumers with secret “burner accounts.”
The ruling from Judge Carter provides further clarity on Delo’s position at BitMEX; it states that he was responsible for major trading and financial decisions, as well as the operation of the trading desk.
Delo also used the site for his own trading, taking advantage of the same hidden benefits, as the order shows.
The class action lawsuit wasn’t the first time Delo, Hayes, and Reed were involved in legal trouble. U.S. authorities charged four platform executives and founders with violating anti-money-laundering regulations in a criminal complaint announced in October 2020.
When the CFTC announced the trio’s conviction, they did so together with an unidentified fourth defendant for “knowingly inducing BitMEX to violate the Bank Secrecy Act and conspiracy to conduct that same offence.”
As the regulator pointed out, Hayes, Delo, and Reed “have entered guilty pleas to” the charges levelled against them, and their sentencing is “expected to occur in the following weeks.”
In June of last year, Delo entered a guilty plea for violating the Bank Secrecy Act (BSA) by failing to maintain an anti-money laundering (AML) program at BitMEX.
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