BitMEX co-founder Ben Delo thinks he can avoid a Commodities Futures Trading Commission (CFTC) lawsuit, reports Law360.
Delo’s lawyers said in a memorandum on Friday that “the due process clause of the U.S. Constitution requires that he be dismissed from this action.”
“Due process requires more than mere allegations of participation in management to assert personal jurisdiction over an individual defendant based on a control-person theory,” the lawyers added.
Delo, former chief exec Arthur Hayes, and former chief technical officer Samuel Reed had joint control of BitMEX, the CFTC says.
Together, regulators claim they conspired to operate it in ways that broke US financial laws.
Delo (34) says his status as a British national means the derivatives watchdog doesn’t have jurisdiction over him.
He also notes he’s a minority owner and a non-executive of a company based outside of the US, which should help get him off the hook.
The CFTC began legal proceedings against Delo and the two other BitMEX execs in October 2020.
The complaint, filed in New York’s Southern District Court, alleges the cryptocurrency exchange offered unlicensed derivatives trades to US customers.
BitMEX’s Delo must still face the DoJ
Delo and Hayes set up BitMEX in 2014. They were the first in the crypto space to offer a perpetual futures contract. This allowed traders to bet on volatile cryptos with up to 100x leveraged exposure.
In August, the five companies operating BitMEX settled with the US Financial Crimes Enforcement Network and the CFTC in a $100-million agreement.
Delo, Hayes, and Reed then joined BitMEX’s first employee Greg Dwyer in a similar lawsuit filed by the US Department of Justice (DoJ) in October.
Along with violations of AML and KYC rules, the DoJ alleges the four men broke the Banking Secrecy Act, which mostly relates to money laundering.
Dwyer recently agreed to the DoJ’s extradition request after spending his time at large in Bermuda, where he resides.
Authorities have released Delo on a $20 million bail bond. He’s scheduled to appear in court in March next year.
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