BitMEX faces a new legal challenge as plaintiffs accuse the exchange and its co-founders of wrongfully seizing over 600 BTC during forced liquidations, shortly before BitMEX announced its shutdown scheduled for September 23. The suit, filed in New York’s Southern District, alleges that BitMEX pocketed excess collateral instead of returning it to users.
Claims of Internal Trading Abuse and Collateral Misuse
The class-action complaint, brought by BKX Services Inc. and trader David Namdar, details how BitMEX automatically liquidated leveraged positions while retaining leftover collateral valued at nearly twice the losses suffered. Instead of returning these funds, the plaintiffs argue BitMEX funneled them into the exchange’s insurance fund, amounting to about 622.66 BTC, roughly $40 million at current market prices.
More seriously, the filing accuses an internal "Insider Trading Desk," reportedly managed by former business development lead Gregory Dwyer, of enjoying "God access" to sensitive customer positions and liquidation thresholds. This team allegedly used specialized software to identify price moves that would maximize forced liquidations and continued trading during server freezes that barred users from acting.
Background and Ongoing Legal Context
This lawsuit revives earlier claims from a 2020 class action that was dismissed without judgment. It includes references to previous legal troubles: BitMEX’s founders pleaded guilty in 2022 to Bank Secrecy Act violations related to the platform’s operations, resulting in a $100 million penalty. all three founders and Dwyer received pardons in 2025.
The defendants in the current suit include BitMEX’s parent entities and co-founders Arthur Hayes, Benjamin Delo, and Samuel Reed, with the proposed class covering U.S. users involved in BTC swap products since mid-2018. BitMEX has yet to respond publicly to these allegations.
The timing of the lawsuit coincides with BitMEX’s imminent closure after more than a decade in operation, marking a significant moment in centralized crypto exchange history. This case highlights ongoing scrutiny over centralized platforms’ handling of customer funds and transparency, especially as markets experience volatility and regulatory pressure.
This material is for informational purposes only and does not constitute financial advice.
