Celsius Estate Sues BitMEX Over Alleged $490 Million in Wrongful Liquidations
The bankruptcy estate of cryptocurrency lender Celsius has filed a lawsuit against five companies linked to the BitMEX exchange, accusing them of fraud, market manipulation, and wrongful liquidations during the severe market downturn in March 2020.
Legal Action Filed in New York
The complaint, lodged on September 12 in the U.S. Bankruptcy Court for the Southern District of New York, was brought by Celsius entities represented by the estate representative, Blockchain Recovery Investment Consortium (BRIC). The defendants named in the suit are HDR Global Trading, ABS Global Trading, Shine Effort, 100x Holdings, and HDR Global Services.
Allegations of Seized Bitcoin
According to the estate’s allegations, BitMEX improperly liquidated and seized a total of 6,360 Bitcoin (BTC), valued at approximately $490 million at the time of the lawsuit’s filing. Specifically, the estate claims that 1,325.84 BTC in collateral was wrongfully liquidated from Celsius on March 12, 2020. The following day, an additional 5,034.33 BTC was seized from the investment fund JST, which has since assigned its claims to the Celsius estate.
The lawsuit seeks the recovery of this Bitcoin, or its equivalent market value. The filing comes just 11 days before BitMEX is scheduled to cease its exchange services on September 23.
Claims of Price Manipulation
The Celsius estate contends that BitMEX exerted control over the prices used to trigger liquidations, the system that executed these sales, and the insurance fund that benefited from some of the liquidated positions. The complaint asserts that certain liquidation orders were executed at prices more than 24% below the next available bid on the platform. Furthermore, it alleges that Bitcoin traded at lower prices on BitMEX compared to competing exchanges as the liquidation process intensified.
Service Disruption Cited as Evidence
The estate points to a service disruption experienced by BitMEX on March 13, 2020, as evidence supporting its claim that the exchange’s liquidation engine exacerbated the market sell-off. The lawsuit alleges that liquidation orders ceased when the platform became unavailable, and Bitcoin’s price subsequently recovered. This sequence of events, the estate argues, indicates that forced selling on BitMEX was artificially suppressing the price. BitMEX had previously stated that it experienced two distributed denial-of-service (DDoS) attacks on March 13, 2020.
Damages Sought
The Celsius estate is seeking actual damages equivalent to at least 6,360.16 BTC or its current market value, along with the return of the Bitcoin in kind or its equivalent. The complaint also requests statutory damages, punitive damages, any applicable treble damages, profits allegedly earned by BitMEX from these liquidations, and reimbursement for legal fees and costs. The filing notes that additional claims will be quantified at trial.
Previous Class Action Lawsuit
This is not the first legal challenge against BitMEX related to liquidations. On July 23, BKX Services and David Namdar filed a separate proposed class action lawsuit, alleging losses of 622.66 BTC through forced liquidations. That complaint suggested an internal trading desk had access to private customer information and continued trading during server freezes. A BitMEX spokesperson previously described that July lawsuit as an “opportunistic claim with no basis” and stated the company would vigorously defend itself.
