BitMEX Sued Over Alleged Wrongful Liquidations on Day It Announced Shutdown

Global crypto derivatives exchange BitMEX has been hit with a class-action lawsuit over allegations that it wrongfully liquidated customer positions. The suit was filed the same day the exchange announced it would shut down.

Cointelegraph reported on July 23 that BKX Services and others filed the lawsuit in the U.S. District Court for the Southern District of New York against HDR Global Trading and other BitMEX-related entities. The plaintiffs claim they suffered losses of about 623 Bitcoin as a result of forced liquidations on the platform.

According to the complaint, BitMEX offered users leverage of as much as 100 times their collateral, then automatically liquidated positions even when the remaining collateral was worth about twice the amount lost. The plaintiffs allege that Bitcoin left after those liquidations was transferred to the exchange's own assets, allowing BitMEX to profit.

The plaintiffs also allege that BitMEX personnel had access to customers' nonpublic information. They claim the exchange was able to continue trading even during server outages that prevented regular users from trading or stopping liquidations. They further allege the system was intentionally designed to let BitMEX profit from customer liquidations.

The lawsuit was filed on the day BitMEX announced it would end operations. HDR Global Trading plans to shut down the BitMEX service on Sept. 23.

New user registration has already been suspended. Starting Aug. 26, the exchange will also restrict the opening of new positions.