BitMEX Hit with $40M Class Action Over Alleged Bitcoin Theft
BitMEX, a pioneering cryptocurrency exchange known for its perpetual futures, is facing a $40 million class action lawsuit alleging fraud and misappropriation of Bitcoin. The lawsuit claims that BitMEX deliberately created a system to profit from client liquidations, allowing the exchange's internal trading desk to access confidential user data and trade during server 'freezes' when ordinary clients couldn't manage their positions.
The plaintiffs, BKX Services and investor David Namdar, claim they lost 305.81 BTC and 316.85 BTC respectively. They allege that BitMEX allowed clients to use up to 100x leverage but then automatically liquidated positions even when collateral was twice the losses, directing the remaining funds to the platform's insurance fund.
The lawsuit also accuses BitMEX of exploiting its liquidation mechanism to profit at clients' expense. The plaintiffs are seeking compensation for trading fees paid, lost profits, and punitive damages from the exchange's founders, Arthur Hayes, Ben Delo, and Samuel Reed. The case covers US clients who traded Bitcoin swaps from July 2018 onward.