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  • Mass Withdrawal of Bitcoins From BitMEX Continues Following Indictment

    Bitcoins being withdrawn from BitmEX

    After being indicted with a series of charges including running an unregistered trading exchange, a mass withdrawal of Bitcoins is still underway at BitMEX.

    Executives of the world’s fifth-largest Bitcoin derivatives exchange were charged on Thursday with conspiring to violate the Bank Secrecy Act by failing to implement an adequate anti-money laundering program.

    Since the charges were made public it’s estimated that 40,000 Bitcoins worth an estimated $420 million has been withdrawn by BitMEX traders.

    This has followed the immediate withdrawal of 23,200 BTC in the first hour following the news – believed to be the biggest hourly outflow of Bitcoin from BitMEX.

    It’s believed there is another 130,000 BTC still held on BitMEX, but since news of the indictment broke open positions on Bitcoin futures contracts have taken a 20% hit on BitMEX.

    Bitcoin Price Hardly Affected By The Negative News

    The news caused a drop in price as Bitcoin went from monthly highs of $10,920 to $10,492.

    But this has been seen as a very bullish signal from Bitcoiners.

    Past events like this, and the recent Kucoin hack would have crashed the market by at least 20%.

    However, neither BTC futures or options displayed signs of discomfort to the negative news, as other Bitcoin derivatives platforms have shown signs that traders remain bullish.

    What Next For BitMEX?

    Founders Author Hayes, Benjamin Delo, Samuel Reed, and executive Gregory Dwyer were indicted on charges of violating the Bank Secrecy Act by failing to implement adequate anti-money laundering provisions.

    Manhattan federal prosecutors then charged the BitMEX executives with conspiring to violate the Bank Secrecy Act by failing to implement an adequate anti-money laundering program.

    The Commodity Futures Trading Commission (CFTC) charged in a civil complaint that the charged executives had operated BitMEX as an unregistered trading platform as well as failing to implement anti-money laundering procedures.

    BitMEX has denied the charges and vowed to vigorously defend against the allegations in court. But what next for BitMEX?

    BitMEX indicted

    It’s ironic that in the same week as news broke about JPMorgan, HSBC, Standard Chartered, Deutsche Bank and Bank of New York Mellon laundering over $2 trillion.

    The case is on-going, but if past indictments are anything to go by, which we know nobody has ever been charged or even arrested, the banks will receive a fine for helping the Taliban, Mexican Drug Cartels and other corrupt regimes launders trillions of dollars.

    As for BitMEX, it used to be the biggest player in the BTC derivatives game, and has been questioned in the past about skirting around regulations, so it’s not shock that regulators are coming for it.

    Chairman of the CFTC Heath P. Tarbert said,

    ‘Digital assets hold great promise for our derivatives markets and for our economy. For the United States to be a global leader in this space, it is imperative that we root out illegal activity like that alleged in this case. New and innovative financial products can flourish only if there is market integrity. We can’t allow bad actors that break the law to gain an advantage over exchanges that are doing the right thing by complying with our rules.’

    BitMEX will at the very least have to start complying further with the regulators, but it wouldn’t be a shock to see the CFTC disband the derivatives exchange altogether.

    It’s clear they see huge potential for Bitcoin derivatives, and want to make sure they and their friends are leaders in the space. Eradicating the competition is the quickest way to achieve that.

    Author: Tommy Limpitlaw


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