A proposed class action lawsuit has been filed against BitMEX, alleging that the cryptocurrency exchange's liquidation system enabled it to retain 622.66 Bitcoin from customer accounts. BKX Services Inc. and trader David Namdar submitted the complaint in the U.S. District Court for the Southern District of New York on the same day BitMEX officially confirmed its trading platform would cease operations in September. The plaintiffs are seeking the return of the disputed Bitcoin along with financial compensation and punitive damages.

Plaintiffs Challenge BitMEX Liquidation System

BKX Services and Namdar assert that they lost a combined 622.66 BTC through forced liquidations tied to Bitcoin perpetual swap contracts — a derivative product that BitMEX helped pioneer and that has since become one of the most widely traded instruments in crypto markets. BKX reports losses of at least 305.81 BTC, while Namdar states that more than 316.85 BTC was seized from his account. The proposed class covers eligible U.S. customers who traded these products beginning July 23, 2018.

According to the filing, BitMEX permitted customers to trade with leverage of up to 100 times their deposited collateral. The plaintiffs allege that the exchange closed certain positions before traders had fully exhausted their available collateral, leaving remaining Bitcoin that exceeded the actual losses recorded at liquidation.

The lawsuit claims that excess collateral was transferred into the exchange's insurance fund rather than returned to customers, and that BitMEX generated revenue from the liquidation process. Insurance funds are commonly used by derivatives exchanges to cover counterparty losses from bankrupt positions, but the complaint alleges BitMEX's implementation allowed the platform to profit from surplus collateral. At the time covered by the filing, BitMEX had not issued a detailed public response to the specific allegations.

The complaint is documented in public court records available via PacerMonitor.

Internal Trading Operations Face Scrutiny

The plaintiffs further accuse an internal BitMEX trading desk of operating with access to non-public customer information. According to the complaint, the desk could monitor customer positions and continue trading during periods when regular users were unable to access the platform. The allegations center on server disruptions that reportedly prevented some customers from reducing or closing their positions.

The filing argues that these disruptions gave the internal operation an unfair advantage during periods of sharp market volatility, leaving customers exposed to liquidation while unable to manage their trades. The plaintiffs contend that the exchange benefited when those positions were closed and the remaining collateral was directed into the insurance fund.

Similar accusations surfaced in a 2020 class action brought by trader Brett Messieh and other claimants, which cited alleged violations of the Commodity Exchange Act. Court records referenced in the new complaint indicate that the earlier case was voluntarily dismissed without prejudice on June 30, 2025.

BitMEX Confirms September Exchange Closure

HDR Global Trading, the company that owns and operates BitMEX, announced that exchange services will end at 04:00 UTC on September 23. The operator stated that the decision followed a strategic review of its business and the broader digital asset market. New account registrations have already been suspended.

Starting August 26, existing customers will no longer be able to open new positions. Traders will only be permitted to reduce current exposure as the exchange gradually winds down outstanding contracts. Any positions remaining open at the final deadline will be automatically liquidated under the platform's closure procedures.

BitMEX noted that contracts with limited liquidity may be settled prior to the shutdown date, with customers receiving advance notice where early settlement is necessary. Account access will remain available after trading ceases, enabling users to withdraw funds and review balances and transaction records.

As previously reported, BitMEX announced its shutdown after 11 years of operations.

Restructuring Precedes BitMEX Shutdown

The closure follows a series of management changes at BitMEX. Stephan Lutz was replaced as chief executive, while chief financial officer Ina Steiner and chief growth officer Raphael Polansky also departed. Former chief operating officer and global general counsel Peter Wilkinson subsequently assumed the role of CEO.

Reports had previously indicated that BitMEX was exploring a possible sale, though no transaction materialized. The exchange has undergone significant regulatory and leadership transitions since 2020, when founders Arthur Hayes, Ben Delo, and Samuel Reed stepped down following U.S. anti-money laundering charges. BitMEX subsequently agreed to pay $100 million in 2021 to settle civil charges brought by the CFTC and FinCEN related to those violations, and Hayes pleaded guilty to one count of willfully failing to establish an anti-money laundering program.

Once the dominant venue for crypto derivatives trading, BitMEX has seen its market share decline markedly as competitors such as Binance, Bybit, and OKX expanded their derivatives offerings.

BitMEX stated that its reserves remain above customer liabilities and directed users to its proof-of-reserves and proof-of-liabilities records. The exchange also cautioned customers about phishing attempts linked to the shutdown, emphasizing that it does not offer a priority withdrawal service. Funds remaining on the platform after closure will incur a monthly charge of $50 or an annual fee of 1%, whichever is greater.

Source: Coinpaper