BKX Services Inc. and David Namdar have filed a class action lawsuit against BitMEX.
The plaintiffs accuse the exchange of market manipulation and misappropriating nearly 623 BTC due to forced liquidations.
Lawsuit Questions BitMEX’s Liquidation Practices
Filed on the same day the exchange announced it would shut down, the two claim that BitMEX’s internal trading team accessed customers’ private information and continued trading while servers were down and users were unable to access the platform.
BitMEX has faced accusations over its liquidation practices and internal trading advantages in the past, with the latest lawsuit reviving these allegations.
According to the complaint, the exchange offered its customers leveraged trading of up to 100 times their collateral but allegedly liquidated their positions before all assets had been used up. This resulted in users losing their positions while the remaining BTC collateral was worth more than the losses incurred.
Instead of refunding the excess BTC to traders, BitMEX allegedly redirected the funds to its insurance pool, which, according to the plaintiffs, made it possible for the platform to financially benefit from forced liquidations.
“BitMEX deliberately developed a system that profited from the liquidations,” read the filing.
The filing also cites an old 2020 case where Brett Messieh and other traders sued the platform for similar offenses. Here, the group accused the company of rigging trading conditions in its favor, resulting in financial losses for users. But the court threw out the case for a lack of evidence.
Traders Lost Almost 623 BTC
Namdar says they lost more than 316.85 BTC in the process, while BKX says its losses were around 305.81 BTC. As a result, the two are looking to recover their seized crypto and damages. Furthermore, the proposed lawsuit seeks to represent U.S. customers who traded BTC perpetual swap products in transactions dating back to July 23, 2018.
Earlier on Thursday, BitMEX owner HDR Global Trading said it will shut down the exchange after a strategic review, with the decision expected to take effect on September 23. The platform has already suspended new account registrations, with traders now only allowed to close existing positions.
Following the announcement, BitMEX co-founder Arthur Hayes thanked his partners, employees, and customers for their support over the years. “It was an amazing ride,” he wrote, adding that he was proud the exchange was shutting down “responsibly on our own terms.”
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