The BitMEX Exodus: The Decrease of $73M in Trading Volume a Result of CFTC Investigation?

A storm’s been brewing over the last month, with Bitmex under investigation for numerous accounts of suspected illegal activity. Last week, temperatures heightened with a public blast by the exchange’s arch-nemesis, Nouriel Roubini, claiming that Bitmex is ‘siphoning customers’ savings into a “liquidation fund” via inside trading and betting against them.

Since the investigation has been highlighted by the media, Bitmex has seen a decrease of $73 million in trading volume, leading to public speculation on social media that panicked traders may be leaving the margin trading platform consequently.

This suspicion has further been confirmed by the platform’s direct competitor margin trading platform, PrimeXBT, with one of the company’s representatives sharing that it has seen an influx of new registrations since the investigation commenced, increasing exponentially again within the last week.

This shift in userbase should come as no surprise, as Bitmex has been compared to a casino that looks at your cards and deliberately places their bet to beat your hand. On a regular basis, traders are taking to social media to share their frustration on how they are getting ‘rekt’ by the consequent of Bitmex’s instability.

For instance, Francis McDaniel (@Crypto_Breathe) tweeted:

“Whats up guys, Im switching completely from #Bitmex to #Primexbt now. Overloads, trading against its clients, constant connectivity issues and now US authorities investigation. Enough is enough. Who’s with me?!”

The platform’s connectivity issues and server overloads are also under question, due to the fact that they tend to happen at the most critical times causing clients’ positions to be liquidated. Some are claiming these issues are fake and triggered, with notable public figures sharing their opinion that it seems absurd that a multi-trillion-dollar exchange can’t get its act together and manage the increased trading volume.

While the heat is on Bitmex and traders are exploring alternative margin trading options until the jury is out, other crypto exchanges also offering margin trading likely stand to benefit. Most prominently, Binance - which recently added 3x margin trading, Kraken - offering 5x leverage, and PrimeXBT - the only other 100x leverage trading platform.

Read more in the Bloomberg report which broke the news of the ongoing investigation last week, Friday 19th-July, and the earliest exploration of Bitmex’s foul play by crypto writer, Hasu, in an article published last year in October 2018.

The CFTC’s confirmation of the claims made against Bitmex remains to be seen, however, the number of disgruntled and ‘rekt’ Bitmex traders that have come forth and already jumped ship warrants cause for concern alone.