Regulatory Action
Celsius Bankruptcy Estate Sues BitMEX Over $495 Million in March 2020 Bitcoin Liquidations
According to crypto.news, the bankruptcy estate of Celsius Network has initiated legal action against BitMEX in the U.S. Bankruptcy Court for the Southern District of New York, seeking the recovery of 6,360.17 Bitcoin valued at approximately $495 million. The lawsuit targets forced liquidations executed during the market turbulence of March 2020 and alleges various counts of fraud and unjust enrichment. These claims remain unproven and are not officially confirmed by an independent judicial verdict.
Lawsuit Filed in New York Bankruptcy Court
According to reporting by crypto.news, the bankruptcy estate of Celsius Network has officially filed a major lawsuit against multiple companies linked to the BitMEX derivatives platform. The complaint was lodged on September 12 in the U.S. Bankruptcy Court for the Southern District of New York by the Blockchain Recovery Investment Consortium, which acts as the litigation administrator under the approved bankruptcy plan. The legal challenge focuses on the return of 6,360.17 Bitcoin, which has been valued at approximately $495 million based on recent calculations provided in the court filings. The named corporate defendants include prominent holding and trading entities operating across multiple international jurisdictions such as Bermuda, the Cayman Islands, Hong Kong, and the Seychelles.
The legal action centers around forced liquidations that occurred during the severe market crash in March 2020, a period marked by unprecedented volatility as the global economy reacted to the early stages of the COVID-19 pandemic. According to the court documents detailed by crypto.news, Celsius lost 1,325.84 Bitcoin during a liquidation on March 12, 2020, while an investment fund identified as JST lost an additional 5,034.33 Bitcoin the following day before assigning its claims directly to the Celsius bankruptcy estate. The litigation administrator is pursuing the actual cryptocurrency holdings rather than seeking a fixed cash value based on the historical dollar prices recorded at the time of the original market collapse.
Allegations Concerning Liquidation Mechanisms
The substance of the complaint involves serious accusations regarding the structural design of the BitMEX trading platform and its internal liquidation engine. The Celsius estate alleges that the exchange intentionally engineered its platform and liquidation protocols to generate profit from customer collateral rather than merely closing positions to cover trading losses during market stress. Specifically, the lawsuit contends that BitMEX retained excess Bitcoin collateral after closing leveraged positions instead of returning the remaining balance to the affected accounts. The claims brought forward by the litigation administrator encompass multiple legal theories, including fraudulent transfer, conversion, breach of contract, and unjust enrichment.
Furthermore, the court filings highlight concerns regarding the exchange's control over the insurance fund that received assets generated by various forced liquidations. According to the reporting by crypto.news, the platform allegedly maintained operational control over both sides of the liquidation process, creating an inherent conflict of interest. The lawsuit asserts that these practices defrauded customers who trusted the platform with their margined positions during periods of extreme market stress. However, it is essential to note that these allegations have not been proven in court, and the defendants retain the opportunity to present their defense through the formal judicial process.
Context Within Celsius Bankruptcy and Asset Recovery
This newly filed lawsuit forms a distinct component of the broader asset-recovery efforts stemming from the collapse of Celsius Network. The crypto lender famously froze customer withdrawals in June 2022 before filing for Chapter 11 bankruptcy protection the following month, leaving thousands of depositors unable to retrieve their funds. Subsequent court investigations and the final report prepared by court-appointed examiner Shoba Pillay revealed significant discrepancies between the lender's public representations of low-risk arbitrage strategies and its actual engagement in highly speculative derivative and asset deployment mechanisms. The BitMEX position described in the current complaint utilized pooled customer assets and incurred heavy leverage during the market downturn.
Despite the operational and risk-management failures documented within the lender's bankruptcy proceedings, the estate has continued to pursue external claims against third-party entities to increase recoveries for creditors. Celsius successfully obtained court approval for its restructuring plan, which began distributing billions of dollars in cryptocurrency and other property to creditors starting in January 2024. Subsequent recovery phases included the distribution of shares in Ionic Digital, a Bitcoin mining enterprise formed out of the restructuring, alongside subsequent cash payout rounds. Any potential recovery resulting from the BitMEX litigation could theoretically supplement these recovery pools, although the current complaint does not guarantee any financial payout or establish a definitive timeline for resolution.
BitMEX Closure and Historical Regulatory Actions
The legal action against BitMEX coincides with the final operational wind-down of the exchange itself. In July, BitMEX announced that it would close its doors and instructed all remaining customers to wind down their open positions and withdraw their funds prior to the final trading cutoff scheduled for September 23. Founded in 2014, the exchange gained widespread prominence within the cryptocurrency industry for pioneering high-leverage derivatives products such as the Bitcoin perpetual swap. However, its market influence diminished over subsequent years as institutional competition intensified and regulatory scrutiny mounted across major global jurisdictions regarding unregistered derivatives platforms.
BitMEX has also accumulated a substantial history of direct interactions with United States regulatory and law enforcement authorities. In January 2025, a federal judge ordered corporate defendant HDR Global Trading to pay a substantial criminal fine of $100 million following admissions that the company had violated the Bank Secrecy Act by operating without an adequate anti-money-laundering program between 2015 and 2020. Earlier civil enforcement actions initiated by the Commodity Futures Trading Commission and the Financial Crimes Enforcement Network also resulted in major financial settlements. Furthermore, former co-founders Arthur Hayes, Benjamin Delo, and Samuel Reed pleaded guilty to Bank Secrecy Act violations in 2022 before receiving presidential pardons in 2025 alongside former executive Gregory Dwyer.
Conclusion and Litigation Outlook
In conclusion, the Celsius bankruptcy estate has filed an unproven lawsuit against BitMEX-linked entities in the U.S. Bankruptcy Court for the Southern District of New York, seeking the recovery of 6,360.17 Bitcoin valued at approximately $495 million based on historical liquidation events from March 2020. The reporting from crypto.news indicates that the complaint alleges fraud, breach of contract, and unjust enrichment tied to platform liquidation mechanisms. These factual claims and allegations are not officially confirmed by any judicial ruling and remain untested in court. Affected creditors and market participants must recognize that while estate litigation continues, no financial recovery has been guaranteed or secured at this stage of the proceedings.
Looking forward, affected users and creditors should closely monitor developments in the U.S. bankruptcy court regarding the administration of remaining asset recoveries. With BitMEX scheduled to terminate trading operations on September 23, users must ensure they have completed all necessary balance withdrawals and account closures in accordance with the exchange's winding-down instructions. The next action for stakeholders is to track official bankruptcy docket updates from the litigation administrator to understand how these unconfirmed claims may eventually impact future distribution rounds or recovery timelines.
Cexvia conclusion
Estate Litigation Targets Legacy Derivative Practices
The Celsius bankruptcy estate filed a lawsuit on September 12 against BitMEX-linked companies in New York, demanding the return of 6,360.17 Bitcoin connected to historical margin liquidations. The allegations include breach of contract, conversion, and fraudulent transfer. These assertions are not officially confirmed and represent unproven claims brought forward by the litigation administrator ahead of the exchange's impending closure.
- Risk meaning
- The legal action highlights ongoing counterparty and liquidation-mechanism risks associated with legacy derivatives exchanges. Even years after extreme volatility events, platform design elements concerning insurance funds and excess collateral retention can become subjects of aggressive litigation by bankruptcy estates seeking to maximize creditor recoveries.
- User action
- Creditors and platform participants should monitor ongoing bankruptcy litigation developments while ensuring they comply with all final asset distribution windows and withdrawal deadlines set by closing legacy platforms.
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