Celsius sues BitMEX for $495 million over 2020 crash liquidations

The litigation administrator for Celsius Network’s bankruptcy estate filed suit against multiple BitMEX-related entities on Sept. 12, accusing the exchange of engineering forced liquidations and manipulating the market during the March 2020 Covid crash. The complaint says BitMEX ran the systems that determined when customers were liquidated and managed the insurance fund that benefited from those liquidations. Celsius claims it lost 1,325.84 BTC to a single liquidation on March 12, 2020, and is also pursuing rights assigned from investment fund JST, which lost 5,034.33 BTC the following day. Together those losses amount to 6,360 BTC, which the estate values at roughly $495 million in the filing. The defendants named span entities registered across multiple jurisdictions, including Bermuda, the Cayman Islands, England, Hong Kong, the Seychelles and the United States. The suit alleges BitMEX “intentionally designed its platform and liquidation procedures to cause liquidations of collateral and defraud its own customers,” language the complaint uses to press claims of fraud, market manipulation and wrongful liquidation. The lawsuit arrives as BitMEX is winding down operations: the company announced a wind-down in July and has set Sept. 23 as the date it will stop trading, leaving the Celsius estate limited time to pursue claims against a departing counterparty. The complaint’s focus on a leveraged long position during the Covid crash also intersects with scrutiny of Celsius’s earlier marketing; while the lender promoted delta-neutral, low-risk strategies to customers, prior bankruptcy filings and an examiner’s report described the firm as operating speculative derivative and asset deployment methods behind the scenes. All allegations in the complaint remain unproven. This is the second lawsuit against BitMEX since its July wind-down announcement, and the outcome will hinge on the bankruptcy court’s review of the estate’s factual and legal claims.