BitMEX Is Losing Customers Left and Right Following Legal Troubles

BitMEX Is Losing Customers Left and Right Following Legal Troubles

October 8, 2020

It looks like trouble surrounding the once popular cryptocurrency exchange BitMEX has reached an entirely new level.

The Trouble Surrounding BitMEX Has Gotten Larger

The world was shocked last week when it was announced that the founders and executives behind the Seychelles-based cryptocurrency trading platform were being indicted following charges of money laundering and other financial fraud. As it turns out, this really rung a negative bell with customers (surprise, surprise) and many have sought to remove their funds from the platform as soon as possible. Thus far, as many as 50,000 individual cryptocurrency tokens have been taken out of BitMEX over just the last few days.

To add insult to injury, blockchain analysis firm Chainalysis has emerged to label BitMEX a “high-risk” cryptocurrency exchange, warning players that the platform is not one to be messed around with at the time of writing. Chainalysis is suggesting that crypto traders take their money elsewhere and let the exchange work out its problems with legal authorities before returning to store their money in its respective accounts.

The company explained in a statement:

Any transfers from October 1 and later should be considered high risk.

Chainalysis further stated that any future transactions to occur beyond this date will alert its staff members, thereby ensuring that the company will examine all details of the transactions and knock privacy aside for many of the exchange’s customers.

BitMEX first rose to fruition – like most cryptocurrency exchanges – about three years ago during 2017, when the price of bitcoin was exploding to unprecedented heights. During that time, the price of one bitcoin unit reached a whopping $20,000, though things took a nasty turn just months later. By the end of 2018, the currency had fallen into the mid-$3,000 range, bringing about several questions regarding the status of the currency and what had potentially influenced the phony run.

Glass Node has compiled data that shows a near 30 percent drop in the amount of bitcoin being stored on the exchange. The company put out the following message:

On Friday 2 October, the day after the announcement, BitMEX saw its largest ever day of net outflows as investors rushed to remove their funds from the now risky platform.

Customers Just Keep Walking Away

From there, open interest in the bitcoin derivates that are currently being offered by BitMEX also experienced a sudden fall, with data from Arcane Research suggesting a 16 percent drop. Anatoliv Knyazev – co founder of the investment firm Exante – explained in a recent statement:

The BitMEX case has shown that crypto businesses must work according to the rules of the existing financial system as far as the US is concerned. The US authorities have made it clear that the crypto sector, including its ‘gray’ alleys, is now under control and will have to play by the rules.

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