BitMEX is facing a new class-action lawsuit alleging that the cryptocurrency derivatives exchange deliberately engineered customer liquidations in order to take possession of traders' Bitcoin collateral.

The case was filed on the same day BitMEX announced plans to shut down its operations, bringing renewed scrutiny to long-running allegations about the exchange's liquidation system and trading practices. The lawsuit arrives amid a broader wave of litigation and regulatory enforcement against crypto exchanges in the United States, where courts and agencies have increasingly examined whether trading platforms treated customer funds fairly during periods of volatility.

Filed in the US District Court for the Southern District of New York, the lawsuit seeks to recover hundreds of bitcoins that the plaintiffs say were wrongfully taken through forced liquidations. The complaint alleges that BitMEX retained excess Bitcoin collateral that should have been returned to customers after their positions were closed.

Plaintiffs allege more than 622 BTC in losses

The lawsuit was brought by BKX Services Inc. and investor David Namdar, who claim they collectively lost 622.66 BTC as a result of BitMEX's liquidation process.

According to the complaint, BKX Services lost at least 305.81 BTC, while Namdar alleges losses of more than 316.85 BTC.

The plaintiffs argue that the losses were not caused by ordinary market activity, but by a liquidation system they claim was designed and operated in a way that benefited BitMEX.

The complaint accuses the exchange of intentionally triggering liquidations that allowed it to keep customers' remaining Bitcoin collateral. It also alleges that BitMEX profited from those 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 substantial financial losses across multiple trading events.

Lawsuit targets BitMEX's liquidation engine

At the center of the case is BitMEX's liquidation engine, which the plaintiffs allege was structured to benefit the exchange instead of protecting traders from losses beyond what was required to close their positions.

BitMEX became one of the largest cryptocurrency derivatives platforms by offering leveraged trading of up to 100x. That model allowed traders to control positions much larger than the collateral they deposited. At its peak around 2018–2020, BitMEX was among the highest-volume crypto derivatives venues globally before its market share declined sharply following US regulatory actions.

While leverage can amplify gains, it also increases the risk that a position will be liquidated when the market moves against a trader.

The complaint alleges that BitMEX liquidated traders' positions even when the collateral remaining in their accounts exceeded the amount needed to cover losses. Rather than returning the excess Bitcoin after the positions were closed, the lawsuit claims BitMEX retained those funds.

The plaintiffs also allege that server outages and disruptions during periods of elevated market volatility contributed to liquidations that could have been avoided. Traders on BitMEX and other derivatives exchanges have long debated how platforms handle liquidations and whether surplus margin is properly returned, a concern that has also drawn attention from regulators examining exchange conduct.

According to the filing, these outages prevented some traders from managing or closing their positions before they were automatically liquidated by the platform.

The lawsuit argues that, through these practices, BitMEX accumulated customer Bitcoin through forced liquidations instead of limiting liquidations to the amount necessary to cover trading losses.

Filing coincides with BitMEX shutdown plan

The timing of the lawsuit has attracted attention because it was filed on the same day BitMEX said it would cease operations.

In its shutdown announcement, the company said it plans to close on September 23, 2026, following a strategic review of its business.

As part of the wind-down process, BitMEX has advised customers to close any open positions and withdraw their assets before operations end.

The lawsuit adds another legal issue during the exchange's final weeks of planned activity. BitMEX has faced significant legal consequences before, including a $100 million settlement in 2021 with the Commodity Futures Trading Commission and FinCEN over violations of anti-money-laundering and registration rules, as well as criminal charges against its founders. While BitMEX's closure announcement focused on the company's decision to wind down the business, the lawsuit raises separate allegations about the handling of customer funds and the operation of its liquidation system.

The claims in the complaint have not been proven in court. The lawsuit represents allegations made by the plaintiffs, and court proceedings will determine whether BitMEX or related entities bear legal responsibility for the alleged losses.

The case also renews scrutiny of BitMEX's liquidation model, which has been debated within the cryptocurrency trading community for years.

As BitMEX prepares to end operations, the litigation could become a closely watched dispute involving a crypto derivatives platform and its treatment of customer collateral.