BitMEX Hit with $623m Lawsuit Over Alleged Liquidation Fraud

BitMEX is facing a new US class action lawsuit accusing it of fraudulently arranging liquidations to keep traders' Bitcoin collateral. The complaint, filed in the US District Court for the Southern District of New York on Thursday, targets BitMEX operator HDR Global Trading and names BKX Services Inc. and David Namdar as plaintiffs.

The plaintiffs allege that they collectively lost 622.66 BTC due to forced liquidations tied to BitMEX's automated liquidation mechanics. According to the lawsuit, BitMEX permitted customers to use leverage of up to 100 times their collateral and then automatically liquidated positions at prices the plaintiffs argue were set while collateral remained allegedly sufficient to cover the losses.

The complaint asserts that an internal trading operation could allegedly continue trading during server freezes that supposedly blocked ordinary users from managing positions. Customers are seeking return of the allegedly withheld Bitcoin, along with compensatory and punitive damages.

The lawsuit comes at a sensitive moment for BitMEX, which has announced it will shut down after a strategic review by its owner, HDR Global Trading, with services scheduled to stop on Sept. 23. BitMEX also plans to prevent users from opening new positions starting Aug. 26.