Lawsuit of the week: Cryptocurrency exchange companies seek to dissolve phantom B.C. firm allegedly incorporated for ‘improper purpose’

In civil action filed in BC Supreme Court, plaintiffs say they fear company was created for reasons of "trademark infringement or financial fraud"

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A pair of companies behind an international cryptocurrency exchange platform are taking Bitmex Exchange Ltd. to court, claiming the B.C.-registered firm is shrouded in mystery and should be dissolved after being “incorporated for an improper purpose” including alleged trademark infringement and financial fraud.

In a petition filed in BC Supreme Court on September 29, HDR SG PTE Ltd. and its affiliate HDR Global Service (Canada) Ltd. claim they are part of the BitMEX Group, which runs a peer-to-peer cryptocurrency exchange platform offering “virtual asset derivative products” tied to Bitcoin. HDR Global, according to the petition, originally filed a registration of the BitMEX trademark in Canada in February 2018, which was granted by the Canadian Intellectual Property Office in March 2021.

The companies claim Bitmex Exchange Ltd. was incorporated in B.C. in June 2020 and came to their attention when it registered as a money-services business with the U.S. Financial Crimes Enforcement Network days after it was formed. But the petitioners claim they’re “unaware of any activities, commercial or otherwise, that are actually carried out by [Bitmex Exchange Ltd.] in Canada or any other country.”

“BEL owns no property or any identifiable assets of any kind. It has no public profile or public website. BEL’s [registered and records office] is a shared workspace, at which BEL does not appear to carry on any business whatsoever,” the petition states. “Registered mail sent to BEL at this address has been returned unclaimed, and persons at the RRO location are unaware of BEL.”

“Due to the use of BITMEX EXCHANGE in BEL’s corporate name and on BEL’s [Money Services Business] registration, petitioners have reasonable grounds to suspect that BEL was incorporated for an improper purpose, such as trademark infringement or financial fraud,” the petition states. 

For its part, the B.C. Registrar of Companies ordered Bitmex Exchange to provide the petitioners with corporate records in June 2021, but the company allegedly didn’t respond to the order. While the registrar has the authority to dissolve companies, it “does not exercise its authority” under the Business Corporations Act.

Staff at the registrar, according to the petitioners, “advised that this was due to its internal policy of declining to exercise its dissolution authority.”

“They further advised that his policy is general and applies to all companies which fail to produce corporate records in response to the Registrar’s orders, rather than any specific concerns about HDR’s request to dissolve BEL,” the petition states. “Instead, the Registrar advised the petitioners that they should seek redress in this Court.”

The petition’s factual basis has not been tested in court, and Bitmex Exchange Ltd. had not filed a response by press time.