BitMEX Faces Lawsuit Over Alleged Forced Liquidations and Collateral Abuse
A new class action lawsuit has been filed against BitMEX in federal court in New York, alleging that the crypto derivatives exchange engineered forced liquidations to profit from traders' Bitcoin collateral. The complaint, filed by BKX Services Inc. and David Namdar, claims losses of over 622 BTC across the plaintiffs due to improperly triggered and timed liquidation events.
The lawsuit accuses BitMEX's internal trading desk of having access to private customer information and being able to continue trading during 'server freezes' that allegedly prevented ordinary users from acting. This mechanism allowed the exchange's insurance fund to absorb remaining Bitcoin after forced liquidations, effectively converting customer positions into profits for the exchange.
The complaint seeks the return of allegedly withheld Bitcoin, alongside compensatory and punitive damages. The proposed class action covers US customers who purchased BTC swap products in transactions dating back to July 23, 2018. With BitMEX planning to shut down its services on September 23 after a strategic review by HDR Global Trading, affected users may have to focus quickly on legal remedies.