BitMEX Faces Class Action Lawsuit Over Customer Liquidations

BitMEX Sued Over Alleged Profiting from Customer Liquidations

BitMEX, the cryptocurrency derivatives exchange, is facing a proposed class action lawsuit filed in the U.S. District Court for the Southern District of New York. The suit accuses the exchange of manipulating customer liquidations to retain hundreds of Bitcoin before its planned shutdown in September.

Details of the Lawsuit

The lawsuit, filed by BKX Services Inc. and trader David Namdar, claims that together they incurred losses of 622.66 BTC due to forced liquidations on the platform. BKX Services alleges a loss of at least 305.81 BTC, while Namdar claims to have lost over 316.85 BTC.

The plaintiffs argue that BitMEX’s internal trading operations unfairly favored the exchange during market volatility, as they liquidated customer positions before fully utilizing available collateral. According to the filing, customers often lost positions while there remained substantial collateral that could have covered the losses. This collateral was reportedly transferred to BitMEX’s insurance fund rather than returned to the customers.

Claims of Unfair Advantage

The complaint alleges that an internal trading desk at BitMEX had access to confidential customer information, enabling it to conduct trades during server outages that affected normal users. The plaintiffs claim that “BitMEX deliberately developed a system that profited from the liquidations,” leading to significant financial gains for the exchange at the expense of its customers.

Sought Damages and Class Representation

The plaintiffs are seeking the return of the 622.66 BTC and are also pursuing compensatory and punitive damages on behalf of eligible U.S. traders who engaged in Bitcoin perpetual swap transactions since July 23, 2018. The case echoes earlier allegations against BitMEX, including another class action filed in 2020 that was voluntarily dismissed in 2025.

BitMEX’s Planned Shutdown

This lawsuit coincides with BitMEX’s announcement of the closure of its operations, slated for September 23. Earlier announcements indicated that the exchange would stop accepting new registrations and would begin closing outstanding positions leading up to its final shutdown. During this transitional phase, BitMEX reassured customers of their ability to withdraw funds and monitor their accounts, despite impending fees for funds left on the platform after shutdown.

BitMEX has highlighted the integrity of its financial reserves, stating that these remain greater than customer liabilities, urging users to verify this information through its proof of reserves data.

Leadership Changes Aboard

BitMEX’s closure follows a series of high-profile management changes. Recently, the exchange replaced its CEO after restructuring its management team, which included significant departures in its executive leadership. This transformation follows scrutiny over the exchange’s compliance with financial regulations since its founders stepped down in light of legal issues with U.S. authorities.

Founded in 2014, BitMEX was at the forefront of cryptocurrency derivatives exchanges and famously introduced the 100x leveraged perpetual swap product. In recent weeks, the exchange has faced market pressures, which have been reflected in the sharp decline in the value of its utility token, BMEX.