New Lawsuit Revives Old Allegations Against Crypto Derivatives Exchange BitMEX
The latest lawsuit against BitMEX is far from the first legal challenge the crypto derivatives exchange has faced. In 2020, BitMEX was named in a class-action lawsuit filed by Brett Messieh, accusing the platform of manipulating its liquidation engine at the expense of traders. Although that case was voluntarily dismissed without prejudice on June 30, 2025, concerns surrounding BitMEX’s trading practices never fully disappeared.
Now, a new lawsuit filed by BKX Services Inc. and David Namdar presents more detailed allegations. The plaintiffs claim that BitMEX intentionally designed its system to generate profits from the liquidation of users’ trading positions.
According to the complaint, BitMEX’s internal trading desk allegedly had access to confidential customer information. The lawsuit also claims that internal traders were able to continue trading during server outages, while regular users were unable to access their accounts or close their positions.
BitMEX has denied all allegations. In a statement to Cointelegraph, a company spokesperson said the exchange has successfully defended itself against similar lawsuits in the past.
“This is yet another opportunistic and baseless complaint. We will vigorously defend ourselves once again,” the spokesperson said.
The lawsuit comes just days after BitMEX announced that it will permanently cease operations on September 23. The timing is expected to play a significant role in the legal proceedings.
Liquidation System Accused of Taking Traders’ Bitcoin
At the center of the dispute is BitMEX’s automated liquidation engine. The exchange has long been known for offering leverage of up to 100x, allowing traders to control positions far larger than their initial collateral. When losses reached a certain threshold, the system automatically liquidated those positions.
However, the plaintiffs argue that the problem began after the liquidation occurred.
They allege that users’ positions were often liquidated while the value of their collateral remained roughly twice the amount of the actual losses incurred. Instead of returning the remaining Bitcoin to users, BitMEX allegedly transferred the excess funds into its insurance fund.
If these allegations are proven in court, every liquidation could have served as an additional source of revenue for the exchange.
BKX Services claims losses of at least 305.81 BTC, while David Namdar is seeking the return of more than 316.85 BTC. Together, they aim to represent all U.S. customers who have traded derivatives on BitMEX since July 23, 2018.
In addition to the return of the allegedly confiscated Bitcoin, the plaintiffs are seeking compensatory damages as well as punitive damages.
While high leverage has been one of BitMEX’s defining features since its launch, it has also drawn repeated criticism over the transparency of its liquidation process. The court will ultimately decide whether the liquidation mechanism functioned as intended or was deliberately structured to benefit the exchange at the expense of its users.
BitMEX Shuts Down After 11 Years of Controversy
BitMEX’s decision to shut down marks a major event for the cryptocurrency industry. The exchange has already stopped accepting new user registrations and will no longer allow new trading positions to be opened starting August 26.
The decision followed a strategic business review conducted by its parent company, HDR Global Trading.
Shortly after the announcement, BitMEX’s utility token, BMEX, plunged by around 90%, reflecting a sharp decline in market confidence.
Prior to the shutdown announcement, BitMEX had already scaled back its services by removing 65 trading pairs and several derivatives products. However, those changes were not widely seen as signs that the exchange would completely cease operations.
Ironically, on the same day BitMEX announced its closure, a New York court accepted a new lawsuit that could expose the company to significant financial liability.
During the trial, BitMEX will need to convince the court that the disputed liquidations were part of the normal functioning of the market rather than a deliberate strategy to profit from customer losses.
Overall, the case highlights the growing pressure facing cryptocurrency exchanges from both regulators and users, who are increasingly willing to pursue legal action. The collapse of the BMEX token, the rise in class-action lawsuits against crypto exchanges, and BitMEX’s impending shutdown all suggest that the era of opaque crypto trading platforms may be coming to an end.
The key question now is whether the more than 623 BTC at the center of the lawsuit will ultimately be returned to their rightful owners.
