Crypto16 September, 20263 min read
Celsius Bankruptcy Estate Sues BitMEX for $495 Million Over March 2020 Liquidations
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Celsius estate sues five BitMEX entities for 6,360 BTC (~$495M) from March 2020 liquidations. Allegations include fraud, market manipulation, and improper liquidations.
Lawsuit over 2020 liquidations
Celsius’s bankruptcy estate sued BitMEX for $495 million over forced liquidations during the March 2020 Covid crash, seeking the return of 6,360 BTC tied to a leveraged long position.
The complaint was filed on Sept. 12 in the U.S. Bankruptcy Court for the Southern District of New York by Blockchain Recovery Investment Consortium, alleging fraud, market manipulation and wrongful liquidations during the March 2020 crash.
The estate says it lost 1,325.84 BTC in a single liquidation on March 12, 2020, and that investment fund JST lost 5,034.33 BTC the following day, for 6,360 BTC in total.
Defendants named in the suit include HDR Global Trading, ABS Global Trading, Shine Effort, 100x Holdings and HDR Global Services, spanning Bermuda, the Cayman Islands, England, Hong Kong, the Seychelles and the U.S.
The filing alleges BitMEX controlled both the system deciding when customers were liquidated and the insurance fund that grew from those liquidations, and it quotes the complaint saying, "BitMEX intentionally designed its platform and liquidation procedures to cause liquidations of collateral and defraud its own customers."
Claims, timing, and shutdown
Celsius’s estate accuses BitMEX of manipulating its liquidation engine during the March 12-13, 2020 market crash, saying BitMEX controlled margin requirements, the prices used to trigger liquidations and the liquidation engine that sold customer positions.
The lawsuit alleges aggressive sell orders, including sell walls and orders more than 24% below the next-best ask, contributed to a liquidation cascade that pushed the market down further.
Celsius also alleges that BitMEX’s Bitcoin price fell materially below prices on other exchanges during the cascade, and that it says BitMEX’s reported DDoS disruption coincided with a halt in liquidations and a rapid price recovery.
BitMEX’s closure schedule is central to the dispute, with CoinDesk saying the exchange stops trading Sept. 23 and giving the estate 11 days to act against a defendant winding down.
In the same framing, Coin Academy says the complaint was filed on September 12 in the Southern District of New York bankruptcy court, "less than two weeks before the exchange’s closure."
What’s at stake for creditors
The Celsius estate’s demand is positioned as a recovery channel for creditors, with the disputed bitcoin described as about 6,360 BTC valued at roughly $495 million around the time of the filing.
CryptoSlate reports the complaint seeks the return of 6,360 BTC, and it says the case was filed Sept. 12 in the U.S. Bankruptcy Court for the Southern District of New York, putting the dispute before the court as BitMEX prepares to shut down on Sept. 23.
The filing is described as targeting BitMEX’s liquidation engine, with Celsius alleging BitMEX’s conduct during the crash resulted in wrongful liquidations and the seizure of digital assets belonging to Celsius and investment-fund group JST.
CoinDesk adds that the allegations are unproven, but it says the claim is the second suit filed against BitMEX since it announced in July that it would wind down.
CryptoSlate quotes the complaint’s allegation that "BitMEX intentionally designed its platform and liquidation procedures to cause liquidations of collateral and defraud its own customers," tying the estate’s theory of harm to the liquidation mechanism and the insurance fund.