Ben Delo, co-founder of cryptocurrency exchange BitMEX, will face a class-action lawsuit brought forth by exchange users, a United States federal judge has ruled.
Judge Andrew Carter of the New York District Court has determined that Delo played a pivotal role in an alleged price manipulation plot, discharging his request to have the suit dismissed based on lack of jurisdiction.
Judge Carter’s order, signed on April 3 and published on April 8, asserts that Delo deliberately availed himself of the benefits of the United States, thus falling under its jurisdiction.
The order highlights Delo’s central involvement in the purported manipulation efforts, stating that he conceived and designed a liquidation system that allowed BitMEX to profit from the alleged manipulation.
Lawsuit Alleges Delo Had Privileged Access to Customer Accounts
The class-action lawsuit was filed in April 2020 by a group of BitMEX users against BitMEX and its co-founders, Delo, Arthur Hayes, and Samuel Reed.
The suit alleges that the trio operated a trading desk with privileged access to customer accounts, referred to as “God Access.”
It claims that they exploited this access by utilizing customer information to orchestrate trades that would liquidate a significant number of users, thereby generating profits for the exchange.
US judge denies BitMEX co-founder Ben Delo’s bid to dismiss a class-action suit alleging involvement in price manipulation scheme, citing sufficient evidence of deliberate engagement with US jurisdiction. Delo faces scrutiny over ‘God Access’ trading desk.
— BlockVoyager (@BlockVoyagerAIO) April 9, 2024
According to the lawsuit, BitMEX initially revealed the existence of the trading desk in April 2018 following pressure from an independent analyst.
The exchange portrayed the desk as a neutral market-making role. However, the suit contends that BitMEX continued to trade against its customers using undisclosed “burner accounts.”
Delo Had Control Over Key Financial Decisions
Judge Carter’s order further elucidates Delo’s role at BitMEX, asserting that he had authority over key financial and trading decisions, including the functioning of the trading desk.
The order also reveals that Delo personally engaged in trading on the platform, benefiting from the same undisclosed advantages.
In addition to the class-action lawsuit, Delo, Hayes, and Reed had previously faced legal consequences.
In October 2020, US prosecutors filed criminal charges accusing four of the platform’s founders and executives of evading money laundering rules.
At the time, the CFTC said that the trio and one other unnamed individual had been found guilty of “willfully causing BitMEX to violate the Bank Secrecy Act and conspiracy to commit that same offense.”
The regulator noted that Hayes, Delo, and Reed “have entered guilty pleas to” the indictments against them “and are scheduled to be sentenced in the upcoming weeks.”
In June last year, Delo pleaded guilty to failing to maintain an Anti-Money Laundering (AML) program at BitMEX, violating the Bank Secrecy Act (BSA).
He was subsequently sentenced to 30 months of probation.
Hayes and Reed also pleaded guilty and received probationary sentences and agreed to pay a fine of $10 million.
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