Key facts
- BitMEX faces a class action lawsuit accusing it of fraudulently seizing customer Bitcoin collateral.
- Plaintiffs allege they lost a combined 622.66 BTC through forced liquidations on the platform.
- The lawsuit claims BitMEX used privileged trading access and server freezes to profit from liquidations.
- BitMEX announced it will stop providing services on September 23.
- The exchange has stopped accepting new registrations and will prevent users from opening new positions starting August 26.
BitMEX is facing a proposed class action lawsuit accusing the cryptocurrency derivatives platform of fraudulently engineering customer liquidations to seize traders' Bitcoin collateral. The complaint, filed in the US District Court for the Southern District of New York by BKX Services Inc. and David Namdar, alleges they lost a combined 622.66 BTC through forced liquidations. BKX claims losses of at least 305.81 BTC, while Namdar alleges losses exceeding 316.85 BTC.
The lawsuit revives long-standing allegations about the platform's internal trading operations and liquidation engine. Plaintiffs claim that an internal trading desk had access to private customer information and could continue trading during server freezes that prevented ordinary users from accessing or closing their positions. The complaint also states that BitMEX allowed customers to use leverage up to 100 times their collateral, automatically liquidating positions while collateral was allegedly worth twice the incurred losses. The remaining Bitcoin was reportedly placed into the platform's insurance fund, allowing BitMEX to profit from these forced liquidations.
The legal action comes on the same day BitMEX announced it would cease operations on September 23 after 11 years, following a strategic review by its owner, HDR Global Trading. The exchange has stopped accepting new registrations and plans to prevent users from opening new positions starting August 26. The announcement was followed by a significant drop in BitMEX's BMEX utility token.