Celsius Estate Sues BitMEX Over COVID-Crash Liquidations, Seeks 6,360 Bitcoin Worth Nearly $500M

A Legal Shockwave From Bitcoin’s “Black Thursday”

The bankruptcy estate of Celsius Network has turned its legal firepower on crypto derivatives giant BitMEX, filing a lawsuit that seeks to recover roughly 6,360 Bitcoin — currently valued at about $495 million — tied to forced liquidations that took place during the historic market collapse of March 2020. The complaint, filed Sept. 12 in the U.S. Bankruptcy Court for the Southern District of New York, accuses BitMEX and a web of related corporate entities of profiting from a liquidation process that allegedly pushed customers’ collateral into the exchange’s own insurance fund while global markets were in free fall at the start of the Covid-19 pandemic. The case brings back one of the most chaotic weeks in crypto history, while also slicing into the complex, sometimes destructive relationship between derivatives platforms and their users.

A Claim Built on Two Crushing Losses

The legal action is being pursued by the Blockchain Recovery Investment Consortium, the litigation administrator appointed to handle claims arising from the Celsius bankruptcy. According to the complaint, the losses behind the lawsuit are separated into two distinct events. Celsius itself lost 1,325.84 Bitcoin in a single forced liquidation on March 12, 2020 — a date forever known in crypto circles as “Black Thursday.” The following day, an investment fund identified in court documents as JST lost another 5,034.33 Bitcoin. Combined, those two positions account for the 6,360 Bitcoin that the lawsuit now seeks to recover, an amount worth roughly $495 million at current market prices. JST assigned its claims to Celsius, allowing the bankruptcy estate to step into the fund’s shoes and pursue the recovery alongside its own purported losses.

The lawsuit is clear that these were not accidental trades or minor market blips. Both Celsius and JST had taken positions on BitMEX that, according to the filing, would profit only if Bitcoin’s price held steady or moved upward. When the global financial system convulsed in March 2020 and Bitcoin collapsed, those positions were caught on the wrong side of a leveraged downturn. What followed, the complaint alleges, was not simply a routine margin call. Both accounts were liquidated at a devastating scale, and the proceeds from those forced liquidations were channeled into an insurance fund that BitMEX itself controlled.

An Alleged Design to Defraud

At the heart of the lawsuit is a dangerously specific accusation: BitMEX deliberately engineered its platform so that it could benefit from its customers’ distress. According to the filing, BitMEX was not a neutral market operator merely executing a standard liquidation. It controlled both the system that decided when customers would be liquidated and the insurance fund that grew from those liquidations. That dual role, the complaint says, created a direct financial incentive for the platform to allow highly leveraged customers to be crushed when volatility spiked.

The lawsuit leaves little room for polite interpretation. “BitMEX intentionally designed its platform and liquidation procedures to cause liquidations of collateral and defraud its own customers,” the filing states. That single line captures the core of the Celsius estate’s legal theory: this was not an unfortunate market event, but rather a pattern of conduct baked into the exchange’s infrastructure. The complaint goes on to argue that BitMEX’s design choices pushed collateral from users into exchange-controlled funds at exactly the moment when the market was least able to absorb the damage, turning a historic crash into a massive transfer of wealth from bettors to BitMEX-linked entities.

A Corporate Maze Stretching Across the Globe

One of the most notable features of the case is the number of defendants and the scope of their corporate footprint. In addition to BitMEX itself, the lawsuit names HDR Global Trading, ABS Global Trading, Shine Effort, 100x Holdings and HDR Global Services. These entities, according to the complaint, are connected to BitMEX’s ownership and operational structure and are incorporated or located in several jurisdictions, including Bermuda, the Cayman Islands, England, Hong Kong, the Seychelles and the United States. This global network of shell companies and corporate entities could make the lawsuit particularly complex, since the court will be asked to determine the true entity that bore responsibility for the liquidation decisions.

The Southern District of New York has long been a center for high-stakes financial litigation, and this case is no exception. The matter fits neatly into that court’s docket, which has become increasingly important for cryptocurrency cases involving exchanges, lenders and digital asset custodians. The involvement of the Blockchain Recovery Investment Consortium, which is charged with pursuing litigation in the Celsius bankruptcy, adds legal weight to the case. Rather than having Celsius itself, a bankrupt and internally distressed lender, carry the claim, the lawsuit is being pursued by an independent administrator focused on recovering value for harmed creditors.

A Long Reckoning With Crypto’s Legal Wounds

The lawsuit against BitMEX also needs to be understood in a broader context. Celsius was once one of the most prominent crypto lenders in the world, offering user-friendly yields on bitcoin and other digital assets. But its collapse in 2022 became one of the defining financial disasters of the modern crypto era. The company filed for bankruptcy amid a rapidly deteriorating market and allegations of mismanagement, leaving users unable to withdraw funds and creditors forced to fight over whatever assets remained. In the aftermath, the bankruptcy estate has turned to litigation as a primary tool for making creditors whole, and this complaint against BitMEX is one of the more ambitious moves yet.

BitMEX, too, is no stranger to legal trouble. The exchange has long been a major player in crypto derivatives, especially in the market for perpetual futures, but its regulatory history is complicated. In 2020, U.S. regulators cracked down on BitMEX, charging the exchange with operating an unregistered derivatives platform and failing to maintain required anti-money laundering controls. That case eventually ended in a major financial settlement, but the legal and reputational damage to the exchange has lingered. The new lawsuit now places BitMEX’s internal mechanisms under a spotlight once again, shifting the focus from compliance failures to the very structure of the platform itself.

The March 2020 crash remains a dark memory for many crypto traders. During that turbulent week, nearly the entire crypto ecosystem convulsed as Bitcoin fell sharply and other digital assets followed. The crash triggered soaring volumes of liquidations across dozens of exchanges, wiping out leveraged traders and setting off a cascade of forced sells that fed into the downward spiral. In that sense, BitMEX was far from the only platform affected. But the Celsius estate argues that BitMEX’s particular behavior during those days crossed a legal line, and that the exchange’s operating model was designed to benefit from the pain of its users.

A Watershed Test for Exchange Accountability

The broader meaning of this lawsuit extends well beyond the Celsius bankruptcy or the particular facts of a 2020 market crash. It raises fundamental questions about how crypto exchanges design and operate their liquidation frameworks, who they are really serving when they handle stressed positions, and whether they should be allowed to profit from forced market exits. If Celsius’s legal arguments succeed, it could open the door for other bankruptcy estates, investment funds and everyday users to pursue similar claims against exchanges that use opaque liquidation systems during market turmoil.

The stakes are enormous. The 6,360 Bitcoin at issue in this lawsuit is more than just a sum of money. It represents the difference between a handful of institutions and individuals escaping the March 2020 crash significantly poorer and the ability of the Celsius estate to return value to the creditors who lost access to their funds when the lender collapsed. A successful claim could force BitMEX to replenish a significant amount of the value that was wiped out during the worst days of the pandemic-driven market selloff.

For now, the case is just beginning. Neither BitMEX nor the other named defendants have responded publicly in detail, and there is a long road ahead involving discovery, motion practice and legal arguments over jurisdiction, contractual terms and the meaning of platform rules in conditions of extreme market volatility. But the filings carry a simple narrative: when the market collapsed, BitMEX had the technical and financial infrastructure in place to ensure that it would get paid, even as its customers were left with nothing. Whether that claim holds up in court could have lasting implications for the crypto industry’s most fragile fault line — the one between exchange operators, their users and the extreme volatility that has always defined the asset class.