A proposed class-action lawsuit filed July 23 in the Southern District of New York accuses BitMEX and its co-founders, including Arthur Hayes, of improperly keeping customer collateral seized during liquidations and running an internal trading desk that had access to confidential position data. The exchange is currently winding down its operations.
The Allegations
The complaint, which seeks class-action status, claims that BitMEX systematically retained collateral from customers whose positions were liquidated, even when the liquidation proceeds exceeded the amount owed. According to the filing, the exchange’s internal trading desk also had access to real-time position data that regular users could not see, giving it an unfair advantage in the market.
BitMEX has not yet filed a response to the lawsuit. The company’s legal team is expected to address the claims in the coming weeks.
Internal Trading Desk Under Scrutiny
At the heart of the suit is the allegation that BitMEX operated a proprietary trading desk that could view customers’ open positions, stop-losses, and margin levels. The plaintiffs argue this allowed the desk to trade against users or front-run their orders. The practice, if proven, would violate promises BitMEX made in its terms of service about fair treatment of all traders.
The lawsuit also points to BitMEX’s history of regulatory troubles. In 2021, the exchange and its founders paid $100 million to settle charges with the Commodity Futures Trading Commission and the Financial Crimes Enforcement Network for operating an unregistered trading platform and failing to implement adequate anti-money laundering controls.
Exchange Wind-Down
BitMEX is in the process of winding down, though the timeline remains unclear. The company announced earlier this year that it would cease operations, citing a challenging regulatory environment. The class action adds another layer of complexity to the shutdown, as any settlement or judgment could affect how remaining assets are distributed to creditors and customers.
For now, the exchange continues to process withdrawals, but trading has largely stopped. Users who still have funds on the platform are being urged to move them off.
What’s Next for the Lawsuit
The case is in its early stages. The plaintiffs must first seek class certification, a process that could take months. If granted, the suit would represent all BitMEX customers who had collateral seized or were potentially disadvantaged by the internal trading desk. A hearing date has not yet been set.
Arthur Hayes and the other named co-founders have not publicly commented on the new lawsuit. The Southern District of New York will handle the proceedings.
