A new class action lawsuit has reignited allegations against cryptocurrency derivatives exchange BitMEX, accusing the platform of manipulating its liquidation system to seize customers' Bitcoin collateral. The complaint was filed in the US District Court for the Southern District of New York as the exchange prepares to wind down operations later this year.

BitMEX, launched in 2014, was one of the earliest platforms to popularize cryptocurrency perpetual swaps and at its peak ranked among the highest-volume derivatives exchanges globally. The new allegations add to a regulatory and legal history that includes 2020 enforcement actions by the CFTC and the Department of Justice against BitMEX and its founders for anti-money-laundering and Bank Secrecy Act violations, which the exchange settled for approximately $100 million in 2021.

Plaintiffs Detail Substantial Bitcoin Losses

BKX Services Inc. and David Namdar, the named plaintiffs in the lawsuit, allege that they lost a combined 622.66 BTC through forced liquidations. According to the complaint, BKX Services lost 305.81 BTC, while Namdar lost more than 316.85 BTC when their leveraged positions were liquidated.

The plaintiffs assert that BitMEX's trading platform conferred an unfair advantage on the exchange itself. They allege that an internal trading desk had access to confidential customer information and could continue trading during platform outages, periods when ordinary users were unable to execute trades or close positions. These conditions, the complaint contends, allowed BitMEX to profit directly from customer liquidations.

Liquidation Engine Practices Under Scrutiny

The lawsuit also examines BitMEX's liquidation framework. According to the complaint, the exchange offered leverage of up to 100x and would automatically close out positions even when a user's collateral had not fallen below the level of their losses. The plaintiffs allege that the remaining Bitcoin was diverted into an insurance fund created and maintained by the platform, generating additional revenue for the exchange. Insurance funds of this type are a common mechanism across crypto derivatives platforms, designed to cover counterparty losses from liquidated positions, though their internal management and lack of independent auditing have drawn scrutiny from regulators and market participants industry-wide.

The lawsuit seeks the return of the disputed Bitcoin as well as compensatory and punitive damages. The proposed class encompasses all United States customers who purchased Bitcoin perpetual swap products on BitMEX on or after July 23, 2018.

Prior Litigation and Exchange Closure

The complaint references a similar class action filed in 2020 that accused BitMEX of engaging in comparable practices in violation of the Commodity Exchange Act. That earlier case was voluntarily dismissed without prejudice in June 2025.

The new filing comes shortly after BitMEX announced it will shut down after 11 years of operation. The exchange stated it will discontinue all operations on September 23 following a strategic review conducted by HDR Global Trading. New account registration has already been disabled, and the ability to open new trading positions will end on August 26. BitMEX's utility token, BMEX, reportedly lost approximately 90% of its value following the closure announcement. The exchange's wind-down raises practical questions about the recoverability of disputed assets during litigation if platform operations and associated infrastructure are fully discontinued.

Broader Implications

As the case proceeds, the lawsuit may bring renewed attention to liquidation practices and risk management protocols across crypto derivatives platforms. The outcome could influence future litigation and shape ongoing discussions around customer protection, exchange transparency, and accountability in leveraged cryptocurrency trading.

Reference: Pacermonitor – BKX Services Inc. et al v. HDR Global Trading Limited et al