BitMEX Sued Over 622.66 BTC as Exchange Prepares to Shut Down

Plaintiffs challenge BitMEX liquidation system

BitMEX allowed customers to trade with leverage of up to 100 times their deposited collateral, increasing both potential returns and the likelihood that relatively small adverse market movements could trigger liquidation. The complaint alleges that BitMEX closed some positions before customers had exhausted all available collateral, leaving Bitcoin in their accounts beyond the amount needed to cover losses at the time of liquidation.

The plaintiffs claim positions could be closed when unrealized losses reached approximately half of the collateral provided, even when the remaining margin was allegedly sufficient to protect the exchange from further losses. They allege that BitMEX did not return the excess collateral after closing those positions and instead transferred it into the exchange’s insurance fund.

BitMEX’s insurance fund was intended to absorb losses arising from liquidations. The complaint alleges, however, that the fund also received customer collateral retained beyond the losses associated with liquidated positions. The plaintiffs contend that BitMEX generated revenue from this process and benefited financially whenever customer positions were forcibly closed.

A central part of the lawsuit concerns an alleged internal operation identified as the “Insider Trading Desk.” The plaintiffs claim the desk traded against BitMEX customers while possessing information that was unavailable to ordinary market participants.

The complaint alleges that the internal operation could access customer accounts, open positions, hidden orders, margin conditions and liquidation data. It also claims the desk could view customer liquidation levels despite BitMEX assurances that confidential trading information was not visible to other market participants.

According to the filing, BitMEX used specialized software to identify price movements that would trigger liquidations across the largest possible number of customer positions. The internal unit then allegedly placed trades intended to help generate the market movements required to reach those liquidation thresholds.

The plaintiffs also accuse the desk of using anonymous trading accounts connected to generic email addresses to conceal that BitMEX controlled the transactions. They further allege that the exchange influenced prices on external reference markets used to calculate liquidations on its own platform.

Under the plaintiffs’ account, BitMEX could identify customer liquidation thresholds, trade in the direction needed to reach them and benefit after affected collateral moved into the insurance fund. The court has not determined whether the internal operation existed or whether it possessed the capabilities alleged in the complaint.

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March 2020 outage forms key part of complaint

The lawsuit revisits the market disruption of March 13, 2020, when BitMEX went offline for approximately 25 minutes during extreme cryptocurrency volatility. Around $800 million in positions were liquidated during the period surrounding the interruption.

BitMEX initially attributed the outage to a technical issue involving its cloud provider and later said distributed denial-of-service, or DDoS, attacks caused the disruption. The plaintiffs reject those explanations and allege the outage was intentional.

According to the complaint, the interruption prevented customers from reducing exposure, closing positions or adding protection while their leveraged trades remained vulnerable. The plaintiffs claim BitMEX’s internal trading operation could continue trading while regular users were unable to access the platform.

The filing argues that the alleged access imbalance gave BitMEX an advantage during sharp market movements and allowed the exchange to benefit when locked-out customers were liquidated. It also states that affected users were not compensated for losses associated with the disruption.

Similar claims appeared in a separate class action filed in 2020 by trader Brett Messieh and other plaintiffs, who cited alleged Commodity Exchange Act violations. Court records referenced in the current action show that the earlier case was voluntarily dismissed without prejudice on June 30, 2025, leaving no final determination of its underlying claims.

BitMEX had not issued a detailed public response to the specific allegations in the new complaint at the time of the July 24, 2026 reporting.

Exchange sets September trading shutdown

The legal action comes as BitMEX prepares to permanently stop exchange trading at 04:00 UTC on Sept. 23. HDR Global Trading said the decision followed a strategic review of the company’s operations and conditions across the broader digital-asset market.

BitMEX has stopped accepting new account registrations. Existing customers will no longer be allowed to open new positions starting Aug. 26 and will enter a reduce-only period in which they can lower or close existing exposure but cannot increase positions or begin new trades.

The exchange plans to gradually close outstanding contracts during the wind-down. Positions still open at the final deadline will be liquidated automatically under the platform’s closure procedures.

Contracts with limited liquidity may be settled before the final shutdown when maintaining an orderly market is not practical. BitMEX said customers would receive advance notice when early settlement is required.

Trading access will end after the shutdown, but users will retain account access to withdraw assets and review balances and transaction records. BitMEX said its reserves remain above customer liabilities and directed customers to its proof-of-reserves and proof-of-liabilities records.

The exchange also warned that scammers could exploit the closure through phishing campaigns or fraudulent withdrawal assistance. BitMEX said it does not operate a priority withdrawal service.

Funds left on the platform after closure will be subject to a monthly charge of $50 or an annual fee equal to 1% of the account balance, whichever is higher.

The closure follows senior management turnover. Stephan Lutz was replaced as chief executive, while chief financial officer Ina Steiner and chief growth officer Raphael Polansky also left the company. Former chief operating officer and global general counsel Peter Wilkinson later became chief executive.

BitMEX had also considered a potential sale, but no transaction was announced before the exchange confirmed its shutdown.

Regulatory history precedes new civil claims

BitMEX’s regulatory problems escalated in 2020 when Hayes, Delo and Reed stepped down after U.S. authorities brought anti-money laundering-related charges.

Hayes, Delo and Reed pleaded guilty in 2022 to charges involving violations of U.S. anti-money laundering requirements and the Bank Secrecy Act. The proceedings resulted in multimillion-dollar penalties and reputational damage to the exchange.

The founders later received presidential pardons. BitMEX nevertheless did not regain the market position it held during the earlier years of the cryptocurrency derivatives sector.

The current civil action adds allegations concerning customer liquidations, retained collateral, platform outages and internal trading practices to the exchange’s prior compliance proceedings. The central issue before the court is whether BitMEX applied its disclosed leveraged-trading rules or improperly closed positions, retained excess collateral and used confidential customer information to trade for its own benefit.