TLDR
- BitMEX faces a proposed class action lawsuit over alleged fraudulent Bitcoin liquidations.
- Plaintiffs claim they lost a combined 622.66 BTC through forced liquidations on the exchange.
- The lawsuit alleges BitMEX’s internal trading desk had access to confidential customer information.
- Traders claim server freezes prevented them from managing positions during volatile market conditions.
- The complaint alleges excess Bitcoin collateral was transferred to BitMEX’s insurance fund.
BitMEX is facing a proposed class action lawsuit in the United States just as the crypto derivatives exchange prepares to shut down after 11 years of operation. The complaint accuses the platform of using a liquidation system that unfairly benefited the exchange while causing customers to lose their Bitcoin collateral. The legal filing was submitted to the US District Court for the Southern District of New York by BKX Services Inc. and trader David Namdar.
The plaintiffs claim they lost a combined 622.66 Bitcoin through forced liquidations on the BitMEX platform. BKX alleges losses of at least 305.81 BTC, while Namdar claims losses exceeding 316.85 BTC. They are asking the court to order the return of the Bitcoin they say was withheld, along with compensatory and punitive damages.
BitMEX lawsuit alleges unfair liquidation practices
According to the complaint, BitMEX designed its liquidation system to increase revenue for the exchange instead of protecting customers. The filing claims an internal trading desk had access to confidential customer information and continued trading during periods when regular users could not access the platform.
The plaintiffs also allege that server freezes stopped traders from closing or adjusting positions during market volatility. They argue that these outages left customers unable to respond while internal operations remained active on the exchange.
Insurance fund at center of Bitcoin fraud claims
The lawsuit states that BitMEX allowed customers to trade with leverage of up to 100 times their collateral. It alleges that positions were automatically liquidated even when the remaining collateral still exceeded the actual trading losses.
The complaint further claims that the remaining Bitcoin was transferred into BitMEX’s insurance fund instead of being returned to customers. According to the filing, this process allowed the exchange to keep excess collateral generated through forced liquidations.
Exchange shutdown follows renewed legal action
The latest lawsuit revives allegations that have been raised against BitMEX in the past. A separate class action filed in 2020 made similar claims under the Commodity Exchange Act. That earlier case was voluntarily dismissed without prejudice in June 2025.
The new complaint arrived on the same day BitMEX announced it would close its business following a strategic review by its owner, HDR Global Trading. The exchange said it will stop operating on Sept. 23, has already ended new customer registrations, and will prevent users from opening new positions from Aug. 26. Following the announcement, the exchange’s BMEX utility token reportedly dropped by about 90%.
Be the first to comment