Key facts
- The Celsius estate alleges BitMEX wrongfully liquidated and seized 1,325.84 BTC in collateral on March 12, 2020.
- An additional 5,034.33 BTC was allegedly seized from investment fund JST on March 13, 2020.
- The lawsuit seeks recovery of Bitcoin worth nearly $490 million.
- The estate claims BitMEX controlled liquidation prices, execution engines, and insurance funds.
- Some liquidation sell orders were allegedly placed at prices over 24% below the next-best ask on BitMEX.
- The estate cites BitMEX's service disruption on March 13, 2020, as evidence of intensified sell-offs.
The Celsius bankruptcy estate has initiated legal action against five companies associated with the cryptocurrency exchange BitMEX, alleging fraud, market manipulation, and wrongful liquidations that occurred during the market crash in March 2020. The lawsuit, filed on September 12 in the US Bankruptcy Court for the Southern District of New York, claims that BitMEX improperly seized approximately 6,360 BTC in collateral from Celsius and the investment fund JST.
The estate asserts that BitMEX manipulated the prices used for liquidations, controlled the execution engine, and benefited from the proceeds of liquidated positions. According to the complaint, some sell orders for liquidations were executed at prices more than 24% lower than available on competing exchanges, and Bitcoin's price on BitMEX was suppressed during the intensified liquidation cycle. The estate points to BitMEX's service disruption on March 13, 2020, as evidence that its liquidation engine exacerbated the sell-off, noting that prices recovered once the platform became unavailable.
BitMEX had previously stated that the service disruption was due to two distributed denial-of-service attacks on March 13, 2020. The Celsius estate is seeking the return of the seized Bitcoin or its equivalent market value, along with actual, statutory, punitive, and treble damages, as well as profits BitMEX allegedly made from the liquidations and legal costs. This lawsuit comes just 11 days before BitMEX is set to discontinue its exchange services on September 23.