One of the world’s leading cryptocurrency derivatives exchange, BitMEX, and its founder, Arthur Hayes, is currently facing a lawsuit filed against them by the exchange’s early investors for not granting them equity.
Frank Amato, a former JP Morgan Chase & CO derivatives trader, and RGB Coin, a limited liability corporation, in a court filing dated Dec. 4 with California State Superior Court in San Francisco, are demanding for settlement from both BitMEX and Hayes.
According to the plaintiffs, they had been among BitMEX’s first investors earlier in 2015. Amato claimed that he had invested $30,000, an amount that was agreed by both parties to be converted into equity on a later date. However, he alleged that BitMEX hadn’t honored the deal to date.
The filing also stated that BitMEX received another investment of $30,000, from the startup accelerator, SOSV, some months after Amato’s initial investment, a development that should have triggered his equity conversion. But, this information was also allegedly withheld from Amato.
The current estimate of Amato’s equity in the company is around $50 million, and he is demanding that Hayes and his business compensate him a whopping $250 million for damages caused.
Conclusively, the court filing stated,
Through this action, Plaintiffs seek damages representing the value of their equity interest in BitMEX, which is conservatively estimated to exceed $50,000,000 and punitive damages of $250,000,000. Plaintiffs also seek injunctive relief and other remedies, together with their attorneys’ fees and costs.
Coinfomania reached out to BitMEX for comments following the development, and a spokesperson said in an email response:
We will address Mr Amato’s claims through the proper legal channels and will not comment beyond that.
Meanwhile, BitMEX has recently faced a lot of problems before the latest lawsuit. Earlier in November, the exchange experienced a massive leak of customers’ email addresses that led to it losing customers to rival platforms.
Note: This article was updated to include comments from a BitMEX spokesperson. An earlier article was published as the exchange operator did not immediately respond to our request for comments.