Celsius Files Lawsuit Against BitMEX Alleging Fraud and Wrongful Liquidations Ahead of Exchange Shutdown
The Celsius bankruptcy estate filed a lawsuit against five BitMEX-linked companies, alleging fraud, market manipulation, and wrongful liquidations during the March 2020 market crash. The complaint was lodged on September 12 in the US Bankruptcy Court for the Southern District of New York, seeking recovery of nearly 6,360 Bitcoins—worth approximately $490 million at current prices. The filing came just 11 days before BitMEX is scheduled to cease all exchange operations on September 23.
Details of the Lawsuit and Involved Parties
The lawsuit was filed on behalf of the Celsius bankruptcy estate through its representative, the Blockchain Recovery Investment Consortium (BRIC). Defendants include five BitMEX-affiliated entities: HDR Global Trading, ABS Global Trading, Shine Effort, 100x Holdings, and HDR Global Services.
The complaint alleges that BitMEX wrongfully liquidated 1,325.84 BTC belonging to Celsius on March 12, 2020, followed by 5,034.33 BTC from the investment fund JST on March 13. Subsequently, JST assigned these claims to the Celsius bankruptcy estate.
Accusations of Market Manipulation and Intensifying Sell-Off
The Celsius estate claims BitMEX controlled the pricing triggers for liquidations, operated the liquidation execution engine, and managed the insurance fund that profited from some liquidations.
The complaint states some liquidation sell orders were executed at prices more than 24% below the next-best ask on BitMEX. Additionally, Bitcoin prices on BitMEX were lower than on competing exchanges during the peak of the liquidation cycle.
A key piece of evidence cited is BitMEX's service disruption on March 13, 2020. The lawsuit notes that liquidation orders ceased while the platform was down, and Bitcoin prices recovered, suggesting forced selling on BitMEX had suppressed prices.
Claims for Damages and Remedies Sought
The estate seeks actual damages of at least 6,360.16 BTC or its equivalent market value, along with the return of Bitcoin assets or their monetary equivalent. The lawsuit also asks for statutory and punitive damages, potentially treble damages, profits earned by BitMEX from the liquidations, and associated legal fees.
The complaint does not specify the amounts for additional claims, stating they should be determined at trial.
Prior Legal Actions and BitMEX's Response
On July 23, a separate proposed class action was filed by BKX Services and David Namdar, who claimed combined losses of 622.66 BTC from forced liquidations. That suit also alleged BitMEX allowed its internal trading desk to access private customer data and continue trading during server outages.
In response to the July lawsuit, a BitMEX spokesperson described the claims as “opportunistic” and stated the company would vigorously defend itself. No comment was made yet about the Celsius lawsuit.
Why it matters
The Celsius lawsuit against BitMEX highlights mounting legal challenges faced by prominent crypto derivatives platforms amid volatile market conditions. Allegations of price manipulation and wrongful liquidations raise critical questions around the fairness and transparency of exchange operations, potentially impacting investor trust. Filing the complaint shortly before BitMEX’s scheduled shutdown intensifies pressure on the company and illustrates stakeholders' efforts to reclaim significant assets. This case serves as an important reference point for the legal regulation of the crypto market and risk management practices in similar financial platforms.
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