By Bentley Kapoor (India)
BitMEX, the top crypto derivatives exchange platform, is currently facing a hoard of criminal charges that have been brought against it by the United States government. Even though all accusations of wrongdoings have been denied by the Seychelles-based exchange, it appears that the scandal is causing BitMEX to bleed customers. Glassnode revealed some data, which showed that approximately 45,000 BTC tokens had been withdrawn by the traders from the exchange since its legal battle with the U.S. government took off. These coins have a value of around $420 million. Previously, the blockchain data tracking company had pointed out BitMEX had lost nearly 23,200 BTC tokens in one hour.
This is the equivalent of $243 million and was the most massive outflow recorded by the exchange hourly in its history. Glassnode also added that initially, BitMEX’s wallets had contained a total of 170,000 BTC tokens, which have a value of $1.8 billion. Hence, there is no denying that such a massive outflow is bound to hurt the exchange. Moreover, it is not just the outflows that are a problem for the exchange; BitMEX also saw the open positions on its Bitcoin futures contract declined by nearly 20%. This data was provided by Skew, a market analytics firm.
Similar to the drop in assets, it is highly likely that the open positions were hit because of the government indicted case. The Glassnode report was corroborated by data from the Crystal Blockchain, which explained that net outflows from the exchange were rising. It was also posited by the data analytics firm that BitMEX’s misfortunes were working in favor of rival exchanges, such as Gemini, OKEx, Binance, and Huobi. They were the biggest beneficiaries of the investor’s flight from BitMEX, as almost 20,000 BTC tokens from the exchange were transferred to these four exchanges.
This decline in metrics is due to a significant charge made against BitMEX earlier this month. The Commodity Futures Trading Commission (CFTC) in the United States filed a complaint on October 1st, against the Seychelles-based exchange. The accusations made against it included operating an unregistered platform and violations of the Anti-Money laundering (AML) rules. Three individuals and five entities were named as owners of the exchange in the filing that was made in New York’s Southern District. These include BitMEX’s CEO Arthur Hayes, Ben Delo and Samuel Reed. The entities that were named include HDR Global Trading Limited, ABS Global Trading Limited, 100x Holding Limited, Shine Effort Inc. and HDR Global Services (Bermuda) Limited.
According to the Commission, BitMEX has been offering leveraged services to traders illegally in the country. The exchange was founded in 2014 and since then, it has offered leveraged trading of about $1 trillion. BitMEX was also charged of violating basic compliance procedures, including not registering with authorities and lack of KYC and AML procedures on its platform. The agency said that they were seeking permanent trading bans, civil monetary penalties, injunctions and disgorgements against future violations. Apart from these charges, the three individuals mentioned above were also indicted by the Court for violation of the Bank Secrecy Act.
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