Key Points
- Celsius bankruptcy administrators initiated legal proceedings against BitMEX on September 12 regarding March 2020 forced liquidations
- Administrators demand recovery of 6,360.17 Bitcoin, currently valued at approximately $495 million
- Complaint alleges BitMEX maintained control over both liquidation processes and the insurance fund receiving liquidated assets
- Represents the second legal challenge filed against BitMEX following its July shutdown announcement; platform ceases operations September 23
- Claims presented remain unsubstantiated and await judicial review in U.S. bankruptcy court
Administrators overseeing Celsius Network’s bankruptcy proceedings have initiated a legal action against BitMEX, demanding restitution of 6,360.17 Bitcoin currently valued near $495 million. The complaint focuses on compulsory position closures executed during March 2020’s pandemic-driven market turmoil.
Court documents were submitted September 12 to the U.S. Bankruptcy Court for the Southern District of New York. The Blockchain Recovery Investment Consortium, acting as litigation administrator for Celsius’s bankruptcy estate, brought forward the claims.
The complaint identifies five corporate entities connected to BitMEX: HDR Global Trading, ABS Global Trading, Shine Effort, 100x Holdings, and HDR Global Services. These defendants maintain operations spanning Bermuda, the Cayman Islands, England, Hong Kong, the Seychelles, and the United States.
Details of Bitcoin Position Liquidations
On March 12, 2020, BitMEX liquidated Celsius’s trading position, resulting in a loss of 1,325.84 BTC. The following day, investment vehicle JST Capital suffered liquidation of 5,034.33 BTC, subsequently transferring its legal claims to Celsius administrators.
Both trading strategies were designed to generate returns if Bitcoin maintained or increased in value. However, Bitcoin experienced severe price declines as worldwide financial markets reacted to escalating COVID-19 concerns.
Bankruptcy administrators contend BitMEX exceeded standard liquidation procedures when closing these positions. The complaint asserts the exchange improperly retained Bitcoin collateral that rightfully belonged to account holders.
With Bitcoin trading around $77,800, the total 6,360.17 BTC represents approximately $495 million in current value. Estate administrators seek recovery of the actual Bitcoin holdings rather than their historical dollar equivalent during the market crash.
Allegations of Dual Control Over Liquidation System
Central to the legal complaint is BitMEX’s purported authority over liquidation mechanisms. Administrators claim BitMEX simultaneously managed the insurance fund designated to receive liquidated assets, creating a conflict of interest within the platform’s risk management structure.
“BitMEX intentionally designed its platform and liquidation procedures to cause liquidations of collateral and defraud its own customers,” the filing states.
This marks the second legal challenge questioning BitMEX’s liquidation methodology since the platform’s July closure announcement. BKX Services and individual trader David Namdar previously filed a proposed class action making comparable allegations, claiming BitMEX improperly held 622.66 BTC belonging to customers.
BitMEX has encountered regulatory difficulties previously. Earlier in January 2025, a federal judge mandated HDR Global Trading pay $100 million in criminal penalties for Bank Secrecy Act infractions. Platform co-founders Arthur Hayes, Benjamin Delo, and Samuel Reed entered guilty pleas in 2022, though President Donald Trump subsequently granted pardons in 2025.
BitMEX concludes all trading operations September 23. The Celsius legal action remains in preliminary stages, with no determinations of liability yet established through the judicial process.
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