BitMEX, Hayes Sued Over 623 BTC Liquidation Claims as Exchange Winds Down

BitMEX and its co-founders, including Arthur Hayes, were sued in a proposed class action accusing the exchange of keeping customer collateral seized in liquidations and running an internal trading desk with access to confidential position data. The complaint was filed July 23 in the Southern District of New York — the same day BitMEX said it will shut down after 11 years.

Plaintiffs BKX Services Inc. and David Namdar claim BitMEX auto-liquidated their leveraged positions while their remaining collateral was worth roughly twice their losses, then routed the excess into the exchange's insurance fund instead of returning it. Together they seek the return of 622.66 BTC — about $40 million at current prices, per CoinGecko — plus compensatory and punitive damages.

"BitMEX deliberately developed a system that profited from the liquidations (by seizing its customers' bitcoin), while its customers were unable to escape the unfavorable positions BitMEX created," the complaint says.

Insider With “God Access”

The filing alleges an internal "Insider Trading Desk," run largely by former business development head Gregory Dwyer out of Manhattan, had "God access" to customer positions and liquidation points, used software to find the price moves that would liquidate the most customers, and kept trading during server freezes that locked everyone else out.

The complaint brings two counts — replevin, seeking the bitcoin back in kind, and fraud — and details each liquidation: 13 hits on BKX Services between July 4 and Aug. 20, 2018, and 14 larger ones on Namdar between August 2019 and May 2020, including a 128.58 BTC liquidation in October 2019.

The suit names HDR Global Trading, 100x Holdings, and related entities, along with co-founders Hayes, Benjamin Delo, and Samuel Reed, and Dwyer. The proposed class covers US customers of BitMEX's BTC swap products going back to July 23, 2018.

BitMEX did not reply to a request for comment from The Defiant by oress time.

A Recycled Complaint

The filing revives a 2020 class action that made similar claims about BitMEX's liquidation engine and insurance fund under the Commodity Exchange Act. That case was voluntarily dismissed without prejudice in June 2025, with no ruling on the allegations; the new complaint attaches the old one as its first exhibit, along with Hayes's 2020 indictment and plea allocution.

Hayes, Delo, and Reed pleaded guilty in 2022 to Bank Secrecy Act violations after BitMEX entities paid a $100 million civil penalty to the CFTC and FinCEN. President Donald Trump pardoned all three, plus Dwyer, in March 2025. Hayes is now CIO of his family office, Maelstrom.

An 11-Year Run Ends

Hours before the suit was filed, BitMEX announced it will close on Sept. 23 at 04:00 UTC, following what owner-operator HDR Global Trading called "a strategic review of the business and the broader crypto industry." New registrations stopped immediately, position limits kick in Aug. 26, and remaining positions will be force-closed before the deadline. The exchange said users can withdraw after closure and that "all assets exceed liabilities" per its proof-of-reserves page.

The exchange that invented the 100x perpetual swap had faded to under 0.01% market share, with daily volumes around $400,000, according to Kaiko data cited by Reuters. Its BMEX token dropped roughly 90% on the closure news. BitMEX removed its CEO and CFO in late June amid reports it was seeking a buyer.

Hayes marked the end with a post on X: "Satoshi for life."