Bitmex crypto exchange which is facing allegations of misconduct from SEC has also been hit with a civil lawsuit filed recently. The lawsuit claims that the leadership of HDR Global now under the holding group of 100XGrouop, which owns crypto derivatives exchange BitMEX, HDR Global, and all other assets have looted funds. The 100xGroup was established in July of this year. The latest allegations made against HDR Global claims that founders withdrew significant sums of money once they learned about investigations and pending charges from U.S. regulators and law enforcement.
The allegations were included in an October 30 court filing. Previously the SEC had hit HDR and co-founders Arthur Hayes, Ben Delo and Samuel Reed of market manipulation and money laundering. BitMEX and its leadership was the target of a U.S. government indictment, which alleged violations of the Bank Secrecy Act, October 1. The Commodity Futures Trading Commission has also pressed civil charges. Reed, BitMEX’s CTO, was arrested that morning and was and then released on a $5 million bond. Also in May 2020 Bitmex was hit with a 540 million USD lawsuit by plaintiffs alleging that they were early investors who did not receive shares owed to them.
In this new filing, plaintiffs alleged that “being keenly aware of the Commodity Futures Trading Commission (“CFTC”) and Department of Justice (“DOJ”) investigations and imminently forthcoming civil and criminal charges, and while preparing to go on a lam from the U.S. authorities, Defendants Hayes, Delo and Reed looted about $440,308,400 of proceeds of various nefarious activities that took place on the BitMEX platform, from accounts of Defendant HDR, Exhibits E, F, G.”
“These fraudulent distributions of proceeds of illegal acts were made on the following dates, which are after Defendants learned about the Government investigations and after receiving a draft complaint in this action in 2019: October 15, 2019, November 19, 2019 and January 2020,” the filing went on to allege, referring to the transactions as “profit distributions.” The filing claimed:”From this information, it appears that Defendants were actively and deliberately looting Defendant HDR and trying to make its funds unavailable for the collection of future judgments against it. Specifically, the aforesaid profit distributions at a rate of $440,308,400.00 in just three months were clearly not performed in the ordinary course of business of Defendant HDR, as they represent $1,761,233,600 annual profit distribution rate, which money Defendant HDR simply does not earn. Therefore, these extraordinarily large distributions were clearly designed to loot Defendant HDR of its assets and hinder Plaintiffs’ and Government’s recovery of any future judgments.”
Does this mean that the investments made by BitMex are also being looted or redirected? UNLOCK raises this question given that Bitmex has invested heavily in various entities across the globe through its investment arm 100XGroup whose CEO is also Arthur Hayes, yet there are discrepancies between what 100X Group has confirmed as its portfolio today and what Bitmex Ventures previously had invested in. For example in July 2020 Bitmex under its investment arm 100XGroup invested in a South African crypto exchange. The round led by 100X Ventures Group raised around 3 to 4 million USD. However 100X Group on their website confirm that their investment portfolio includes the following entities MaiCoin, MerkleScience, PDAX digital asset exchage in Phillippines, as well as Sparrow Crypto Exchange based in Singapore, in addition to BitMex crypto exchange. There is no mention of the investment in South African Exchange made by 100XGroup earlier this year. In addition investments previously made by Bitmex Ventures, except for PDAX digital asset exchange investment, are also not mentioned in the 100XGroup portfolio.
To explain further, previously Bitmex investments were made under the entity Bitmex Ventures. According to CrunchBase Bitmex Ventures made five investments the lastest was in May 2020 in CoinDCX as well as FinFabrik a seed investment, in addition to two rounds of investment in PDAX and one round in RAIN Bahrain. Yet on the website of 100XGroup, investments made into RAIN, CoinDCX which raised 3 million USD, and FinFabrik as well as SouthAfrican crypto exchange are not mentioned. Even if you visit HDR Global to see if investments are mentioned there, no information at all is on the website.
The question raised now is where are these investments, Did BitMex Ventures or 100XGroup exit these investments, and if so why was there no mentioning of this? If not under which entity are these investments now , given that 100XGroup is the holding company for all BitMEX assets including HDR Group, BitxMex crypto exchange and other assets.
Things will eventually be made clear but what is obvious is that BitMex has been plagued with one lawsuit after another, has made numerous changes to its company structures over the year, and has made investments that are not protrayed in the portfolio of its new holding entity 100XGroup on its website at least.