Judge Denies Dismissal Request

In a pivotal development for the cryptocurrency exchange BitMEX, co-founder Ben Delo will have to face a class-action lawsuit, as ruled by Judge Andrew Carter of the New York District Court.

Delo's request to dismiss the lawsuit on the grounds of lack of jurisdiction was denied, with the judge highlighting Delo's significant involvement in the United States, thereby placing him under its jurisdiction. The lawsuit accuses Delo of playing a central role in a price manipulation scheme designed to profit the exchange at the expense of its users.

Allegations of Market Manipulation

Filed in April 2020, the lawsuit brings to light serious allegations against BitMEX and its co-founders. It claims that the exchange operated a trading desk with 'God Access' to customer accounts, using this privileged information to trigger trades that would liquidate numerous users, thereby generating profits.

Despite initially describing the trading desk as serving a neutral market-making role, the lawsuit alleges continued trading against customers through undisclosed accounts.

Delo's Central Role and Legal Repercussions

The court's order emphasizes Delo's authority over BitMEX's key financial and trading decisions, including the operation of the controversial trading desk. Delo is also accused of personally trading on the platform, exploiting undisclosed advantages.

This lawsuit adds to the legal woes for Delo, Hayes, and Reed, who have previously faced criminal charges for evading money laundering rules and have pleaded guilty to violating the Bank Secrecy Act.

"Delo deliberately availed himself of the benefits of the United States, thus falling under its jurisdiction."

Previous Legal Issues

In October 2020, US prosecutors charged BitMEX's founders with failing to adhere to anti-money laundering regulations. Delo, along with his co-founders, pleaded guilty to these charges, with Delo receiving a sentence of 30 months probation. These legal challenges underline the scrutiny and regulatory pressures facing cryptocurrency exchanges and their executives.

Implications for the Crypto Industry

The unfolding legal saga around BitMEX and its founders signals increasing regulatory oversight in the cryptocurrency sector. It serves as a reminder to exchanges and their operators of the importance of compliance with financial regulations to ensure the protection of users and the integrity of the market.

The outcome of this class-action lawsuit could set precedents for how similar cases are handled in the future, potentially shaping the regulatory landscape for the crypto industry.