Celsius Network’s bankruptcy estate has sued BitMEX for the return of 6,360.17 Bitcoin, worth about $495 million, over forced liquidations carried out during the March 2020 COVID market crash.
Summary
- Celsius and JST lost a combined 6,360.17 BTC through BitMEX liquidations in March 2020.
- The estate alleges BitMEX designed its system to profit from liquidated customer collateral.
- Five BitMEX-linked companies have been named as defendants in the New York bankruptcy case.
- The complaint remains unproven and was filed shortly before BitMEX ends trading on Sep. 23.
The complaint, filed on Sep. 12 in the U.S. Bankruptcy Court for the Southern District of New York, accuses BitMEX-linked companies of fraud, breach of contract, and unjust enrichment tied to the exchange’s liquidation system.
Blockchain Recovery Investment Consortium filed the case in its role as litigation administrator under Celsius’ bankruptcy plan. The defendants are HDR Global Trading, ABS Global Trading, Shine Effort, 100x Holdings and HDR Global Services.
Operating through several jurisdictions, the named entities have links to Bermuda, the Cayman Islands, England, Hong Kong, the Seychelles and the United States. The filing places the dispute before a U.S. bankruptcy court because the contested claims form part of the remaining assets being pursued for Celsius creditors.
Celsius estate seeks 6,360 BTC from BitMEX
According to the complaint, Celsius lost 1,325.84 BTC when BitMEX liquidated its position on March 12, 2020. Investment fund JST lost another 5,034.33 BTC through a liquidation the following day and later assigned its claims to the Celsius estate.
The two positions were structured to earn a return if Bitcoin either held its value or rose, the estate said. Bitcoin instead fell sharply as global markets reacted to the spread of Covid-19, with the sell-off producing one of the most volatile periods in the cryptocurrency’s history.
During the disorder, leveraged positions on derivatives exchanges faced margin calls and forced closures. Celsius and JST allege that BitMEX did more than close their positions to cover trading losses, claiming the exchange took control of Bitcoin collateral that should have been returned.
At the roughly $77,800 valuation used in the supplied claim, the combined 6,360.17 BTC is worth close to $495 million. The value of any potential recovery would still depend on the court’s findings and the form of relief granted, as the lawsuit remains at the complaint stage.
The litigation administrator is pursuing the Bitcoin itself rather than limiting the demand to its dollar value in March 2020. Its claims include fraudulent transfer, conversion, breach of contract, breach of the implied duty of good faith and fair dealing, and unjust enrichment.
BitMEX allegedly controlled both sides of liquidations
At the center of the case is BitMEX’s control over the mechanism that determined when leveraged positions would be closed. The Celsius estate alleges that the exchange also controlled the insurance fund that received assets generated by some liquidations, creating a financial interest in how the process operated.
“BitMEX intentionally designed its platform and liquidation procedures to cause liquidations of collateral and defraud its own customers,” the complaint says.
Rather than sell only enough collateral to settle an account’s obligations, BitMEX allegedly retained excess Bitcoin after closing positions. The defendants have not been found liable for the conduct described in the filing, and the allegations will need to be tested through the U.S. court process.
Similar claims appeared in a proposed class action filed in July by BKX Services and trader David Namdar. As crypto.news previously reported, the plaintiffs alleged that BitMEX engineered forced liquidations and retained 622.66 BTC that should have gone back to customers.
BKX said it lost at least 305.81 BTC, while Namdar claimed losses of more than 316.85 BTC. Their case also alleged that BitMEX’s internal trading operation had access to private customer information and could continue operating during server outages that stopped users from managing their positions.
The proposed class action seeks to represent eligible U.S. traders who used BitMEX’s Bitcoin perpetual swap products in transactions dating back to July 23, 2018. Celsius’ complaint is separate and concerns losses from March 2020, although both cases challenge how the exchange handled customer collateral during forced liquidations.
The case adds another asset-recovery effort for creditors
Celsius’ pursuit of BitMEX forms part of the litigation left behind by the crypto lender’s Chapter 11 case. Celsius froze withdrawals in June 2022 and filed for bankruptcy the following month after losses and liquidity problems left customers unable to retrieve their assets.
Court records later raised questions about the gap between the lender’s public claims and its trading practices. Celsius had promoted strategies such as arbitrage, carry trades and funding-rate harvesting as relatively low-risk ways to generate returns for depositors.
A July 2022 bankruptcy filing said the company had instead used “several highly speculative derivative and asset deployment mechanisms.” Court-appointed examiner Shoba Pillay’s final report also documented trading, risk-control and recordkeeping failures inside the lender.
The BitMEX position described in the new complaint relied on pooled customer assets and carried leveraged exposure during a severe market decline. Although the liquidation allegedly harmed Celsius, the bankruptcy records show that the lender itself had exposed customer funds to speculative trades while presenting its business as safer than its internal practices suggested.
Celsius began working through its repayment plan after a New York bankruptcy judge approved its restructuring. In January 2024, the company started distributing assets under a plan that provided more than $3 billion in cryptocurrency and other property to creditors.
Creditor recoveries later included shares in Ionic Digital, a Bitcoin mining company created through the restructuring. Former Celsius creditors received about 37 million Class A shares, and Ionic subsequently secured SEC approval for its planned Nasdaq listing in July.
A third payout round began in August 2025 with approximately $220.6 million allocated to eligible creditors. Recoveries obtained through estate litigation can add assets to the bankruptcy process, although the BitMEX complaint does not guarantee a payment or set a timetable for resolving the claims.
BitMEX faces the lawsuit before its Sep. 23 closure
The Celsius action is the second lawsuit challenging BitMEX’s liquidation practices since the exchange announced in July that it would close. BitMEX instructed customers to wind down positions and withdraw funds before trading ends on Sep. 23.
Founded in 2014, the exchange became known for offering highly leveraged cryptocurrency derivatives, including its Bitcoin perpetual swap. Its influence later declined as competition increased and regulated futures platforms gained more institutional business.
BitMEX has also faced prior action from U.S. authorities. In January 2025, a federal judge ordered HDR Global Trading to pay a $100 million criminal fine after the company admitted violating the Bank Secrecy Act by operating without an adequate anti-money-laundering program.
The criminal case concerned BitMEX’s compliance controls between 2015 and 2020, not the liquidation conduct alleged by Celsius. U.S. prosecutors said the exchange had served American customers without the required safeguards, while earlier civil proceedings brought by the Commodity Futures Trading Commission and Financial Crimes Enforcement Network produced settlements of up to $100 million.
BitMEX co-founders Arthur Hayes, Benjamin Delo, and Samuel Reed had pleaded guilty in 2022 to Bank Secrecy Act violations. President Donald Trump pardoned the three founders in 2025, along with former executive Gregory Dwyer and the corporate entities connected to the exchange.
