The estate administrators for the defunct cryptocurrency lender Celsius Network have initiated legal action against U.S.-based crypto derivatives exchange BitMEX, claiming 6,360 bitcoin for forced liquidations executed during the COVID-19 pandemic in March 2020. At current valuations, this claim amounts to roughly $495 million.
The lawsuit was filed on September 12 with the U.S. Bankruptcy Court for the Southern District of New York by Blockchain Recovery Investment Consortium, the litigation administrator appointed in Celsius's bankruptcy proceedings. Named defendants include HDR Global Trading, ABS Global Trading, Shine Effort, 100x Holdings, and HDR Global Services, spanning multiple jurisdictions such as Bermuda, the Cayman Islands, the United Kingdom, the Seychelles, and the United States.
The complaint details that Celsius suffered a loss of 1,325.84 bitcoin in a single liquidation on March 12, 2020, along with additional claims assigned by investment fund JST, which lost 5,034.33 bitcoin the following day. Both positions were leveraged long trades that could only generate profits if bitcoin's price held steady or appreciated.
The filing alleges that BitMEX simultaneously controlled the systems determining when clients would be liquidated and the insurance fund that grew from these liquidations. According to court documents, BitMEX "deliberately engineered its platform and liquidation procedures to trigger collateral liquidations and defraud its own customers."
This litigation stands in contrast to Celsius's prior public positioning. The lending platform, which offered interest payments on user deposits before collapsing in 2022, had marketed itself around low-risk, delta-neutral strategies including arbitrage, funding rate harvesting, and carry trades. However, its July 2022 bankruptcy filing revealed that beneath this marketing, the company operated "several highly speculative derivatives and asset deployment mechanisms," a conclusion confirmed by the court-appointed examiner's final report. Holding leveraged long positions funded by the customer pool during the COVID crash represents exactly the type of position described in those documents.
All allegations remain unproven at this stage. This litigation marks the second lawsuit faced by BitMEX since its July announcement of a phased shutdown, with the exchange scheduled to halt trading on September 23.
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