World’s top cryptocurrency derivatives exchange BitMEX has seen a flurry of withdrawal activity following the filing of a legal case by the US Commodities and Futures Trading Commission (CFTC) in a New York district court. The exchange has bled more than 45K BTC in just two days and things might not be looking for the exchange as it gears up for a lengthy court battler against a powerful federal agency. As a result of this, the cryptocurrency market is also reacting and the top cryptocurrencies shed some value in the immediate aftermath.
According to the court filing from the CFTC in the New York court, BitMEX is being blamed for overly leveraged trades with more than 100x leverage possible which is mostly unheard of, even in the volatile derivatives market in addition to other serious allegations like non-compliance with Anti Money Laundering (AML) schemes as well as its unregistered futures trading activity. Owing to the severity of the case, it seems like the CFTC means business this time and doesn’t want to let BitMEX go off the hook that easily. The court battle will therefore be interesting and time consuming because New York is known as the most anti-crypto district in the country and the exchange is most likely look towards federal courts for a more relaxed sentence.
However, BitMEX’s loss seems to be other exchanges’ gain as Gemini, Binance, OKEx, Huobi and other cryptocurrency exchanges saw net positive inflows that came from BitMEX’s wallets. According to analytics firm Crystal Blockchain, around 45,000 BTC was overall withdrawn in a matter of two days and mostly deposited in cryptocurrency exchanges operating in the US.
The BitMEX exchange had been in the radar of federal agencies for a while now. Because of new laws and court cases, they cannot go directly after cryptocurrency exchanges so BitMEX was identified as a particular exchange that dealt in derivatives rather than cryptocurrencies themselves. Now according to American law, only CFTC can regulate derivatives like futures within the US territory and thus, BitMEX may be forced to pay a fine or asked to operate under the watchful eye of the commodities regulator.
However, BitMEX may have a strong legal team in the proceedings. The exchange saw almost $11 billion worth of activity in recent times as futures and swap trading increased. The exchange will need to fight this battle diligently or risk losing the biggest crypto market in the world and others might follow suit.
Image source: pixabay.com
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