BitMEX faces Celsius lawsuit ahead of exchange closure

The Celsius bankruptcy estate, acting through estate representative Blockchain Recovery Investment Consortium (BRIC), sued five companies linked to the BitMEX exchange on Sept. 12 in the US Bankruptcy Court for the Southern District of New York. The complaint accuses HDR Global Trading, ABS Global Trading, Shine Effort, 100x Holdings and HDR Global Services of fraud, market manipulation and improperly liquidating Celsius positions during the market turmoil of March 2020.

According to the filing, BitMEX allegedly liquidated and seized 1,325.84 BTC in collateral from Celsius on March 12, 2020, and took 5,034.33 BTC from an investment fund called JST on March 13. The JST claims were later assigned to the Celsius estate, bringing the total BTC the estate seeks to recover to 6,360.16. The complaint values that amount at nearly $490 million at the time the story was published and asks for either the return of the Bitcoin in kind or its equivalent market value, along with statutory, punitive and potentially treble damages, profits from the liquidations, and legal fees.

The estate alleges BitMEX controlled the price feeds used to trigger liquidations, operated the liquidation engine that executed those sales, and managed the insurance fund that benefited from some liquidated positions. The complaint claims some sell orders were placed more than 24% below the next-best ask on the platform and alleges that Bitcoin traded at lower prices on BitMEX than on other exchanges as the liquidation cycle intensified. The filing also points to a BitMEX service disruption on March 13, 2020, asserting that forced selling halted when the platform became unavailable and that prices then recovered.

BitMEX had previously said on March 16, 2020, that it experienced two distributed denial-of-service attacks on March 13 at 02:16 UTC and 12:56 UTC. The Celsius complaint was filed 11 days before BitMEX was slated to stop exchange services on Sept. 23. Cointelegraph sought comment from both the Celsius estate and BitMEX but did not receive responses before publication. The suit follows a separate proposed class action filed July 23 by BKX Services and David Namdar alleging forced liquidations totaling 622.66 BTC and internal trading during server freezes.