The bitcoin game is becoming way too big
Topic: United States CFTC Charges BitMEX Owners! (Read 601 times)
Now, that's some stimulating news. Exchanges and third-parties have always been the biggest single-point-of-failure of the vast crypto environment. I don't want to name which exchanges I believe could soon be in trouble, but by doing some research it can easily be understood which are the next in line.
The bitcoin game is becoming way too big
The bitcoin game is becoming way too big
News update.
New lawsuits. Where is Arthur Hayes?
It appears that some speculations made on cryptospace exchanges as part of a global money laundering ring might be true.
I speculate another series of investigations and takedowns on Chinese and Eastern European exchanges. This time coordinated between different government task forces.
Beleaguered crypto derivatives exchange BitMEX and its founders are facing yet another lawsuit that alleges racketeering, money laundering, and market manipulation.
Păun Gabriel-Razvan, a resident of Bucuresti, Romania, filed the lawsuit in the Northern District Court of California on Friday. He alleges that HDR Global Trading Limited, the operator of BitMEX, the exchange's founders Arthur Hayes, Ben Delo, and Samuel Reed and others, engaged in and facilitated racketeering activities, "earning Defendants billions of dollars in illicit profits."
The complaint comes one month after a similar lawsuit was filed against BitMEX and founders by plaintiff Dmitry Dolgov, a resident of Moscow, Russia. Both Dolgov and Gabriel-Razvan are represented by the same attorney — Pavel Pogodin of Consensus Law.
Source https://www.theblockcrypto.com/post/84842/bitmex-yet-another-lawsuit-alleging-market-manipulation
New lawsuits. Where is Arthur Hayes?
It appears that some speculations made on cryptospace exchanges as part of a global money laundering ring might be true.
I speculate another series of investigations and takedowns on Chinese and Eastern European exchanges. This time coordinated between different government task forces.
Beleaguered crypto derivatives exchange BitMEX and its founders are facing yet another lawsuit that alleges racketeering, money laundering, and market manipulation.
Păun Gabriel-Razvan, a resident of Bucuresti, Romania, filed the lawsuit in the Northern District Court of California on Friday. He alleges that HDR Global Trading Limited, the operator of BitMEX, the exchange's founders Arthur Hayes, Ben Delo, and Samuel Reed and others, engaged in and facilitated racketeering activities, "earning Defendants billions of dollars in illicit profits."
The complaint comes one month after a similar lawsuit was filed against BitMEX and founders by plaintiff Dmitry Dolgov, a resident of Moscow, Russia. Both Dolgov and Gabriel-Razvan are represented by the same attorney — Pavel Pogodin of Consensus Law.
Source https://www.theblockcrypto.com/post/84842/bitmex-yet-another-lawsuit-alleging-market-manipulation
@figmentofmyass. What would occur if the NYAG won their case against iFinex, Bitfinex, Tether and had legal right to freeze all their bank accounts then ordered them to stop the issuance and the use of Tether?
Would exchanges continue to take the risk?
Would exchanges continue to take the risk?
I disagree. I speculate that exchanges might be ordered immediately to stop accepting Tether deposits, withdrawals and trades by regulators.
wanna bet? i'm game.
when have you ever seen regulators across the globe make a unified order for crypto exchanges to de-list a cryptocurrency? even if that kind of insanity ever happened, it wouldn't happen fast enough to stop USDT holders from unwinding their exposure after a seizure. the panic buying would happen very fast IMO.
In any case, what are the news updates on Bitmex? The website is still working. I speculate a settlement.
me too. they're probably gonna pass all user data on to the feds as part of a settlement. that's always been their bargaining chip of last resort.
What if this is being hold as a controlled bomb against the inevitable bitcoin price rise?
