- The lawsuit was filed on the day BitMEX announced its closure.
- The lawsuit claims that excess Bitcoin collateral was held.
- The plaintiffs are claiming losses totaling 622.66 bitcoins.
BitMEX faces new legal trouble after a class-action lawsuit accused the cryptocurrency derivatives exchange of deliberately engineering customer liquidations to seize traders’ Bitcoin collateral.
The lawsuit was filed on the same day The company announced plans to close its operations, with a renewed focus on the allegations surrounding its liquidation system and business practices.
The case, filed in the US District Court for the Southern District of New York, seeks to recover hundreds of bitcoins that plaintiffs claim were illegally seized through forced liquidation.
The lawsuit alleges that more than 622 bitcoins were illegally seized
The lawsuit was filed by BKX Services Inc. and investor David Namdar, who claimed to have collectively lost 622.66 BTC due to the BitMEX liquidation.
According to the complaintBKX Services lost at least 305.81 BTC, while David Namdar claims his losses exceeded 316.85 BTC.
The plaintiffs argue that these losses were not the result of normal market conditions but stemmed from a liquidation system that allegedly worked for BitMEX.
The complaint accuses the exchange of intentionally causing liquidations that enabled it to hold customers’ remaining Bitcoin collateral.
It also claims that BitMEX profited from these liquidations rather than returning any excess collateral after positions were closed.
The plaintiffs are seeking damages and other legal remedies, arguing that the exchange’s practices caused significant financial losses during multiple trading events.
Plaintiffs challenge BitMEX’s liquidation model
At the heart of the lawsuit is BitMEX’s liquidation engine, which plaintiffs claim was designed to benefit the exchange rather than protect traders from excessive losses.
BitMEX has become one of the largest cryptocurrency derivatives platforms by offering leveraged trading of up to 100x, allowing traders to control positions much larger than their deposited collateral.
While leverage can increase profits, it also increases the risk of liquidation when the market moves against the position.
The complaint alleges that traders’ positions were liquidated even when remaining collateral exceeded the amount needed to cover losses. Instead of returning surplus bitcoin after positions were closed, the lawsuit claims BitMEX kept those funds.
Plaintiffs also allege that service outages and disruptions during periods of extreme market volatility contributed to avoidable liquidations.
According to the file, these incidents prevented some traders from managing or closing their positions before they were automatically liquidated.
The lawsuit says these practices allowed the exchange to accumulate bitcoins through forced liquidations rather than simply covering trading losses.
The legal action coincides with the announcement of the closure of BitMEX
The timing of the lawsuit drew attention because it was filed on the same day that BitMEX announced it would go out of business.
The company said it plans to close on September 23, 2026, after a strategic review of its business.
As part of the closing process, clients were advised to close open positions and withdraw their assets before the end of operations.
The legal action now adds another layer of uncertainty to the final weeks of the exchange’s operation.
While the closure announcement focused on the company’s decision to wind down its business, the lawsuit raises separate allegations regarding its handling of client funds and liquidation practices.
The allegations in the complaint have not been proven in court, and the lawsuit represents allegations made by plaintiffs.
The court proceedings will determine whether BitMEX or its associated entities bear legal responsibility for the alleged losses.
The case also revives long-standing scrutiny of BitMEX’s liquidation system, which has been a topic of debate within the cryptocurrency trading community for years.
As the exchange prepares to wind down its operations, the outcome of this lawsuit could become one of the most closely watched legal disputes involving a cryptocurrency derivatives platform and its treatment of customer collateral.
