BitMEX hit with 623 BTC lawsuit on day it announces shutdown

BitMEX faces a class action lawsuit for 622.66 BTC in alleged liquidation fraud on the same day it announced its September shutdown.

BKX Services Inc. and David Namdar filed a proposed class action in the US District Court for the Southern District of New York on Thursday, accusing BitMEX of fraudulently engineering customer liquidations to seize Bitcoin collateral. The plaintiffs claim they lost a combined 622.66 BTC — BKX at least 305.81 BTC and Namdar more than 316.85 BTC.

"BitMEX deliberately developed a system that profited from the liquidations," the plaintiffs alleged in the complaint, which claims an internal trading desk had access to private customer information and could continue trading during server freezes that locked out ordinary users.

The lawsuit revives allegations that BitMEX allowed customers to trade with up to 100 times leverage, then automatically liquidated positions while collateral was still worth twice the losses. The remaining Bitcoin was funneled into the platform's insurance fund, allowing BitMEX to profit from forced liquidations, according to the filing. The plaintiffs seek the return of the withheld Bitcoin plus compensatory and punitive damages, aiming to represent US customers who purchased BTC swap products dating back to July 23, 2018.

The complaint cites a prior class action filed in 2020 by trader Brett Messieh that alleged similar conduct. That case, brought under the Commodity Exchange Act, was voluntarily dismissed without prejudice on June 30, 2025.

Shutdown timeline and token crash

BitMEX announced it would cease operations on Sept. 23 after an 11-year run, following a strategic review by owner HDR Global Trading. New user registrations have been halted, and starting Aug. 26, users can only reduce existing positions. Any open positions remaining at the Sept. 23 deadline will be forcibly closed.

The exchange's BMEX utility token plunged roughly 90% on the news, reducing its market capitalization to about $497,000, according to CoinGecko data. BitMEX said user assets remain fully secure and under customer control during the wind-down, though KYC-verified users who do not withdraw in time will face an account management fee of $50 or 1% per annum on remaining balances.

BitMEX, co-founded by Arthur Hayes in 2014, introduced the crypto industry's first perpetual swap and 100-times leverage trading, products that later became standard across the sector. The exchange said it has not lost any customer funds to hacks in its 11-plus years of operation, a security record that contrasts with its legal history. Hayes and the other co-founders stepped down after US criminal charges in 2020, and an effort to sell the exchange earlier this year did not result in a publicly announced deal.

The lawsuit adds legal overhang during BitMEX's wind-down, potentially complicating asset recovery for users and increasing scrutiny on centralized derivatives platforms' liquidation mechanisms. Competitors including Binance and Bybit have captured much of the market share BitMEX once dominated.

This article is for informational purposes only and does not constitute investment advice.