- Arthur Hayes faces a proposed class action over allegations that BitMEX secretly traded against customers using confidential account data and manipulated liquidations.
- Plaintiffs claim the internal trading desk exploited private market data while exchange outages triggered widespread liquidations, harming leveraged traders.
- Earlier lawsuit ended without prejudice while BitMEX later pleaded guilty before announcing permanent shutdown following strategic board review in September.
Arthur Hayes is facing a proposed class action after two former BitMEX customers accused him and other company executives of operating a secret trading operation that allegedly profited from users’ losses. The lawsuit places the BitMEX co-founder at the center of claims that the exchange accessed confidential customer information while manipulating liquidations for its own benefit as BitMEX prepares to end operations in September.
The complaint was filed in the U.S. District Court for the Southern District of New York. Besides Hayes, the lawsuit names BitMEX co-founders Samuel Reed and Benjamin Delo. Former head of business development Gregory Dwyer also appears as a defendant alongside HDR Global Trading Limited and four affiliated entities.
According to the complaint, BitMEX operated an undisclosed “Insider Trading Desk” that accessed private customer account information. The plaintiffs allege the desk used confidential trading data to place positions against customers without their knowledge.
Additionally, the filing claims the exchange deliberately designed its liquidation system to close positions earlier than necessary. Consequently, remaining customer collateral allegedly flowed into BitMEX’s Insurance Fund after those forced liquidations.
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Lawsuit alleges secret trading desk exploited customer information
The complaint claims Gregory Dwyer supervised the Insider Trading Desk from BitMEX’s Manhattan office throughout 2018. According to the filing, internal software identified market moves capable of triggering the highest number of customer liquidations.
Furthermore, the plaintiffs argue BitMEX assured users that hidden orders and liquidation prices remained confidential, yet they allege the internal trading desk had unrestricted access to that information while customers did not. The lawsuit also accuses the exchange of influencing prices on third-party reference exchanges, allegedly triggering liquidations across BitMEX’s derivatives platform.
Another major allegation focuses on March 13, 2020, when customers reportedly lost access to the exchange for about 25 minutes while nearly $800 million in leveraged positions were liquidated. BitMEX initially attributed the disruption to a cloud hardware issue before later blaming distributed denial-of-service attacks, although the plaintiffs reject those explanations and claim the platform intentionally prevented customers from managing open positions.
Plaintiffs seek bitcoin recovery through proposed class action
BKX Services claims it lost about 305.8 BTC across 13 liquidations between July and August 2018, while David Namdar alleges losses totaling roughly 316.9 BTC through 14 identified liquidations and at least 69 additional transactions between August 2019 and May 2020.
Moreover, the lawsuit includes fraud and replevin claims, with the plaintiffs seeking the return of the bitcoin they allege BitMEX wrongfully obtained instead of only monetary damages. They also estimate the proposed class includes tens of thousands of U.S. customers whose combined claims exceed $5 million.
The filing also references a similar lawsuit brought in 2020 that ended in a voluntary dismissal without prejudice in June 2025. The plaintiffs now argue that the earlier litigation paused the statute of limitations, allowing the latest claims to proceed.
BitMEX closure follows renewed legal challenge
BitMEX pleaded guilty in 2024 to violating the Bank Secrecy Act, received an additional $100 million fine in January 2025, and its co-founders, including Arthur Hayes, were later pardoned by current U.S. President Donald Trump in March 2025.
Arthur Hayes now faces renewed legal pressure as former BitMEX customers pursue class action status over allegations of insider trading, market manipulation, and wrongful liquidations. Meanwhile, BitMEX has confirmed it will permanently cease operations on Sept. 23 following a strategic review by HDR’s board, bringing additional attention to the lawsuit during the exchange’s final weeks.
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