BitMEX faces Celsius lawsuit ahead of exchange closure
Reported by Cointelegraph · AI-assisted summary by ChikoCorp AI News Desk
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Summary
The Celsius bankruptcy estate has filed a lawsuit against five BitMEX-linked companies, accusing them of fraud, market manipulation, and wrongful liquidations during the March 2020 market crash. The complaint, filed on September 12 in the US Bankruptcy Court for the Southern District of New York, alleges BitMEX wrongfully liquidated and seized over 6,300 BTC from Celsius and its investment fund JST. The lawsuit seeks recovery of Bitcoin worth nearly $490 million and comes 11 days before BitMEX is scheduled to cease exchange services on September 23.
Why it matters
The Celsius estate claims that BitMEX's liquidation practices intensified the 2020 crypto market crash by controlling prices and triggering forced sell-offs at artificially low levels. This lawsuit raises potential regulatory and reputational risks for BitMEX ahead of its exchange shutdown. The source does not explicitly discuss broader market or policy implications.
Key context
The complaint alleges that some liquidations on BitMEX occurred at prices significantly below the market, and that Bitcoin prices on BitMEX lagged behind other exchanges during the liquidation cycle. BitMEX suffered two DDoS attacks on March 13, 2020, which the estate claims coincided with a temporary halt to forced liquidations and a subsequent price recovery. A separate class action filed in July targeted BitMEX for similar forced liquidation issues but was dismissed by BitMEX as opportunistic.
Key numbers and entities
The defendants include HDR Global Trading, ABS Global Trading, Shine Effort, 100x Holdings, and HDR Global Services. The estate seeks damages for the wrongful seizure of about 6,360 BTC, valued at nearly $490 million at the time of writing. The lawsuit was filed on September 12, 2023, shortly before BitMEX’s planned exchange closure on September 23. Previous related litigation involved a combined loss of 622.66 BTC.
What remains unclear
The source does not provide any response or comment from BitMEX or Celsius beyond noted attempts to reach them. Details on the evidentiary basis for the allegations, the defendants’ defenses, or the potential timeline and outcomes of the litigation are not specified. The broader market impact of the lawsuit or its implications for other entities involved in the March 2020 crash remain unaddressed.