- Bitmex co-founder Ben Delo faces a class-action lawsuit due to the existence of a “God desk”
- New York District Court Judge Andrew Carter ruled the desk’s existence pivotal in an alleged manipulation scheme
- Delo has already faced legal consequences over the operation of Bitmex, receiving 30 months probation for violating the Bank Secrecy Act
Bitmex co-founder Ben Delo is set to face a class-action lawsuit after a judge ruled that the existence of a “God desk” hurt users of the platform. New York District Court Judge Andrew Carter ruled that the existence of the desk was key to an alleged price manipulation plot, throwing out Delo’s defense that, as a British citizen, the court had no jurisdiction over him. Delo has already faced legal action over the operation of Bitmex, having been sentenced to 30 months probation in June 2022 after pleading guilty to failing to maintain an Anti-Money Laundering program on Bitmex having initially denied the charges.
Delo was “Central” to Manipulation
A group of BitMEX users filed the lawsuit in April 2020 against the exchange and co-founders Delo, Arthur Hayes, and Samuel Reed, claiming they had a trading desk with “God access” to BitMEX customer accounts. The trio allegedly used customer information to determine which market moves would liquidate the highest number of users, thus netting the exchange the biggest profits, and would conduct trades to make that happened.
BitMEX revealed the desk in April 2018 after pressure from an independent analyst but claimed that it had a neutral market-making role. The suit, however, alleges that Bitmex continued trading against its customers on burner accounts.
Along with designing Bitmex’s liquidation system, Judge Carter ruled that the lawsuit showed Delo’s role at the exchange meant he would approve “key financial and trading decisions,” including the operation of the trading desk, and that he was “central” to alleged manipulation efforts.
Delo personally traded on the platform, benefiting from these same undisclosed advantages, the order stated, as well as noting, crucially, that his actions harmed American citizens.
Motion to Dismiss Denied
Judge Carter’s ruling, issued on April 3 but published this week, denied a motion to dismiss the suit from BitMEX and its Seychelles-based parent firm, HDR Global Trading, finding that it “sufficiently alleged” the trading desk operated from BitMEX’s office in Manhattan.
The class action suit will now progress into a full trial, which could see Bitmex and Delo on the hook for a hefty sum should he lose.
