TLDR
- On September 12, Celsius Network’s bankruptcy administrators initiated legal proceedings against BitMEX regarding March 2020 liquidation events
- Administrators demand recovery of 6,360.17 BTC, currently valued at approximately $495 million
- Claims assert BitMEX maintained control over both liquidation systems and insurance funds profiting from customer losses
- BitMEX faces its second liquidation-related lawsuit following the July announcement of platform closure; operations terminate September 23
- All claims remain allegations subject to judicial review in U.S. bankruptcy court
Bankruptcy administrators representing Celsius Network have initiated legal action against BitMEX, demanding restitution of 6,360.17 Bitcoin valued near $495 million. The litigation focuses on liquidation events that occurred during the March 2020 coronavirus-driven market collapse.
Court documents were submitted September 12 to the U.S. Bankruptcy Court for the Southern District of New York. The Blockchain Recovery Investment Consortium, acting as litigation administrator for the Celsius bankruptcy proceedings, filed the complaint.
The lawsuit names five corporate entities connected to BitMEX: HDR Global Trading, ABS Global Trading, Shine Effort, 100x Holdings, and HDR Global Services. These organizations maintain operations spanning Bermuda, the Cayman Islands, England, Hong Kong, the Seychelles, and the United States.
The Path to Bitcoin Losses
On March 12, 2020, BitMEX liquidated Celsius’s trading position, resulting in a loss of 1,325.84 BTC. The next day, investment fund JST suffered liquidation of 5,034.33 BTC and subsequently transferred its legal claims to the Celsius estate.
Both trading positions were designed to generate returns if Bitcoin maintained or increased in value. However, Bitcoin experienced a dramatic decline as worldwide financial markets responded to the escalating COVID-19 pandemic.
According to the bankruptcy estate, BitMEX’s actions extended beyond standard position closures to mitigate losses. The complaint contends the platform retained Bitcoin collateral that rightfully belonged to customers.
Using current Bitcoin prices around $77,800, the total 6,360.17 BTC represents approximately $495 million in value. Importantly, administrators seek recovery of the actual Bitcoin holdings rather than their 2020 dollar equivalent.
Allegations of Dual Control Over Liquidation Systems
The lawsuit’s core assertion centers on BitMEX’s purported authority over liquidation mechanisms. According to the complaint, BitMEX simultaneously managed the insurance fund receiving liquidated assets, creating a conflict of interest in platform operations.
“BitMEX intentionally designed its platform and liquidation procedures to cause liquidations of collateral and defraud its own customers,” the filing states.
This marks the second legal challenge addressing BitMEX’s liquidation methodology since the platform’s July shutdown announcement. BKX Services and trader David Namdar previously filed a proposed class action with comparable allegations, claiming BitMEX improperly held 622.66 BTC owed to customers.
BitMEX’s regulatory history includes previous enforcement actions. A federal judge mandated HDR Global Trading pay $100 million in criminal penalties for Bank Secrecy Act violations in January 2025. Company co-founders Arthur Hayes, Benjamin Delo, and Samuel Reed entered guilty pleas in 2022, though President Donald Trump granted pardons in 2025.
BitMEX’s trading platform concludes operations on September 23. The Celsius litigation remains in preliminary stages, with no judicial determination of liability established to date.
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