It's difficult to say what will happen when USDT does finally implode. Obviously there is an awful lot of fake USDT being printed out of thin air, which has been used to pump the market at various times for the benefit of iFinex/Bitfinex/Tether. The Leibowitz v iFinex Inc. case spells it out pretty well: https://www.classaction.org/media/leibowitz-et-al-v-ifinex-inc-et-al.pdf. So when USDT collapses, all that artificial pumping will disappear and a lot of people will lose a lot of money, which could obviously lead to bitcoin's price falling. However, prior to the complete collapse of USDT, there will be millions of users trying to offload 16 billion USDT in to other assets, the majority of which will be bitcoin. It will be a volatile time, that's for sure, but just like every other hack or scam it won't kill or irreversibly damage bitcoin. I think it would be better for it to happen sooner rather than later.I disagree. I speculate that exchanges might be ordered immediately to stop accepting Tether deposits, withdrawals and trades by regulators.
Also, if everyone was given time to offload Tether to hold bitcoin before taken down, I reckon that everyone in the cryptospace might also be at risk because we hold cryptocoins without the liquidity that supports its markets.
In any case, what are the news updates on Bitmex? The website is still working. I speculate a settlement.
Interesting discussion and since we derailed it a bit but for a good reason below I share an article about a possible scenario regarding a possible Tether collapse
https://cryptonews.com/exclusives/imagine-regulators-shutting-tether-down-what-happens-to-bitc-8025.htm
https://cryptonews.com/exclusives/imagine-regulators-shutting-tether-down-what-happens-to-bitc-8025.htm
can you elaborate? why is it more compelling?
Because they actually examine real events. The specifically show that on days Tether is printed Bitcoin returns go up, even while controlling for all other variables (pages 28-9). They show that at hours when there are significant Tether/Bitcoin flows, bitcoin returns consistently flip from negative to positive (page 30).isn't that exactly what you would expect to happen?
when tether is created, it means dollars are being injected into the exchange system---to buy bitcoin or other cryptocurrencies. on days where coinbase or bitstamp credit large dollar inflows to depositing clients, would you not expect the price to go up too?
i don't see how that is proof of manipulation at all. all it suggests is that tether/bitfinex, due to their position as one of the biggest liquidity providers in the world, leads the market sometimes.
that would imply they issued unbacked assets, which is not what happened.
what the facts show is that one time, a bank seizure rendered bitfinex insolvent and tether then removed its 1:1 backing to fulfill bitfinex's liquidity needs. that's quite a far leap from this suggestion that tether is constantly printing money out of thin air!
But if they were rendered insolvent, and ended up in $800 million of debt, then why have they continued to print billions more USDT?what the facts show is that one time, a bank seizure rendered bitfinex insolvent and tether then removed its 1:1 backing to fulfill bitfinex's liquidity needs. that's quite a far leap from this suggestion that tether is constantly printing money out of thin air!
presumably because they had dollar inflows that back the newly minted USDT.
we've already gone over all this. bitfinex's debt replaced the missing cash reserves on their balance sheet, which was later replaced by the LEO token offering. then tether continued business as usual.
you may not like how they went about surviving the liquidity emergency, but nothing you're saying suggests that tether prints money out of thin air. not even once, let alone on a regular basis.
And why was their claim of being backed up 1-to-1 with USD quietly removed from their website?
because it was no longer true.
that still doesn't suggest they ever issued unbacked USDT. it just reinforces what we already know about their balance sheet.
can you elaborate? why is it more compelling?
Because they actually examine real events. The specifically show that on days Tether is printed Bitcoin returns go up, even while controlling for all other variables (pages 28-9). They show that at hours when there are significant Tether/Bitcoin flows, bitcoin returns consistently flip from negative to positive (page 30). They show that if you remove the hours with the top 10% of Tether outflow, bitcoin returns would be 80% lower than the were (page 32). And so forth. I find this more compelling than simply drawing up a VAR model with some arbitrarily chosen variables and basing your entire hypothesis on the outcome of this single model. But as I say, I'm not a statistician, so please correct me if I'm wrong.that would imply they issued unbacked assets, which is not what happened.
what the facts show is that one time, a bank seizure rendered bitfinex insolvent and tether then removed its 1:1 backing to fulfill bitfinex's liquidity needs. that's quite a far leap from this suggestion that tether is constantly printing money out of thin air!
