BitMEX’s co-founders and the exchange itself are now at the center of a new class action lawsuit accusing them of running a secret trading operation that worked against their own customers. BKX Services Inc. and David Namdar, former users of the platform, claim losses totaling around 622.66 BTC and have filed suit in the Southern District of New York.

Allegations of a Hidden Trading Desk

The lawsuit targets BitMEX co-founders Arthur Hayes, Samuel Reed, Benjamin Delo, and former business development head Gregory Dwyer. Plaintiffs allege BitMEX maintained a covert "Insider Trading Desk" that exploited confidential customer data to trade against users. According to the complaint, the exchange presented itself as a neutral marketplace while secretly operating internal accounts with generic email addresses to mask its own trading activities.

This hidden desk reportedly had access to sensitive customer order details and liquidation thresholds, using this intelligence to strategically push prices and trigger forced liquidations. The plaintiffs argue that BitMEX manipulated the market to maximize liquidations, profiting both from seized collateral, which funneled into the exchange’s Insurance Fund, and from trading fees paid by users.

Market Crash and Operational Failures Under Scrutiny

The complaint revisits the chaotic market crash of March 13, 2020, when customers were unable to access their accounts for approximately 25 minutes as nearly $800 million in leveraged positions were liquidated. While BitMEX initially blamed hardware issues and denial-of-service attacks, the lawsuit suggests these disruptions were intentional and led to uncompensated customer losses. Plaintiffs also claim the exchange closed out positions prematurely when unrealized losses hit about half of the posted collateral, even though sufficient collateral remained, further benefiting BitMEX financially.

The timing of this lawsuit coincides with BitMEX’s announcement that it will permanently cease operations on September 23, 2026, after more than a decade in the crypto trading space. This development adds to ongoing legal and regulatory challenges faced by the exchange and its leadership.

This material is for informational purposes only and does not constitute financial advice.