Two former BitMEX customers, BKX Services Inc. and David Namdar, filed a proposed class action against the crypto exchange and its three co-founders on Thursday, the same day the platform announced it would shut down permanently in September 2026. The plaintiffs allege that BitMEX operated an undisclosed 'Insider Trading Desk' that traded against its own customers using private account data and deliberately froze its servers during periods of high volatility to lock users out while forcing liquidations. The complaint was filed in the U.S. District Court for the Southern District of New York and names Arthur Hayes, Samuel Reed, Benjamin Delo, and former head of business development Gregory Dwyer as defendants, alongside HDR Global Trading Limited and four affiliated entities.
Plaintiffs Allege BitMEX Operated Insider Trading Desk Throughout 2018
The complaint alleges that Gregory Dwyer ran the Insider Trading Desk from BitMEX's Manhattan office throughout 2018. Plaintiffs claim the desk used software to identify which price movements would liquidate the most customers, then placed trades to induce those moves. According to the filing, BitMEX told users that hidden orders were concealed from other traders and that liquidation points stayed private. The complaint alleges the Insider Trading Desk saw all of it, and that BitMEX created burner accounts paired with generic email addresses to disguise its own trading.
The plaintiffs also allege that BitMEX liquidated positions when unrealized losses reached roughly half of posted collateral, despite remaining collateral still exceeding the losses. They claim the exchange set that trigger higher than needed to protect itself, seizing remaining collateral and routing it into the platform's Insurance Fund. The complaint further alleges the exchange manipulated prices on third-party reference exchanges to force liquidations on its own platform.
BitMEX Locked Out Customers for 25 Minutes on March 13, 2020
The complaint points to March 13, 2020, when customers were locked out of the platform for roughly 25 minutes and about $800 million in leveraged positions were liquidated. According to the filing, BitMEX attributed the outage to a hardware issue with its cloud provider that day, then said four days later that two distributed denial-of-service attacks were the root cause. The plaintiffs allege the freezes were deliberate and that customers were never compensated.
BKX Services and Namdar Claim Combined Losses Exceeding 622 BTC
BKX Services says it lost at least roughly 305.8 BTC across 13 liquidations between July and August 2018. David Namdar, who traded under an alias, claims about 316.9 BTC in losses across 14 named liquidations plus at least 69 smaller ones, spanning August 2019 to May 2020.
The two counts are replevin and fraud. Replevin seeks return of specific property rather than its cash value, meaning the plaintiffs want the bitcoin itself back. The proposed class covers anyone who bought bitcoin swap products on BitMEX in domestic U.S. transactions from July 23, 2018 onward. Plaintiffs estimate tens of thousands of members and put aggregate claims above $5 million.
Prior Similar Case Dismissed in June 2025
A substantially similar suit, Messieh v. HDR Global Trading, was filed in the same court in April 2020 under the Commodity Exchange Act. The parties stipulated to voluntary dismissal, and the court entered that order on June 30, 2025, without prejudice. The plaintiffs argue the statute of limitations was tolled for the full stretch of that case, from April 2020 through June 2025.
BitMEX Pleaded Guilty to Bank Secrecy Act Violations in 2024
BitMEX pleaded guilty in 2024 to violating the Bank Secrecy Act and was hit with an additional $100 million fine in January 2025, reportedly. President Donald Trump pardoned the co-founders in March 2025.
BitMEX said Wednesday it would cease operations on Sept. 23 after 11 years, citing a strategic review by HDR's board without giving further explanation. The complaint, filed before BitMEX publicly announced its planned shutdown, alleges that the exchange "continues to operate the platform without any repercussions."
FAQ
What did BKX Services Inc. and David Namdar allege in their lawsuit against BitMEX?
BKX Services Inc. and David Namdar allege that BitMEX operated an undisclosed 'Insider Trading Desk' that traded against its own customers using private account data. They also claim the exchange deliberately froze its servers during periods of high volatility to lock users out while forcing liquidations.
How much bitcoin did the plaintiffs claim to have lost on BitMEX?
BKX Services says it lost at least roughly 305.8 BTC across 13 liquidations between July and August 2018. David Namdar claims about 316.9 BTC in losses across 14 named liquidations plus at least 69 smaller ones, spanning August 2019 to May 2020.
What happened to BitMEX customers on March 13, 2020?
On March 13, 2020, customers were locked out of the BitMEX platform for roughly 25 minutes and about $800 million in leveraged positions were liquidated. BitMEX attributed the outage to a hardware issue with its cloud provider, then later said two distributed denial-of-service attacks were the root cause. The plaintiffs allege the freezes were deliberate and that customers were never compensated.
