TLDR
- The Celsius bankruptcy estate sued five BitMEX-linked companies on Sept 12 in New York bankruptcy court.
- The estate alleges BitMEX wrongfully liquidated and seized 6,360 BTC during the March 2020 crash.
- The Bitcoin at stake is worth close to $490 million at current prices.
- The estate claims BitMEX controlled the prices, the liquidation engine and the insurance fund involved.
- The lawsuit lands just 11 days before BitMEX shuts down its exchange services on Sept 23.
The Celsius bankruptcy estate has filed a lawsuit against five companies linked to BitMEX. The estate accuses the crypto exchange of fraud, market manipulation and wrongful liquidations tied to the March 2020 market crash.
The complaint was filed on Sept 12 in the US Bankruptcy Court for the Southern District of New York. It was brought by Celsius entities acting through estate representative Blockchain Recovery Investment Consortium.
The named defendants are HDR Global Trading, ABS Global Trading, Shine Effort, 100x Holdings and HDR Global Services. All five are connected to BitMEX.
The estate says BitMEX wrongfully liquidated and seized 1,325.84 BTC in collateral from Celsius on March 12, 2020. It also seized 5,034.33 BTC from investment fund JST the next day.
JST later assigned its related claims to the Celsius estate. That is how both amounts ended up in the same filing.
The lawsuit seeks the return of Bitcoin worth close to $490 million at current prices. It comes just 11 days before BitMEX is set to stop exchange services on Sept 23.
Cointelegraph reached out to both the Celsius estate and BitMEX for comment. Neither had responded by the time of publication.
How the liquidations allegedly happened
The estate claims BitMEX controlled three parts of the process at once. That includes the prices used to trigger liquidations, the engine that carried them out, and the insurance fund that collected proceeds from some of the liquidated positions.
The complaint states that some liquidation sell orders were placed more than 24% below the next best asking price on the platform. It also claims Bitcoin traded lower on BitMEX than on other exchanges as the liquidation cycle sped up.
Timing of the March 2020 outage
The estate points to a BitMEX service disruption on March 13, 2020, as part of its case. It alleges liquidation orders stopped once the platform went offline, and that Bitcoin’s price recovered soon after.
The estate argues this timing shows forced selling on BitMEX had been pushing the price down. BitMEX said at the time that it faced two separate denial-of-service attacks that day, at 02:16 UTC and 12:56 UTC.
The estate is asking for actual damages of at least 6,360.16 BTC, or the current market value of that amount. It also wants the Bitcoin returned directly, or its equivalent value paid instead.
The filing also seeks statutory damages, punitive damages, and any profits BitMEX made from the liquidations. Legal fees and court costs are included in the request too.
The complaint does not put a number on these additional claims. It states the amounts would need to be set at trial.
This is not the first legal action of its kind against BitMEX this year. On July 23, BKX Services and David Namdar filed a separate proposed class action.
That case claims the pair lost a combined 622.66 BTC through forced liquidations. It also alleges an internal trading desk could see private customer data and kept trading during server freezes.
A BitMEX spokesperson responded to the July lawsuit by calling it an opportunistic claim with no basis. The company said it would defend itself in that case, though that statement did not address the newer Celsius complaint.
The post BitMEX Faces Celsius Lawsuit Over $490 Million Bitcoin Liquidation appeared first on Blockonomi.
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This articles is written by : Nermeen Nabil Khear Abdelmalak
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