BitMEX Sued Over Alleged Liquidation Collusion

BitMEX and its co-founders have been sued in a proposed class action accusing the exchange of keeping customer collateral seized in liquidations. The complaint, filed in New York federal court on July 23, alleges that BitMEX auto-liquidated leveraged positions while their remaining collateral was worth roughly twice their losses.

The plaintiffs claim that BitMEX routed the excess into its insurance fund instead of returning it to customers. They seek the return of approximately $40 million in BTC, plus compensatory and punitive damages. The complaint details 13 liquidations on BKX Services between July 4 and August 20, 2018, and 14 larger ones on Namdar between August 2019 and May 2020.

The suit names HDR Global Trading, 100x Holdings, and related entities, along with co-founders Arthur Hayes, Benjamin Delo, and Samuel Reed, as well as former business development head Gregory Dwyer. The proposed class covers US customers of BitMEX's BTC swap products going back to July 23, 2018.

BitMEX announced it will close on September 23, following a strategic review of the business. New registrations have stopped, and remaining positions will be force-closed before the deadline. Users can withdraw after closure, but all assets exceed liabilities per BitMEX's proof-of-reserves page.