BitMEX is facing a proposed class action lawsuit in the United States, with plaintiffs accusing the cryptocurrency derivatives exchange of unfairly profiting from customer liquidations and retaining hundreds of Bitcoin that should have been returned to traders.
The lawsuit was filed in the U.S. District Court for the Southern District of New York by BKX Services Inc. and trader David Namdar. Together, they claim to have lost 622.66 BTC through forced liquidations on the platform. BKX alleges losses of more than 305 BTC, while Namdar claims losses exceeding 316 BTC.
According to the complaint, BitMEX allowed users to trade with leverage of up to 100 times their collateral but allegedly liquidated positions before all available collateral had been used. The plaintiffs argue that in many cases the remaining Bitcoin collateral was worth more than the actual trading losses, yet users did not receive those funds back.
Instead, the lawsuit claims the excess Bitcoin was transferred into BitMEX’s insurance fund, allowing the exchange to benefit financially from customer liquidations.
The plaintiffs also allege that BitMEX operated an internal trading desk that had access to non-public customer information and was able to continue trading during periods when ordinary users could not access the platform due to outages or technical issues.
As part of the lawsuit, the plaintiffs are seeking the return of the 622.66 BTC, along with compensatory and punitive damages. The proposed class action aims to represent U.S. customers who traded Bitcoin perpetual swap products on BitMEX dating back to July 2018.
The legal action comes on the same day BitMEX announced plans to shut down its exchange operations. The company said trading will officially end on September 23 following a strategic review of the business and broader cryptocurrency industry.
BitMEX has already stopped accepting new user registrations. Beginning August 26, traders will no longer be able to open new positions and will only be allowed to reduce existing ones before the platform’s final closure.
Despite ending exchange operations, BitMEX said users will continue to have access to their accounts for withdrawals and viewing transaction history after the shutdown. The company also stated that customer assets remain fully backed and pointed to its proof-of-reserves data as evidence.
Founded in 2014, BitMEX became one of the most influential crypto derivatives exchanges and helped popularize perpetual futures contracts. However, the company has faced multiple legal and regulatory challenges over the years, including anti-money laundering violations that led to criminal charges against its founders.
The latest lawsuit adds another challenge for the exchange as it prepares to end more than a decade of operations. If the case moves forward, it could bring renewed attention to long-standing debates over liquidation practices and risk management in leveraged crypto trading.
