Before announcing its closure, BitMEX faced a proposed class-action lawsuit in the United States. The plaintiffs accused the cryptocurrency derivatives exchange of retaining users' Bitcoin collateral through forced liquidation mechanisms and profiting from allowing its internal trading department to continue operations when the platform malfunctioned.
The plaintiff claims a total loss of 622.66 bitcoins.
The lawsuit has been filed in the U.S. District Court for the Southern District of New York. The plaintiffs include BKX Services Inc. and trader David Namdar. The two plaintiffs claim they lost a total of 622.66 bitcoins in a forced liquidation on the BitMEX platform.
BKX claims a loss of at least 305.81 bitcoins, while Namdar claims a loss of over 316.85 bitcoins. The plaintiffs are demanding the return of the withheld bitcoins and seeking compensatory and punitive damages.
- BKX claims a loss of at least 305.81 BTC.
- Namdar reports losses exceeding 316.85 BTC.
- The two plaintiffs are jointly seeking 622.66 BTC in damages.
The lawsuit focuses on forced liquidation and the flow of insurance funds.
The lawsuit alleges that BitMEX allowed users to trade derivatives with leverage up to 100x, but the platform would automatically liquidate positions when the value of the user's remaining collateral still exceeded the actual loss. The plaintiff argues that the Bitcoin exceeding the loss was not returned to the user, but instead transferred to BitMEX's insurance fund.
The plaintiff also alleges that BitMEX's clearing system was designed to benefit the platform. The complaint alleges that the platform's internal trading department had access to users' confidential trading information and continued trading even when ordinary users were unable to log in or adjust their positions.
According to the plaintiff, the server freeze prevented users from closing positions or making additional transactions, but internal trading activities did not stop simultaneously. This is one of the key allegations regarding the platform's fairness in the lawsuit.
BitMEX had already announced its shutdown when the lawsuit was filed.
On the same day the lawsuit was filed, BitMEX announced it would shut down after 11 years of operation. Its parent company, HDR Global Trading, decided to cease operations after completing a strategic review. The platform is scheduled to cease service on September 23.
BitMEX had previously stopped accepting new user registrations and planned to prohibit users from opening new positions starting August 26. The report also stated that after the announcement of the shutdown, the platform's utility token, BMEX, plummeted by approximately 90%.
As of now, BitMEX has not made a public response to the aforementioned allegations.
