Arthur Hayes and BitMEX Co-Founders Face Class Action Over Alleged Insider Trading Scheme
Key Takeaways
- •The lawsuit accuses BitMEX of secretly running an internal trading desk that used confidential customer information to intentionally trigger forced liquidations.
- •Plaintiffs allege that a March 2020 platform outage was deliberately engineered to prevent users from managing their positions during a major market sell-off.
- •The proposed class action could involve thousands of U.S. traders with total claims exceeding $5 million, and seeks the return of lost Bitcoin rather than monetary damages.
- •BitMEX co-founders Arthur Hayes, Samuel Reed, and Benjamin Delo previously pleaded guilty in 2022 to Bank Secrecy Act violations related to inadequate anti-money-laundering controls.
- •The complaint was filed shortly before BitMEX announced it would permanently cease operations in September 2026, and an earlier similar lawsuit ended without a ruling.
Two former BitMEX customers have filed a proposed class action lawsuit accusing the cryptocurrency exchange of operating against its own users during its years of operation. The legal action targets co-founders Arthur Hayes, Samuel Reed, Benjamin Delo, and several affiliated entities.
The complaint was filed shortly before BitMEX confirmed it would permanently cease operations in September 2026, intensifying scrutiny over the platform's trading practices, liquidation system, and handling of customer funds.
BitMEX was once one of the dominant venues for crypto derivatives, offering leveraged perpetual swap contracts on Bitcoin and other tokens at a time when fewer regulated alternatives existed. The exchange and its leadership have previously faced regulatory action: in 2022, Hayes, Reed, and Delo each pleaded guilty to violations of the Bank Secrecy Act for failing to implement an adequate anti-money-laundering program, resulting in criminal penalties and corporate resolutions.
Alleged Trading Practices Under Scrutiny
The plaintiffs allege that BitMEX secretly maintained an internal trading desk that accessed confidential customer information. According to the filing, the desk identified liquidation levels and executed trades specifically designed to trigger forced position closures.
The lawsuit further claims that the exchange disguised these activities through anonymous accounts. The complaint also argues that BitMEX channeled excess collateral from liquidated positions into its Insurance Fund rather than protecting affected customers.
The allegations echo long-standing concerns in crypto derivatives markets about exchanges that operate proprietary trading desks while also hosting customer orders, creating potential conflicts of interest if customer positions or liquidation data are visible internally.
Plaintiffs Seek Bitcoin Recovery
The complaint revisits the March 2020 trading disruption, alleging the outage was intentionally engineered to prevent users from managing their positions during extreme market volatility. That month saw a sharp sell-off across global crypto markets, and BitMEX's high-leverage products left many traders exposed to rapid liquidations.
The plaintiffs report losing hundreds of Bitcoin through multiple liquidations between 2018 and 2020. Rather than seeking cash damages, they are requesting the return of their Bitcoin.
The proposed class could encompass thousands of U.S. traders, with total claims exceeding $5 million. An earlier litigation effort ended without a ruling, clearing the path for the new lawsuit to pursue similar allegations.
Related: Here Are the Reasons Why BitMEX Is Shutting Down Operations
