BitMEX Users Seek 623 BTC in Liquidation Fraud Suit

BitMEX is facing a class action lawsuit accusing the crypto derivatives platform of fraudulently engineering customer liquidations to seize traders’ Bitcoin collateral. 

On Thursday, BKX Services Inc. and David Namdar filed the complaint in the US District Court for the Southern District of New York. The plaintiffs allege they lost a combined 622.66 BTC through forced liquidations on BitMEX, with BKX claiming losses of at least 305.81 BTC and Namdar alleging losses exceeding 316.85 BTC. 

The lawsuit revives long-running allegations about the platform’s internal trading operations and liquidation engine and comes just as the exchange is preparing to close in September. 

“BitMEX deliberately developed a system that profited from the liquidations,” the plaintiffs alleged. The complaint claimed that an internal trading desk had access to private customer information and could continue trading during server freezes that prevented ordinary users from accessing or closing their positions. 

Cointelegraph reached out to BitMEX for comment but did not receive a response before publication. 

BitMEX users seek Bitcoin return under fraud claims 

According to the filing, BitMEX allowed customers to use leverage of up to 100 times their collateral, then automatically liquidated positions while collateral was still allegedly worth twice the losses incurred.

The remaining BTC was placed into the platform’s insurance fund, allowing BitMEX to profit from forced liquidations, the plaintiffs claim. 

The plaintiffs are seeking the return of the allegedly withheld Bitcoin as well as compensatory and punitive damages. They aim to represent US customers who purchased BTC swap products in transactions dating back to July 23, 2018. 

Related: BitMEX delists 65 trading pairs, derivatives in July amid exchange shutdown

The complaint also pointed to a class action filed in 2020 by Brett Messieh and other traders alleging similar conduct. That case, which brought claims under the Commodity Exchange Act, was voluntarily dismissed without prejudice on June 30, 2025.

Lawsuit lands as BitMEX announces shutdown

The proposed class action lawsuit was filed on the same day BitMEX announced that it would close after 11 years of operation.

BitMEX said it would stop providing services on Sept. 23 after a strategic review by its owner, HDR Global Trading. 

It has stopped accepting new registrations and plans to prevent users from opening new positions starting on Aug. 26. The announcement was followed by a roughly 90% plunge in BitMEX’s BMEX utility token. 

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