- The lawsuit was filed the day BitMEX announced its shutdown.
- Lawsuit alleges excess Bitcoin collateral was retained.
- Plaintiffs claim losses totalling 622.66 BTC.
BitMEX is facing fresh legal trouble after a class-action lawsuit accused the cryptocurrency derivatives exchange of deliberately engineering customer liquidations to take possession of traders’ Bitcoin collateral.
The lawsuit was filed on the same day the company announced plans to shut down its operations, placing renewed attention on allegations surrounding its liquidation system and trading practices.
The case, filed in the US District Court for the Southern District of New York, seeks to recover hundreds of bitcoins that the plaintiffs claim were wrongfully taken through forced liquidations.
Lawsuit claims more than 622 Bitcoin were wrongfully seized
The lawsuit was brought by BKX Services Inc. and investor David Namdar, who allege they collectively lost 622.66 BTC because of BitMEX’s liquidation process.
According to the complaint, BKX Services lost at least 305.81 BTC, while David Namdar claims losses exceeding 316.85 BTC.
The plaintiffs argue that these losses were not the result of normal market conditions but stemmed from a liquidation system that allegedly operated in BitMEX’s favour.
The complaint accuses the exchange of intentionally triggering liquidations that enabled it to retain customers’ remaining Bitcoin collateral.
It further alleges that BitMEX profited from these liquidations instead of returning any excess collateral after positions were closed.
The plaintiffs are seeking damages and other legal remedies, arguing that the exchange’s practices caused significant financial losses over multiple trading events.
Plaintiffs challenge BitMEX’s liquidation model
At the center of the lawsuit is BitMEX’s liquidation engine, which the plaintiffs claim was designed to benefit the exchange rather than protect traders from excessive losses.
BitMEX became one of the largest crypto derivatives platforms by offering leveraged trading of up to 100x, allowing traders to control positions much larger than their deposited collateral.
While leverage can increase profits, it also raises the risk of liquidation when the market moves against a position.
The complaint alleges that traders’ positions were liquidated even when the remaining collateral exceeded the amount required to cover losses. Instead of returning the excess Bitcoin after closing the positions, the lawsuit claims BitMEX retained those funds.
The plaintiffs also allege that server outages and disruptions during periods of heightened market volatility contributed to liquidations that could have been avoided.
According to the filing, these incidents prevented some traders from managing or closing their positions before they were automatically liquidated.
The lawsuit argues that these practices allowed the exchange to accumulate customer Bitcoin through forced liquidations rather than simply covering trading losses.
Legal action coincides with BitMEX shutdown announcement
The timing of the lawsuit has drawn attention because it was filed on the same day BitMEX announced that it would cease operations.
The company said it plans to shut down on September 23, 2026, following a strategic review of its business.
As part of the closure process, customers have been advised to close open positions and withdraw their assets before operations end.
The legal action now adds another layer of uncertainty to the exchange’s final weeks of operation.
While the shutdown announcement focused on the company’s decision to wind down its business, the lawsuit raises separate allegations regarding the handling of customer funds and liquidation practices.
The claims made in the complaint have not been proven in court, and the lawsuit represents allegations brought forward by the plaintiffs.
The court proceedings will determine whether BitMEX or its related entities bear legal responsibility for the alleged losses.
The case also revives long-running scrutiny of BitMEX’s liquidation system, which has been the subject of debate within the cryptocurrency trading community for years.
As the exchange prepares to end its operations, the outcome of this lawsuit could become one of the most closely watched legal disputes involving a crypto derivatives platform and its treatment of customer collateral.
