BitMEX Accused of Seizing $100 Million Worth of Bitcoin in Alleged Insider Trading Scheme
A lawsuit has been filed against BitMEX, alleging that the exchange used server freezes and internal trading to seize 622 Bitcoin from customers ahead of its planned closure in September. The complaint, which seeks the return of the seized coins rather than their value, claims that an internal desk exploited customer data and traded during platform outages.
The plaintiffs, BKX Services Inc. and David Namdar, allege that BitMEX's liquidation engine closed positions when unrealized losses reached about half of the collateral traders had posted, leaving collateral worth roughly twice the losses. However, instead of returning the excess collateral to customers, BitMEX seized it and transferred it to its Insurance Fund.
The lawsuit also alleges that an internal trading desk could see customer positions, hidden orders, and liquidation points, and used anonymized accounts to continue trading during server freezes. This allegedly allowed the desk to induce price moves on reference exchanges, triggering liquidations and allowing BitMEX to seize more collateral.