Crypto Derivatives Exchange BitMEX Gets Hit with $300 Million Lawsuit

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  Alex Dovbnya

  Thu, 12/12/2019 - 05:58

  📰 News

  Commodity derivatives trader Frank Amato takes BitMEX to court after he was deprived of his $50 mln equity stake in the exchange

BitMEX, the leading cryptocurrency derivatives exchange, is now facing a $300 mln lawsuit from its early investor, Bloomberg reports. 

Former JPMorgan trader Frank Amato claims he put $50,000 into the exchange during its pre-seed funding round back in 2015, but never managed to profit off his investment. 

An early investor ends up with nothing

The Seychelles-based exchange has turned into a behemoth due to the explosive growth of crypto in the coming years, surpassing $1 trln in annual trading volume at the end of June. Amato estimates that his share of the company would now be worth $50 mln but the problem he was never granted the equity. In his suit, he states that he was misled by the exchange. 

Apart from demanding his $50 mln equity, Amato is also seeking punitive damages to the tune of $250 mln, which brings the total value of the suit to $300 mln.   

BitMEX is no stranger to legal woes. In June, the U.S. Commodity Futures Trading Commission (CFTC) launched an investigation into the company.       

The end of the BitMEX era? 

Bloomberg estimates that BitMEX is currently worth $1 bln. Back in July 2018, The Times reported that the exchange was valued at $3.6 bln based on its annual earnings. BitMEX, which was branded as "the biggest casino ever" by Sid Shekhar of TokenAnalyst, earns around $700,000 in fees every day.  

However, as reported by U.Today, the exchange's share of trading volume has been steadily declining throughout 2019, which might explain a significant drop in valuation.