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Plaintiffs in a civil lawsuit filed this spring allege that the leadership of HDR Global — the parent company of crypto derivatives exchange BitMEX — 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. That filing is the latest in a months-long lawsuit filed in May, which, as previously reported by The Block, accused HDR and co-founders Arthur Hayes, Ben Delo and Samuel Reed of market manipulation and money laundering. In a statement at the time, HDR said that “we will be defending ourselves vigorously against this spurious claim.”

BitMEX and its leadership was the target of a U.S. government indictment, which alleged violations of the Bank Secrecy Act, first unveiled on October 1. The Commodity Futures Trading Commission has also pressed civil charges. Reed, BitMEX’s CTO, was arrested that morning and was later released on a $5 million bond. 

In the new filing, the plaintiffs alleged that “[b]eing 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, claiming:

“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.”

Beyond these specific allegations, the plaintiffs accused the defendants’ legal representatives of seeking to delay the proceedings of the lawsuit.

A representative for HDR did not immediately respond to a request for comment. 

Read the full court filing below:

Filing by MichaelPatrickMcSweeney on Scribd

© 2020 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

2020 was a significant year for fintech firms and their activities in the crypto space. 

As the timeline below — produced by The Block Research — shows, fintechs like PayPal and Square made significant splashes on the crypto front. Earlier this month, Square drew headlines for its move to buy $50 million in bitcoin. 

Source: The Block Research

But it’s perhaps PayPal — and it’s many millions of global customers — that drew the most attention with its long-rumored move into crypto services. In partnership with Paxos, the digital payments giant is slowly beginning to roll out the ability to buy and sell cryptocurrency to its customer base. 

What’s more, PayPal appears to be making entreaties to businesses in the crypto space for possible acquisitions, including BitGo.

© 2020 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

On October 31, 2008, the white paper that first described Bitcoin was published on a mailing list for those interested in cryptography. 

“I’ve been working on a new electronic cash system that’s fully peer-to-peer, with no trusted third party,” wrote Satoshi Nakamoto, bitcoin’s pseudonymous creator. The link included in that email still works today, directing readers to the nine-page white paper that described the particulars of bitcoin’s design. 

“The main properties: Double-spending is prevented with a peer-to-peer network. No mint or other trusted parties. Participants can be anonymous. New coins are made from Hashcash style proof-of-work. The proof of work for new coin generation also powers the network to prevent double spending,” Nakamoto wrote in the email. 

Months later, the Bitcoin network went live on January 3, 2009. 

Read the full Bitcoin white paper below:

BitCoin White Paper by ZX Lee

© 2020 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.