BitMEX Sued Over Alleged Collateral Seizure and Insider Trading Desk

A proposed class action lawsuit has been filed in New York federal court against BitMEX and its co-founders, including Arthur Hayes. The complaint alleges that the exchange pocketed customer collateral seized during liquidations and operated an internal trading desk with access to confidential position data.

The plaintiffs, BKX Services Inc. and David Namdar, claim that BitMEX auto-liquidated their leveraged positions while their remaining collateral was worth roughly twice their losses. The excess was then routed into the exchange's insurance fund instead of being returned to the customers.

The complaint seeks the return of 622.66 BTC, approximately $40 million at current prices, plus compensatory and punitive damages. It also alleges that an internal 'Insider Trading Desk' had 'God access' to customer positions and liquidation points, using software to find price moves that would liquidate the most customers.

The lawsuit brings two counts: replevin, seeking the return of the bitcoin in kind, and fraud. It names HDR Global Trading, 100x Holdings, and related entities, as well as co-founders Hayes, Benjamin Delo, and Samuel Reed, and Gregory Dwyer.