Crypto trading is very risky and underlying prices are highly volatile. While this type of movement is unexpected and undesirable, the price on BitMEX accurately reflected the price on the underlying spot market throughout this crash and recovery. Due to BitMEX systems functioning as expected and according to specification, there will be no refunds of losses sustained due to liquidations.
Index stability is important to us. BitMEX will continue to evaluate if adjustments are needed to existing index compositions. The liquidity of crypto spot markets is constantly in flux and can change significantly over the lifetime of a quarterly contract. Poloniex hosts one of the most liquid ETHBTC markets (note, not ETHUSD) in the world, but this unexpected action has triggered an internal re-review.
The Index Price is used as the central calculation for marking BitMEX futures. This Mark Price is used for margin calculations, which trigger liquidations. More information is available here.