BitMEX Hit With Class Action as It Plans September Shutdown

BitMEX faces a proposed class action lawsuit filed Thursday in New York, accusing its co-founders of running a hidden trading desk that used customer data to engineer liquidations. The complaint came the same day the exchange announced it would shut down in September.

The hidden desk operated from BitMEX's Manhattan office in 2018 under former business development head Gregory Dwyer, according to the filing. Software identified which price moves would force the most customer liquidations, then the desk traded to push prices to those levels. Plaintiffs say the desk had access to customer account data and hidden orders, despite BitMEX telling users that information stayed private.

On March 13, 2020, users lost access to the platform for about 25 minutes as BitMEX force-closed roughly $800 million in leveraged positions. BitMEX first cited a cloud hardware failure, then switched to two DDoS attacks four days later. Plaintiffs claim the exchange gave false explanations, deliberately froze the platform, and never compensated affected users.

Plaintiffs BKX Services and David Namdar claim combined losses of roughly 622.66 Bitcoin, worth about $40.7 million at current prices. BKX Services says it lost at least 305.8 BTC across 13 liquidations between July and August 2018. Namdar claims roughly 316.9 BTC lost across 14 named liquidations plus at least 69 smaller ones, spanning August 2019 to May 2020. Both seek return of the actual Bitcoin rather than cash damages, a legal claim known as replevin.