Company That Sued FTX and Ripple Now Sets Its Sights on BitMEX

BMA LLC, which two weeks ago sued Ripple, has now accused crypto derivatives exchange BitMEX of orchestrating the largest financial crime in U.S. history.

AccessTimeIconMay 18, 2020 at 7:09 p.m. UTC
Updated Sep 14, 2021 at 8:42 a.m. UTC

BMA LLC, the Puerto Rican company that two weeks ago filed a lawsuit again Ripple, has accused the BitMEX derivatives exchange of orchestrating the largest financial crime in American history.

The little-known firm, formerly known as Bitcoin Manipulation Abatement and controlled by Pavel Pogodin, filed suit in the U.S. District Court for the Northern District of California on Saturday, alleging that HDR Global Trading, the parent company of BitMEX, perpetrated a vast racketeering conspiracy designed to reap billions in illegal profit.

This plot featured wire fraud, money laundering, unlicensed money transmission, interstate transport of stolen property and violations of the Racketeer Influenced and Corrupt Organizations Act, or RICO, BMA alleges.

In a statement, an HDR spokesperson said the company was aware of the complaint, “which is clearly rehashed from information culled from the internet,” and that it would be defending itself “vigorously against this spurious claim.”

“BMA has recently emerged as a serial filer of claims against companies operating in the cryptocurrency space, and is widely recognised for operating just like a patent troll,” the statement added. “We will deal with this complaint through a normal litigation process and are entirely confident the court will see the claim for what it is.”

BitMEX’s failure to secure a money transmitter licence and its ties to U.S. customers means it processed $3 billion in illicit finances each day, BMA alleges, “which is the record volume for such unlawful activity in the entire history of the monetary regulation in the United States.”

BMA also alleges BitMEX manipulated the cryptocurrency markets by artificially boosting the price of bitcoin. The exchange allegedly traded against customers, tied its futures indices to illiquid spot market exchanges that it would then manipulate and capitalized on its schemes with staged “technical glitches” that prevented customers from exiting their positions.

Plaintiff fired shots over BitMEX’s 100x leverage trading options and said founder Arthur Hayes was “cryptocurrency’s P.T. Barnum.”

“Describing trading on cryptocurrency as ‘the entertainment business,’ [Hayes] has embraced a role as showman and promoter for the ‘degenerate gamblers he solicits, and encourages speculative trading by flaunting his lavish lifestyle and making bold predictions designed to elicit responses and move the market in a way that is profitable for BitMEX,” BMA claimed in the suit.

BMA and Pogodin have gone after cryptocurrency headliners before. In November BMA targeted FTX on accusations of price manipulation before voluntarily dismissing its case just over a month later. 

Earlier in May, BMA launched proceedings against Brad Garlinghouse and Ripple Labs for an alleged $1.1 billion violation of U.S. securities law in its XRP token sale.


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