Crypto-Mastermind summary:

  • BitMEX, the fifth largest crypto derivatives exchange, has been accused of working illegally and violating the law by the Commodity Futures Trading Commission (CFTC).

  • Traders withdrew about 40,000 BTC from the exchange’s wallets on Friday-afternoon, 23,200 BTC in a single hour.

  • The crypto-exchange rejected the accusations in a blogpost and promised to defend itself in court against the charges.

The American Commodity Futures Trading Commission (CFTC) has filed a cease-and-desist order with the crypto exchange BitMEX, which specializes in trading crypto-derivatives. BitMEX is accused of operating its service illegally and also of violating anti-money laundering regulations. Many Bitcoin traders withdrew their funds from the exchange on Friday afternoon. The company continued its regular operations for now and has vowed to fight the accusations.

Impact of the indictment on the crypto-market

The exit of the Bitcoin dealers followed a series of indictments brought against the company by government attorneys in New York.

According to analyst firm Glassnode, there were approximately 170,000 Bitcoin or $1.8 billion in BitMEX-wallets. Figures from Friday-afternoon show, that traders have withdrawn a total of nearly 40,000 BTC in response to Thursday’s news. At the current exchange rate, this is about $420 million.

Glassnode even stated that about 23,200 BTC, or $243 million, were withdrawn from BitMEX in a single hour, which the information company described as the largest hourly withdrawal it has ever seen from the exchange. In addition, open positions in Bitcoin futures contracts on BitMEX have suffered a 20% setback since the indictment became public, according to Skew.

Recently, the crypto-market has indeed suffered severe setbacks due to decisions by parliaments, authorities and federal governments. But according to crypto-market researcher Vijay Boyapati, Bitcoin has steadily recovered.

The accusations against BitMEX may have negative effects in the short term. But according to Boyapati, it is unlikely that the market will be affected in the long run:

„Bitcoin has always reacted negatively to serious measures taken by governments. Historically, however, this has always been a good buying opportunity. The accusations against BitMEX are no exception.“


The accusations against BitMEX

CFTC has filed the order with the District Court of Southern New York City, as announced on Thursday. The court named 5 companies and 3 individuals who are to work as drivers of the system.

Responsible are 3 individuals: Arthur Hayes, who is openly referred to be the CEO of BitMEX, Ben Delo and Samuel Reed. The CFTC accuses them of jointly operating the trading system for crypto-derivatives via a „non-transparent network of companies“. Reed was arrested in Massachusetts.

The companies involved, which are to be used to conceal BitMEX, are HDR Global Trading Ltd, HDR Global Services Ltd, 100x Holding Ltd, ABS Global Trading Ltd, and Shine Effort Inc Ltd.

BitMEX denied the accusations in a blogpost on Thursday and promised to defend itself vigorously against the accusations in court.

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