BitMEX hit with 623 BTC lawsuit on day it announces shutdown The proposed class action alleges BitMEX used privileged trading access and server freezes to profit from forced liquidations.

BitMEX, a crypto derivatives trading platform, is facing a class action lawsuit accusing it of fraudulently engineering forced liquidations to seize customers’ Bitcoin collateral. The lawsuit was filed on July 23, 2024, in the US District Court for the Southern District of New York by BKX Services Inc. and David Namdar. Together, the plaintiffs claim losses of 622.66 BTC, with BKX alleging over 305 BTC lost and Namdar over 316 BTC lost during forced liquidations on BitMEX. The plaintiffs argue that BitMEX used privileged access to private customer information and continued trading operations during server freezes unavailable to regular users, profiting from these forced liquidations.

Specifically, the complaint alleges BitMEX allowed leverage of up to 100 times collateral but liquidated positions even when collateral was reportedly worth twice the liquidation losses. The remaining Bitcoin from these liquidations was deposited into BitMEX’s insurance fund, allowing the platform to profit unfairly, according to the plaintiffs. They seek the return of the withheld Bitcoins along with compensatory and punitive damages, representing US customers trading BTC swap products since July 2018. The lawsuit references a similar class action filed in 2020, which was dismissed without prejudice earlier in 2024.

This lawsuit coincides with BitMEX’s announcement of its upcoming shutdown after 11 years. The platform plans to cease services on September 23, 2024, following a strategic review by its owner, HDR Global Trading. BitMEX has already stopped new user registrations and will prevent new positions starting August 26. The shutdown announcement prompted a steep decline of about 90% in the value of BitMEX’s BMEX utility token. In response to the lawsuit claims, BitMEX stated it has faced many such allegations before and plans to vigorously defend itself, describing the new claim as opportunistic and without basis.

The timing of the class action filing on the same day as the shutdown announcement highlights ongoing legal challenges facing BitMEX as it winds down its operations. The plaintiffs’ allegations revive previous concerns about the platform’s internal systems and suggest continued scrutiny of BitMEX’s trading engine and corporate practices. Cointelegraph reports this development based on court filings and official statements from the involved parties, emphasizing transparency and verified facts.