BKX Services Inc. filed David Namdar filed a class action lawsuit against BitMEX.
Prosecutors accuse the exchange of market manipulation and misappropriation of approximately 623 bitcoins due to forced liquidation.
The lawsuit raises questions about BitMEX’s liquidation practices
It was filed on the same day the exchange announced it would close, Monday claim BitMEX’s internal trading team accessed clients’ private information and continued trading while servers were down and users were unable to access the platform.
BitMEX has faced accusations over clearing practices and insider trading favors in the past, with a recent lawsuit reviving these allegations.
According to the complaint, the exchange offered its clients leveraged trading of up to 100 times their collateral but allegedly liquidated their positions before using up all assets. This resulted in users losing their positions while the value of the remaining Bitcoin collateral was greater than the losses incurred.
Instead of returning surplus bitcoin to traders, BitMEX allegedly redirected the funds to its insurance pool, which, according to plaintiffs, enabled the platform to financially benefit from the forced liquidation.
“BitMEX intentionally developed a system that took advantage of liquidations,” the filing states.
The filing also cites an old case from 2020 in which Brett Messier and other traders sued the platform for similar crimes. Here, the group accused the company of rigging trading conditions in its favor, which led to financial losses for users. But the court rejected the case due to insufficient evidence.
Traders lost approximately 623 BTC
Namdar says they lost over 316.85 BTC in the process, while BKX says their losses amounted to around 305.81 BTC. As a result, the two are looking to recover the stolen cryptocurrencies and damages. Furthermore, the proposed lawsuit seeks to represent US customers who traded Bitcoin perpetual swap products in transactions dating back to July 23, 2018.
Earlier on Thursday, BitMEX owner HDR Global Trading He said The stock exchange will be closed after a strategic review, and the decision is expected to take effect on September 23. The platform has already suspended new account registrations, with traders now only allowed to close existing positions.
Following this announcement, Arthur Hayes, co-founder of BitMEX, stated to thank Its partners, employees and customers for their support over the years. “It has been an amazing journey,” he wrote, adding that he was proud to close the exchange “responsibly and on our own terms.”
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