BitMEX Faces Bitcoin Lawsuit
BitMEX is facing a proposed class action lawsuit accusing the crypto derivatives exchange of fraudulently engineering customer liquidations and keeping traders’ Bitcoin collateral. BKX Services Inc. and trader David Namdar filed the complaint on Thursday in the US District Court for the Southern District of New York. The plaintiffs claim they lost a combined 622.66 Bitcoin through forced liquidations carried out on the BitMEX platform.
(Source: Pacer)
BKX alleges that it lost at least 305.81 BTC, while Namdar claims losses of more than 316.85 BTC. The plaintiffs are seeking the return of the allegedly withheld Bitcoin, along with compensatory and punitive damages.
According to the complaint, BitMEX deliberately designed its liquidation system to generate profits for the exchange. The lawsuit alleges that an internal trading desk had access to confidential customer information and could continue trading during periods when ordinary users were unable to access the platform.
The plaintiffs claim that server freezes prevented customers from closing or adjusting their positions, while the internal trading operation stayed active.
Plaintiffs Challenge BitMEX Liquidation Practices
BitMEX allowed customers to trade derivatives using leverage of up to 100 times the value of their collateral. The lawsuit alleges that the platform automatically liquidated positions while the remaining collateral was still worth more than the losses incurred.
The excess Bitcoin was allegedly transferred into BitMEX’s insurance fund instead of being returned to affected traders. The plaintiffs argue that this system made it possible for BitMEX to benefit financially from forced liquidations.
The latest filing revives long-standing allegations involving BitMEX’s liquidation engine and internal trading activities. A separate class action that was filed in 2020 by Brett Messieh and other traders included similar claims under the Commodity Exchange Act. However, that case was voluntarily dismissed without prejudice in June of 2025.
Lawsuit Filed as BitMEX Prepares to Close
The legal action was filed on the same day BitMEX announced that it would shut down after 11 years of operation. The exchange said it will stop providing services on Sept. 23 after a strategic review by owner HDR Global Trading. BitMEX has already stopped accepting new customer registrations and plans to prevent users from opening new positions from August 26.
The shutdown announcement also triggered a sharp decline in the exchange’s BMEX utility token, which reportedly fell by approximately 90%.
So far, BitMEX has not publicly responded to the allegations.