BitMEX Faces US Court Action Over Black Thursday Turmoil

The cryptocurrency market experienced its worst selloff in seven years on March 12, 2020, when Bitcoin plummeted by nearly 40% due to the coronavirus pandemic. This 'Black Thursday' event caused significant losses for many individuals who had invested in Bitcoin, with some seeing their investments wiped out entirely.

One company, BitMEX, a crypto trading platform based in Hong Kong, however, emerged from this crisis relatively unscathed. The firm was able to turn the market downturn into a 'profit centre', with an estimated $12.3 billion of trades in just one day.

A new legal action has been filed against BitMEX and its holding company in the US courts, focusing on what exactly happened during this period and who profited from it. The company denies any wrongdoing, describing the complaint as 'false' and 'opportunistic'. One of its founders, Ben Delo, recently donated £36 million to Reform UK, a political party that has pledged to deregulate the crypto industry.

The investigation into BitMEX's activities during this time has exposed some concerning practices. The company was accused of targeting individual investors, whom one of its co-founders described as 'degenerate gamblers'. BitMEX also built up an internal fund worth around $3 billion from investor holdings that had been liquidated to protect them from large losses.

The bankruptcy estate of the now-defunct crypto company Celsius Network has filed a complaint against BitMEX, alleging that many investor holdings were needlessly wiped out. The complaint states that some positions were sold at below the prevailing market rate, and that any remaining balance was diverted to BitMEX's insurance fund.