[Digital Today reporter Chi-gyu Hwang] Two former customers of cryptocurrency exchange BitMEX filed a class action lawsuit against BitMEX and three co-founders.

BitMEX announced plans to close in September.

According to a recent report by The Block, BKX Services and David Namdar (데이비드 남다르) alleged BitMEX operated a private “insider trading desk” and made trades in the opposite direction using customer account information. In a complaint filed in the U.S. District Court for the Southern District of New York, they also alleged BitMEX deliberately halted servers during volatile periods to block access and induce forced liquidations.

The lawsuit names Arthur Hayes, Samuel Reed, Benjamin Delo and former head of business development Gregory Dwyer (그레고리 드와이어) as defendants. It also includes HDR Global Trading and four affiliates.

According to the complaint, BitMEX liquidated positions when unrealised losses reached half of the collateral. The plaintiffs allege it did so even when remaining collateral exceeded the losses. They allege BitMEX set liquidation thresholds higher than necessary and absorbed the remaining collateral into an insurance fund.

The plaintiffs allege Dwyer ran the desk from a Manhattan office throughout 2018. They allege software was used to determine which price moves would liquidate the most customers and to induce those moves.

The plaintiffs allege BitMEX told customers that hidden orders and liquidation points were not disclosed, but that the desk could see them all.