BitMEX Sued Over Alleged Forced Liquidation Scheme

The case was filed in the Southern District of New York (SDNY) on the same day the exchange, co-founded by Arthur Hayes, announced it would be shuttering operations on 23 Sept.

Liquidations under scrutiny

According to the filing, the plaintiffs, BKX Services and a trader, David Namdar, accused BitMEX of forcing liquidations before all available collateral was exhausted, at times allegedly to the tune of twice the losses incurred. They alleged that the excess Bitcoin was sent to the exchange's insurance fund rather than to the customer. 

Namdar claims his losses exceed 316 BTC, while BKX losses allegedly exceed 305 BTC. 

In addition to claims of forced liquidations, the case alleges that the exchange's internal trading desk continued trading during server freezes while other users were blocked from trading or from closing positions. 

The plaintiffs seek the return of funds allegedly held by the platform, as well as compensatory and punitive damages.  

Past allegations return

The lawsuit is the latest in a series of allegations against the firm which point to similar claims of misconduct. The filing highlights a class action from 2020, filed by a group of traders, including Brett Messiah, which was ultimately dismissed on 30 Jun 2025. 

Past cases against the exchange have accused BitMEX of manipulating product prices and trading against their own customers, both in efforts to liquidate highly leveraged traders. 

The co-founders of the exchange, Hayes, Benjamin Delo and Samuel Reed, previously pled guilty to violations of the US Bank Secrecy Act for failing to implement compliant anti-money laundering measures. They were pardoned in 2025 by President Donald Trump.