Celsius Estate Sues BitMEX Over $495M Bitcoin Liquidation…

The Celsius Network bankruptcy estate has sued BitMEX and several related entities in an effort to recover more than 6,360 bitcoin that it says were lost when leveraged positions were liquidated during the market collapse of March 2020.

Blockchain Recovery Investment Consortium, the litigation administrator appointed in the Celsius bankruptcy, filed the complaint on September 12 in the U.S. Bankruptcy Court for the Southern District of New York. The named defendants include HDR Global Trading, ABS Global Trading, Shine Effort, 100x Holdings and HDR Global Services. At current bitcoin prices, the disputed holdings are worth roughly $495 million, a figure that would make the case a significant recovery target for creditors of the failed lender.

According to the filing, Celsius lost 1,325.84 BTC when BitMEX liquidated one of its trades on March 12, 2020. The estate is also pursuing claims assigned to it by investment fund JST, which allegedly lost a further 5,034.33 BTC the following day. Both positions had depended on bitcoin holding or rising in value as global markets sold off in the early stages of the Covid-19 crisis.

Focus on the liquidation engine

The lawsuit centers on how BitMEX's liquidation system and insurance fund interacted. Celsius contends that the exchange controlled both the mechanism that determined when customer collateral would be liquidated and the fund that stood to gain when liquidations produced excess proceeds. The complaint alleges that BitMEX "intentionally designed its platform and liquidation procedures to cause liquidations of collateral and defraud its own customers." Those allegations have not been proven, and no court has found that BitMEX or its affiliates acted improperly.

The claim also revisits Celsius's own pre-collapse conduct. A July 2022 bankruptcy filing stated that the lender had used "several highly speculative derivative and asset deployment mechanisms," and the court-appointed examiner later documented extensive problems with its risk management and use of customer assets. That history does not decide whether BitMEX's process was lawful, but it may shape arguments over what caused the losses and what risk Celsius and JST accepted.

The suit lands as BitMEX prepares to shut down exchange operations on September 23, having announced the wind-down in July. It is the second lawsuit filed against the exchange since that announcement, and the spread of defendants across multiple entities and jurisdictions could complicate any eventual recovery.