Crypto Exchange BitMex Hit With $300 Million Investor Suit

[Baofeng]

Crypto Exchange BitMex Hit With $300 Million Investor Suit

BitMex, one of the world’s most popular cryptocurrency exchanges, and founder Arthur Hayes are being sued for $300 million for allegedly stiffing an early investor.

Frank Amato and RGB Coin Ltd. claim to have been the first seed investor of BitMex in 2015. The $30,000 investment was supposed to later be converted into equity, currently valued at more than $50 million, but they weren’t granted the equity, the suit said. Amato claims BitMex, which has employees in California and is registered in the Seychelles, gave him false information.

https://www.bloomberg.com/news/articles/2019-12-11/crypto-exchange-bitmex-is-hit-with-300-million-investor-lawsuit

So another lawsuit involving crypto exchanges? Well I guess Bitmex will have a lot of explaining to do here, not siding with anyone here, but it looks like Arthur Hayes may have forget something here, early investors claiming back his investors and then some. It will be interesting to see if they have written agreement here, the amount is huge and could impact Bitmex in the long run.

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[squatter]

Well I guess Bitmex will have a lot of explaining to do here, not siding with anyone here, but it looks like Arthur Hayes may have forget something here, early investors claiming back his investors and then some.

Maybe, maybe not. We have zero information about Amato's claims and no way to judge their merit. This could be totally frivolous. The fact that he says the investment "was supposed to later be converted into equity" makes it sound like he didn't cross his Ts or dot his Is.

All we know is that Amato is claiming that BitMex "gave him false information." That probably alludes to a buyout under false pretenses. For example, maybe Hayes claimed the platform was closing, or misrepresented its growth to Amato to deter him from realizing the equity.

The numbers seem really inflated. Amato is probably just looking for an out-of-court settlement.

[Jating]

Well it also says $50 million but what the hell is $250 for punitive damage? I have to agree that Amato might have inflated the claims here, and my opinion is that the judge won't award that big money to him and I agree with @squatter, this could be very well be settled out of court but we really don't know what the real numbers are.

Everyone here is really trying to scam each other, 

[malevolent]

Well it also says $50 million but what the hell is $250 for punitive damage?

*$250 million

Maybe he feels he's been literally scammed by Arthur Hayes, or just fishing to see how much he can wrangle out of him.

[figmentofmyass]

maintaining a physical presence in california seems like such a liability. i just don't understand why bitmex does it. not only are they operating from the USA (re the CFTC, FINCEN, etc) but apparently they are opening themselves up to personal jurisdiction in california state courts.

i still reckon they might fight it on jurisdictional grounds. there may be a distinction between bitmex's "established place of business" and whatever satellite office they have in california.

Maybe he feels he's been literally scammed by Arthur Hayes, but or just fishing to see how much he can wrangle out of him.

that's what it is---a fishing expedition. there's no way in hell he's walking away with $300 million, but the bigger the stated damages, the bigger the payout he'll get when the case settles. that's the rationale, anyway.

[malevolent]

maintaining a physical presence in california seems like such a liability. i just don't understand why bitmex does it. not only are they operating from the USA (re the CFTC, FINCEN, etc) but apparently they are opening themselves up to personal jurisdiction in california state courts.

SV companies for some reason love to have presence in an area with the highest salaries in the world. Maybe it'd be easier to sell their company one day to a bigger player if they maintain their presence there.

[Kemarit]

Well it also says $50 million but what the hell is $250 for punitive damage?

*$250 million

Maybe he feels he's been literally scammed by Arthur Hayes, or just fishing to see how much he can wrangle out of him.

Fishing, mliking whatever we call it. Simply people are using crypto sphere to hassle someone. Yes he already has lots of money, but I'm sure Frank Amato wanted more. Easy $250 million if it goes his way here.

[Theb]

Aren't they the exchange that got sued by the US Government because of them having US traders to illegally trade in their platform since they aren't allowed to do so? The last time I check is that the authorities have found out that they have an office in the US specifically located in San Francisco which they constantly denied of it's existence. So if what Frank Amato is saying is true this just proves more that they indeed have operated in the US illegally since they have a US investor backing them already.

[figmentofmyass]

Aren't they the exchange that got sued by the US Government because of them having US traders to illegally trade in their platform since they aren't allowed to do so? The last time I check is that the authorities have found out that they have an office in the US specifically located in San Francisco which they constantly denied of it's existence.

they didn't get sued by the government. the CFTC launched a probe investigating possible misconduct. they haven't officially done anything (like issuing enforcement actions, etc)

this is what bloomberg said about it:

The probe is ongoing and the regulator’s investigations often don’t lead to allegations of misconduct.

https://www.bloomberg.com/news/articles/2019-07-19/u-s-regulator-probing-crypto-exchange-bitmex-over-client-trades

[hugeblack]

It seems that there are old deals between Arthur Hayes & Frank Amato, and he wants to blackmail the director of BitMex to gain some cash.

I think BitMex's legal status is the best as he insists on dealing with official legal channels, a measure that could cost him a lot of money.
Amato's main purpose may be to create a media crackle and try to use it to get some compensation from the company.

The final settlement may be out of court.

[Theb]

Aren't they the exchange that got sued by the US Government because of them having US traders to illegally trade in their platform since they aren't allowed to do so? The last time I check is that the authorities have found out that they have an office in the US specifically located in San Francisco which they constantly denied of it's existence.

they didn't get sued by the government. the CFTC launched a probe investigating possible misconduct. they haven't officially done anything (like issuing enforcement actions, etc)

this is what bloomberg said about it:

The probe is ongoing and the regulator’s investigations often don’t lead to allegations of misconduct.

https://www.bloomberg.com/news/articles/2019-07-19/u-s-regulator-probing-crypto-exchange-bitmex-over-client-trades

I'm not surprised that there are no developments happening against their first case after all the US Government is known to do massive witch hunts to anyone in the crypto industry. The recent witch hunt they are currently conducting is the DoJ filing a case against Virgil Griffith who apparently went to North Korea to teach them how to avoid sanctions woth the use of crypto and blockchain. The way I see it someone or a group of politicians are just waiting for that massive score just to ruin the crypto industry in the US which I think why this is happening.