BitMEX, a cryptocurrency derivatives exchange, and its CEO Arthur Hayes has been slapped with a $540 million amended lawsuit by self-proclaimed early investors like Frank Amato and RGB Coin Ltd. They were later joined by Elfio Guido Capone.
The first lawsuit was filed back in December for $300 million, and now it has been amended to include Capone and the amount in damages has been increased as well.
The lawsuit claims that the plaintiffs in the case were the earliest investors and made a seed fund of $55,000 back in 2015 who were promised that their investment would be converted to equity at $10 million post-money valuation.
The plaintiffs seek $90 million for the current value of their equity as well as $450 million in punitive damages based on the current valuation of the derivative exchange.
The lawsuit further claimed that now CEO Arthur Hayes contacted all the three parties involved via Linkedin looking for angel investment as there were no backers for the derivative platform from as early as mid of 2014.
Amanto, at the time, was a commodity derivatives trader at JP Morgan & Co.who said that Hayes was looking for equity investors. He went on to claim that Hayes promised him his investment would buy him 0.5% of Bitmex equity at $50,000 along with equal rights as that of the other two founders of the exchange.
Amanto also claimed that Hayes assured them to notify him in case they plan for another fundraising so that he can retain his ownership percentage. The legal document read:
“Defendants representations and repeated assurances that Mr. Amato’s investment would entitle him to equity in BitMEX were either knowingly false, or were recklessly made to induce Mr Amato to invest money that Defendants never intended to allow to become equity in the business.
In reliance on Defendants’ representations, Mr. Amato executed the SAFE and then, on June 26, 2015, wired Defendants $30,000.”
Capone Accuses Hayes of Misleading and Giving False Information
The newly added plaintiff in the amended lawsuit Mr. Elfio Guido Capone accused Arthur Hayes of giving false information and procrastination after receiving the funding. Capone claimed that Hayes contacted him on a similar promise of offering 0.5% equity at $50,000 at $10 million valuations. When he inquired about other investors in the exchange, Hayes claimed that he had been promised $150,000 to $200,000 from other investors.
Capone contacted Hayes multiple times to convert his $50,000 investment into a 0.5% equity in the exchange, but Hayes backed down and offered $125,000 instead to forget about the equity promises.
Capone claimed that he declined the offer and reached to other two founders of the platform Sam Reed and Ben Delo. However, Ben Delo responded with a meme to his issue, claiming that even though they were headquartered in San Francisco, they can easily evade the accountability by incorporating in Seychelles.
The complaint also claimed that BitMEX established a shell company by the name of ABS Global in order to evade strict security laws. Which they can claim to regulators that Bitmex had no investment from US Investors and can also hide its operations out of California, which is the hub for all operations of the derivative exchange.
The lawsuit can get Bitmex in hot waters and puts them in the same league as Bitfinex which has been dealing with several class-action lawsuits for manipulating their yearly monetary records. BitMEX is one of the most popular crypto exchanges which handles billions worth of Bitcoin every day.