BitMEX Shuts Down Leaving $270M Insurance Fund in Question

Crypto exchange BitMEX is winding down operations with roughly $270 million sitting in its house insurance fund, leaving traders worried that the owners will keep the cash. The fund currently holds about $239 million in Bitcoin and $31 million in USDT, built mostly from customer trading losses over the years. BitMEX has not disclosed where the money will go after the exchange closes on September 23, and representatives declined to comment on their plans for the remaining funds.

Social media is full of speculation that the exchange owners will pocket the money. The situation quickly escalated when plaintiffs filed a proposed class action lawsuit on the same day as the closure announcement. The lawsuit claims that the insurance fund grew rapidly during market stress when positions were forcibly closed, rather than shrinking to cover losses. Plaintiffs are asking for the return of their assets, citing past liquidations and pointing out that the fund was heavily drained during a mysterious rebalancing event.

The exchange token has crashed 96 percent this year following the closure news, adding more pain to the community. Traders will be watching closely to see if courts take up the new claims before the final shutdown date arrives in September.