Arthur Hayes Faces New Lawsuit Over BitMEX Trading Allegations

A new class-action lawsuit accuses BitMEX and co-founder Arthur Hayes of using an 'Insider Trading Desk' to profit from customer liquidations.

Plaintiffs allege that the exchange operated an internal trading unit with access to non-public customer data, using it to profit from their liquidations.

New Lawsuit Puts Arthur Hayes Under Pressure Again

The class-action lawsuit was filed in the U.S. District Court for the Southern District of New York by BKX Services Inc. and former client David Namdar.

In addition to co-founders Arthur Hayes, Samuel Reed, and Benjamin Delo, the defendants include former Business Development Director Gregory Dwyer, HDR Global Trading, and several other affiliated entities.

According to the plaintiffs, BitMEX managed an undisclosed unit dubbed the “Insider Trading Desk.” This desk allegedly had virtually unlimited access to customer accounts, positions, and liquidation data.

Allegations Include Manipulation of Liquidations

The complaint states that the internal unit utilized specialized software to analyze which price movements would trigger the liquidation of the largest number of positions.

Following this analysis, the plaintiffs claim the exchange executed trades designed to facilitate those specific price movements.

The lawsuit further asserts that BitMEX liquidated positions when unrealized losses reached approximately half of the provided collateral, even when the remaining margin was sufficient to cover the risk.

According to the filing, this practice allowed the platform to seize the remaining collateral and transfer it to its own “Insurance Fund,” which is intended to cover losses during liquidations.

Lawsuit Claims BitMEX Used Hidden Accounts

Court documents allege that the internal trading unit had access to information that was invisible to other market participants.

Plaintiffs accuse BitMEX of using anonymous accounts with generic email addresses to mask its own trading activities.

The complaint alleges the platform could see hidden orders and customer liquidation levels, despite publicly assuring users that such information remained confidential.

Furthermore, it is claimed that the exchange influenced prices on external reference markets used to determine liquidations within its own system.

The March 2020 Crash Returns to Court

A significant portion of the lawsuit focuses on the events of March 13, 2020, when the platform went offline for approximately 25 minutes during a massive crypto market crash.

During this brief window, positions worth roughly $800 million were liquidated.

At the time, BitMEX initially attributed the outage to a technical issue with its cloud provider, later claiming it was the result of DDoS attacks.

However, the plaintiffs contend the outage was intentional, designed to prevent customers from managing their positions during extreme volatility. The complaint notes that affected users never received compensation.

Closure Follows Years of Regulatory Pressure

This new legal challenge follows years of investigations into BitMEX and its leadership.

In 2022, Arthur Hayes, Benjamin Delo, and Samuel Reed pleaded guilty to charges involving violations of U.S. anti-money laundering rules and the Bank Secrecy Act. These proceedings resulted in multi-million dollar penalties and significant reputational damage to the platform.

While the founders later received presidential pardons, BitMEX struggled to regain its lost market share. The decision to permanently cease operations marks the end of one of the first major crypto derivatives exchanges, even as the legal battles surrounding Arthur Hayes enter a new chapter.

• Important: This text presents the claims of the plaintiffs as contained in the legal filing. As of now, the court has not ruled on the merits, and the allegations remain unproven.