BitMEX is facing a class-action lawsuit alleging theft and insider trading, coinciding with its closure announcement slated for September 23.
BitMEX, the prominent cryptocurrency derivatives exchange, is entangled in a proposed class-action lawsuit that alleges insider trading and misappropriation of funds as it gears up to close its doors on September 23.
Details of the Lawsuit
The lawsuit, initiated by BKX Services and David Namdar in the U.S. District Court for the Southern District of New York, claims that BitMEX engaged in unfair practices, including wrongful liquidations and the retention of customer collateral. They argue that BitMEX owes them a total of 622.66 BTC, approximately valued at $40.7 million.
According to the filing, BKX Services claims a loss of at least 305.81 BTC due to forced liquidations, while Namdar's losses surpass 316.85 BTC. The lawsuit was filed on the same day as BitMEX's closure announcement.
The complaint further alleges that BitMEX co-founders Arthur Hayes, Ben Delo, and Samuel Reed devised a system to withhold customer collateral and transfer leftover bitcoin to the company’s insurance fund. It asserts that an internal trading desk had access to sensitive user data, enabling trades during system outages that barred regular users from accessing their accounts.
BitMEX's trading model permitted significant leverage, reaching up to 100 times a trader's collateral. The plaintiffs maintain that their liquidations occurred while their collateral retained greater value than their realized losses, which remain unreleased.
Included in the lawsuit are HDR Global Trading, BitMEX's parent company, along with its co-founders and affiliates. The plaintiffs seek to represent U.S. customers who purchased BitMEX bitcoin swap products since July 23, 2018, requesting the return of their bitcoin and additional damages. Approval from a judge is necessary for the case to proceed as a class-action.
This legal action follows a major leadership shakeup at BitMEX, which saw the exit of its CEO and other top executives last month. General counsel Peter Wilkinson has since taken the helm as CEO. As of now, BitMEX has not publicly responded to the allegations.
