Arthur Hayes and BitMEX Co-Founders Face Fraud Claims as Exchange Winds Down

TLDR

• Former BitMEX users filed a proposed class action against the exchange and its co-founders.
• The lawsuit names Arthur Hayes, Samuel Reed, Benjamin Delo, and Gregory Dwyer.
• Plaintiffs allege BitMEX ran an undisclosed “Insider Trading Desk” against customers.
• BKX Services and David Namdar claim combined losses of about 622.66 BTC.
• BitMEX plans to permanently cease operations on September 23, 2026.

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BitMEX and its co-founders face a new proposed class action alleging the crypto exchange secretly traded against customers and forced liquidations during volatile market periods.

Former Customers Sue BitMEX and Founders

Two former BitMEX customers filed the lawsuit in the U.S. District Court for the Southern District of New York. BKX Services Inc. and David Namdar brought the case against HDR Global Trading Limited, affiliated entities, and BitMEX co-founders Arthur Hayes, Samuel Reed, and Benjamin Delo.

The complaint also names former business development head Gregory Dwyer as a defendant. The filing arrived on the same day BitMEX announced plans to permanently cease operations on September 23, 2026, after 11 years in business.

The plaintiffs allege BitMEX operated an undisclosed “Insider Trading Desk” that used private customer account data. The lawsuit claims the desk traded against users while the exchange presented itself as a neutral marketplace.

The complaint also alleges BitMEX used hidden internal accounts with generic email addresses to mask its own trading activity. The plaintiffs say users believed they were trading only against other market participants, not the exchange itself.

Lawsuit Claims Hidden Desk Targeted Liquidations

The plaintiffs claim BitMEX had access to customer order data, liquidation points, and so-called “hidden orders.” The filing alleges the internal desk used that information to identify price moves that would liquidate the largest number of customers.

The lawsuit says Dwyer ran the alleged trading desk from BitMEX’s Manhattan office during 2018. The plaintiffs claim the desk placed trades designed to move prices and trigger liquidations against platform users.

The complaint also alleges BitMEX liquidated positions when unrealized losses reached about half of posted collateral. Plaintiffs argue remaining collateral still exceeded those losses, meaning the exchange did not need to close positions at that level.

The lawsuit says seized collateral flowed into BitMEX’s Insurance Fund. Plaintiffs claim this structure helped the exchange profit from liquidations while also collecting trading fees from customer activity.

The filing also revisits the March 13, 2020 market crash. Customers were allegedly locked out for about 25 minutes while roughly $800 million in leveraged positions were liquidated.

BitMEX previously cited a hardware issue and later distributed denial-of-service attacks for the disruption. The lawsuit alleges the freezes were deliberate and that affected customers were not compensated.

Plaintiffs Seek Bitcoin Return

BKX Services claims it lost at least 305.8 BTC through 13 liquidations between July and August 2018. Namdar claims about 316.9 BTC in losses across 14 named liquidations and at least 69 smaller ones from August 2019 to May 2020.

Together, the plaintiffs allege losses of about 622.66 BTC, valued near $40.7 million based on the stated estimate. They are seeking the return of Bitcoin itself rather than only cash damages.

The lawsuit includes claims for replevin and fraud. Replevin seeks the return of specific property, which means the plaintiffs want the Bitcoin returned in kind.

The proposed class covers users who bought Bitcoin swap products on BitMEX in domestic U.S. transactions from July 23, 2018 onward. Plaintiffs estimate tens of thousands of possible class members and aggregate claims above $5 million.

The complaint says BitMEX generated more than $1 billion in transaction fees between November 2014 and October 2024. The filing also says the exchange’s flagship XBTUSD perpetual contract processed more than $2 trillion in trading volume during that period.

BitMEX faced earlier legal action over anti-money laundering and Bank Secrecy Act violations. A similar case filed in 2020 was voluntarily dismissed without prejudice in June 2025, while the new plaintiffs argue the statute of limitations was paused during that earlier litigation.