BitMEX is in legal hot water after early investors in the company filed a $300 million lawsuit, alleging that their seed money investment was not turned into equity as promised. Frank Amato and RGB Coin Ltd. claim that BitMEX founder Arthur Hayes did not honor the equity swap agreement made at the time, and as a result they have resorted to court action to get their hands on the value of the shares they believe are rightfully theirs.
BitMEX “Provided False Information”
In a filing dated December 4, Amato claims to have been the first seed funder for BitMEX, giving Hayes $30,000 in June 2015 in order to help get the platform get off the ground. Due to the risk associated with the project, Amato was allegedly promised a “substantial premium” when it came to share conversion time, only to now allege that Hayes and BitMEX “mislead” him and stopped this from happening.
BitMEX attracted a further $30,000 in funding in late 2018, valuing the company at $600,000, which should have triggered Amato’s equity conversion. However, Amato claims that Hayes “provided false information” in relation to the later investment, thus preventing the equity conversion from taking place. As a result, Amato and RGB Coin are seeking damages representing what they claim to be the value of their equity interest in BitMEX, which is “conservatively estimated to exceed $50,000,000”, as well as punitive damages of $250 million.
BitMEX in the News Again
BitMEX is a rarely out of the news or discussion within crypto circles, with its ethical and financial practices frequently coming into question, as is the performance of the platform itself. Last month a leak revealed all BitMEX users’ email addresses and passwords, while crypto personalities like Suppoman have recently criticized the very presence of margin trading platforms, saying that they prey on unsuspecting new users with offers of free money that almost always ends up back in the pocket of the exchange.
>be Arthur Hayes
>sell IOUs to early investors that become equity next raise
>never raise again pic.twitter.com/aQJMEHuuu6
— The Crypto Dog? (@TheCryptoDog) December 12, 2019