Arthur Hayes, BitMEX co-founders face fraud claims over alleged 'Insider Trading Desk' as exchange winds down

Two former BitMEX customers filed a proposed class action against the crypto exchange and its three co-founders on the same day the platform announced it would shut down permanently in September 2026.

BKX Services Inc. and David Namdar allege that BitMEX operated an undisclosed "Insider Trading Desk" that traded against its own customers using private account data.

The pair also claim that the exchange deliberately froze its servers during periods of high volatility to lock users out while forcing liquidations, according to the complaint filed in the U.S. District Court for the Southern District of New York.

Thursday’s suit names Arthur Hayes, Samuel Reed, Benjamin Delo and former head of business development Gregory Dwyer as defendants, alongside HDR Global Trading Limited and four affiliated entities.

What the plaintiffs say happened

The complaint alleges BitMEX liquidated positions when unrealized losses reached roughly half of posted collateral, despite remaining collateral still exceeding the losses.

Plaintiffs claimed the exchange set that trigger higher than needed to protect itself, seizing remaining collateral and routing it into the platform's Insurance Fund.

Dwyer ran the Insider Trading Desk from BitMEX's Manhattan office throughout 2018, the plaintiffs claim. They allege the desk used software to identify which price movements would liquidate the most customers, then placed trades to induce those moves.

BitMEX told users that hidden orders were concealed from other traders and that liquidation points stayed private, according to the filing. The complaint alleges the Insider Trading Desk saw all of it, and that BitMEX created burner accounts paired with generic email addresses to disguise its own trading.

The plaintiffs also allege the exchange manipulated prices on third-party reference exchanges to force liquidations on its own platform.

The March 2020 lockout

The complaint points to March 13, 2020, when customers were locked out of the platform for roughly 25 minutes and about $800 million in leveraged positions were liquidated.

BitMEX attributed the outage to a hardware issue with its cloud provider that day, then said four days later that two distributed denial-of-service attacks were the root cause, according to the filing. The plaintiffs allege the freezes were deliberate and that customers were never compensated.

The claimed losses

BKX Services says it lost at least roughly 305.8 BTC across 13 liquidations between July and August 2018. Namdar, who traded under an alias, claims about 316.9 BTC in losses across 14 named liquidations plus at least 69 smaller ones, spanning August 2019 to May 2020.

The two counts are replevin and fraud. Replevin seeks return of specific property rather than its cash value, meaning the plaintiffs want the bitcoin itself back. The proposed class covers anyone who bought bitcoin swap products on BitMEX in domestic U.S. transactions from July 23, 2018 onward. Plaintiffs estimate tens of thousands of members and put aggregate claims above $5 million.

An earlier case ended in dismissal

A substantially similar suit — Messieh v. HDR Global Trading — was filed in the same court in April 2020 under the Commodity Exchange Act. The parties stipulated to voluntary dismissal, and the court entered that order on June 30, 2025, without prejudice.

The plaintiffs argue the statute of limitations was tolled for the full stretch of that case, from April 2020 through June 2025.

BitMEX pleaded guilty in 2024 to violating the Bank Secrecy Act and was hit with an additional $100 million fine in January 2025, reportedly. President Donald Trump pardoned the co-founders in March 2025.

BitMEX said Wednesday it would cease operations on Sept. 23 at after 11 years, citing a strategic review by HDR's board without giving further explanation.

The complaint, filed before BitMEX publicly announced its planned shutdown, alleges that the exchange "continues to operate the platform without any repercussions."