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One of the most prominent cryptocurrency exchanges, BitMEX, is being sued for $300 million after it allegedly did not meet its equity and stiffed an investor.
According to the lawsuit filed against the crypto company by Frank Amato and RGB Coin Ltd., who were one of the first seed investors of BitMEX back when it had started in 2015, they will now be pursuing action against the company and its CEO, Arthur Hayes.
The details of the lawsuit show that an initial investment of $30,000 by the plaintiff was promised to be returned in the form of equity in the company, and that BitMEX failed to deliver. The current value of the equity that the plaintiff was promised would be around $50 million at the present day.
False Info to Hide Real Equity
Amato is now suing the company on the grounds that the Seychelles-registered company deceived him by giving him incorrect information. He claimed that the CEO of the company, Hayes, purposely concealed information from plaintiff, especially to prevent Amato from understanding the actual equity he owned.
The lawsuit was filed with the Superior Court of the State of California in San Francisco on December 4th. BitMEX responded by saying that they will address the claims made by Mr. Amato through legal representatives and have refused to make any public comments until that issue has been resolved.
Amato and RGB Coin are now demanding the value of their equity from BitMEX through legal channels which amounts to more than $50 million; and additionally they are demanding $250 million in penal damages. The company is currently valued at about $1 billion.
The plaintiff, Amato, is a former JPMorgan Chase derivative trader. The lawsuit further details that Amato is seeking damages representing the value of his rightful equity interest in BitMEX, which is calculated to be $50 million and after the addition of punitive damages the total settlement would be $300 million, excluding relief and other costs such as plaintiff’s attorney’s fees and legal work costs.
BitMEX has been growing at a successful rate despite its data leak in November which was not a major cause of concern for its executives as user email addresses were sent in mass to other users. The daily trade volume of BitMEX’s Bitcoin derivatives is estimated at $1.6 billion. Due to increased volatility during July of this year, users withdrew funds from the platform after it was reportedly being investigated by US regulators.