BitMEX Accused of Manipulating Liquidations for Profit
BitMEX, one of the largest cryptocurrency derivatives exchanges, is facing fresh legal trouble after a class-action lawsuit accused it of deliberately engineering customer liquidations to seize traders' Bitcoin collateral.
The lawsuit was filed in the US District Court for the Southern District of New York on the same day BitMEX announced its shutdown. The plaintiffs claim losses totaling 622.66 BTC, with BKX Services Inc. and investor David Namdar alleging they collectively lost at least 622.66 BTC due to BitMEX's liquidation process.
The complaint argues that these losses were not the result of normal market conditions but rather stemmed from a liquidation system that allegedly operated in BitMEX's favor, allowing it to retain customers' remaining Bitcoin collateral. The plaintiffs claim that BitMEX profited from these liquidations instead of returning any excess collateral after positions were closed.
The lawsuit challenges BitMEX's liquidation model, which the plaintiffs argue was designed to benefit the exchange rather than protect traders from excessive losses. BitMEX had offered leveraged trading of up to 100x, allowing traders to control positions much larger than their deposited collateral.