BitMEX CTFC investigation may cause $85 million loss to exchange

Research firm Token Analyst reveals in a tweet that the cryptocurrency exchange has witnessed withdrawals worth eighty-five million dollars ($85 million) after a BitMex CTFC investigation.

Investigations can cripple a business to a large extent. The launch of a formal BitMEX CTFC investigation headed by the Commodity Futures Trading Commission (CFTC), was announced earlier this week,

Token Analyst, a technology company offering radical insights on cryptocurrency assets, recently tweeted that the BitMEX consumers may have grown wary of CTFC’s probe into BitMEX, for supposedly carrying out trading with US consumers without a license, which has led them to withdraw hefty sums of tokens to external wallets.

🚨 24H BTC exchange on-chain flows:#binance: $58M in | $54M out#bitstamp: $52M in | $50M out#bittrex: $4M in | $5M out#poloniex: $6M in | $4M out#bitmex: $12M in | $85M out

See more at https://t.co/6AFFM1D63p

— TokenAnalyst (@thetokenanalyst) July 20, 2019

A dismal performance by BitMEX exchange 

The Tweet further revealed that the withdrawal amount has been one of the highest when compared to other competing rivals like Binance, Poloniex, and Bittrex. 

While its peers managed to balance it out with proportionate amounts of deposits, BitMEX, unfortunately, acquired the lowest figures in deposits. The exchange received only twelve million in deposits following the CTFC news outbreak.

BitMEX came under CTFC’s radar for months for conducting business with US customers without a permit. Given Bitcoin’s status as a commodity, CTFC insisted on establishing complete jurisdiction over the digital currency.

Since its inception in 2014, BitMEX cryptocurrency exchange became instantly popular owing to its distinctive referral systems that reward users for bringing in more traders to the platform. 

However, the recent crackdown on the company’s services in the US region, coupled with public condemnation by the renowned economist Nouriel Roubini for allegedly facilitating money laundering and bypassing audits has pulled the company in a bad light.

In January this year, Arthur Hayes, CEO of BitMEX, responded to the allegations by alluding to the possibility of engaging in business with the US customers without knowledge.

He remarked that the company might not have known the true identity of the customers as many sign-in to the platforms through Virtual Private Networks (VPN). This may have led the employees to believe that customers are trading from licensed countries.

Although the terms of services mentioned on the company website restrict the US nationals from availing its services, the exchange has ceased several accounts in the past over the inkling of trading from the US.

With commendable progress made on the investigation so far, it remains to be seen whether there shall be more VPN permissive exchange platforms coming under critical scrutiny by CTFC in the time to come.   

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