BitMEX Co-Founders Sued Over Alleged Insider Trading Scheme

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Two former BitMEX customers have filed a proposed class action lawsuit against co-founders Arthur Hayes, Samuel Reed, and Benjamin Delo, alleging the exchange used support and resistance levels from confidential data to trigger forced liquidations. The suit claims BitMEX mismanaged collateral and failed to protect traders during a 2020 disruption. The class could include thousands of U.S. traders, with claims exceeding $5 million. The risk-to-reward ratio for investors in such platforms is now under closer scrutiny.

BitMEX’s final months have taken another dramatic turn after two former customers accused the cryptocurrency exchange of operating against its own users. The proposed class action targets co-founders Arthur Hayes, Samuel Reed, Benjamin Delo, and several affiliated entities.

The lawsuit arrived just before BitMEX confirmed it would permanently close in September 2026. Consequently, the legal challenge has intensified scrutiny over the platform’s trading practices, liquidation system, and handling of customer funds during its years of operation.

Alleged Trading Practices Under Scrutiny

The plaintiffs argue BitMEX secretly ran an internal trading operation that accessed confidential customer information. They claim the desk identified liquidation levels and executed trades designed to trigger forced closures.

Moreover, the lawsuit alleges the exchange disguised these activities through anonymous accounts. The filing also argues BitMEX directed excess collateral from liquidated positions into its Insurance Fund instead of protecting customers.

Plaintiffs Seek Bitcoin Recovery

Additionally, the complaint revisits the March 2020 trading disruption, claiming the outage intentionally prevented users from managing positions during extreme market volatility. The plaintiffs report losing hundreds of Bitcoin through multiple liquidations between 2018 and 2020. Instead of requesting cash damages, they seek the return of their Bitcoin.

Besides, the proposed class could include thousands of U.S. traders, with total claims exceeding $5 million. Earlier litigation ended without a ruling, allowing the new lawsuit to pursue similar allegations.

Related: Here Are the Reasons Why BitMEX Is Shutting Down Operations

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