Celsius Estate Sues BitMEX Over $490M Bitcoin Liquidation Before Exchange Shutdown

The bankruptcy estate of defunct crypto lender Celsius has filed a lawsuit against BitMEX, accusing the derivatives exchange of wrongfully liquidating 6,360 BTC—valued at approximately $490 million at the time—during the March 2020 market crash triggered by the COVID-19 pandemic. The complaint alleges that BitMEX seized the collateral at a fraction of its fair market value, exploiting distressed market conditions to profit from Celsius's leveraged positions. According to the filing, the liquidation wiped out a significant portion of Celsius's Bitcoin holdings and contributed to the firm's eventual insolvency.

The lawsuit comes at a pivotal moment for BitMEX, which announced plans to wind down its operations and transition its user base to the broader crypto derivatives ecosystem. The exchange has faced years of regulatory scrutiny, including a 2022 settlement with the U.S. Commodity Futures Trading Commission and the Department of Justice over Anti-Money Laundering violations, which resulted in a $100 million fine. The Celsius estate's legal action adds another layer of complexity to BitMEX's exit strategy and could complicate the redistribution of remaining assets to its own creditors.

Celsius, once one of the largest crypto lending platforms, filed for Chapter 11 bankruptcy in July 2022 after freezing customer withdrawals amid a wave of industry-wide contagion. The firm had amassed billions in assets under management at its peak, earning yields for depositors through aggressive lending strategies. Its collapse, alongside the failures of Three Arrows Capital and Voyager Digital, became a defining episode in the broader crypto downturn and drew intense scrutiny from regulators worldwide.

Legal experts say the case could set a precedent for how exchanges handle forced liquidations during periods of extreme volatility, particularly when internal risk engines fail to account for thin order books and cascading sell pressure. The outcome may influence future custody agreements and margin requirements across centralized trading venues. As both parties prepare for litigation, the dispute underscores the legal risks still surfacing from the 2020 and 2022 crypto market cycles, years after the dust appeared to settle.