But if they were rendered insolvent, and ended up in $800 million of debt, then why have they continued to print billions more USDT? And why was their claim of being backed up 1-to-1 with USD quietly removed from their website? what the facts show is that one time, a bank seizure rendered bitfinex insolvent and tether then removed its 1:1 backing to fulfill bitfinex's liquidity needs. that's quite a far leap from this suggestion that tether is constantly printing money out of thin air!
The exchange at the moment is reorganizing the leadership of the exchange while Arthur Hayes faces the wraught of the law after resignation. I feel SEC will have the knowledge of who will replace him as they reorganize the positions. I just hope it wont be a selfish decision. The news is now out, so users should be more conscoius
what specifically are you pointing to?
Yeah, the Griffin and Shams study - https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3195066. Now, I am not a statistician, but I would say that their analysis is far more than simply conjecture, and I certainly find it more compelling than the simple VAR analysis by Wei to which you linked.can you elaborate? why is it more compelling?
i read through a lot of the claims in that filing. it's filled with conjecture and assumptions about how manipulation would have, or could have, worked.
interestingly, the CFTC began probing bitfinex and tether for market manipulation in 2017 and nothing has ever come of it. in contrast, the CFTC began probing bitmex in early 2019 and criminal charges have already been filed. completely different cases i'm sure, but i find the disparity interesting to say the least.
after the crypto capital bank seizure and subsequent transfer from tether to bitfinex, USDT was no longer backed 1:1. i don't see any indication that USDT was printed out of thin air
I don't see how you can come to any other conclusion. USDT is not backed up 1-to-1 with either USD or indeed any assets, and yet Tether have continued to mint billions more USDT. If these new tokens aren't backed up by any assets, then pretty much by definition they are being created out of nothing.that would imply they issued unbacked assets, which is not what happened.
what the facts show is that one time, a bank seizure rendered bitfinex insolvent and tether then removed its 1:1 backing to fulfill bitfinex's liquidity needs. that's quite a far leap from this suggestion that tether is constantly printing money out of thin air!
what specifically are you pointing to?
Yeah, the Griffin and Shams study - https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3195066. Now, I am not a statistician, but I would say that their analysis is far more than simply conjecture, and I certainly find it more compelling than the simple VAR analysis by Wei to which you linked.after the crypto capital bank seizure and subsequent transfer from tether to bitfinex, USDT was no longer backed 1:1. i don't see any indication that USDT was printed out of thin air
I don't see how you can come to any other conclusion. USDT is not backed up 1-to-1 with either USD or indeed any assets, and yet Tether have continued to mint billions more USDT. If these new tokens aren't backed up by any assets, then pretty much by definition they are being created out of nothing. It's difficult to say what will happen when USDT does finally implode. Obviously there is an awful lot of fake USDT being printed out of thin air, which has been used to pump the market at various times for the benefit of iFinex/Bitfinex/Tether. The Leibowitz v iFinex Inc. case spells it out pretty well: https://www.classaction.org/media/leibowitz-et-al-v-ifinex-inc-et-al.pdf.
what specifically are you pointing to?
that filing spells out what we already know---after the crypto capital bank seizure and subsequent transfer from tether to bitfinex, USDT was no longer backed 1:1. i don't see any indication that USDT was printed out of thin air, or that there was an ongoing conspiracy for years to manipulate prices as the lawsuit alleges. the theories referenced (eg the griffin and sham study) and facts presented appear to be mostly conjecture supporting their theory AFAICT, and all are contradicted by other academic studies like this: https://www.coindesk.com/tethers-impact-on-bitcoin-price-not-statistically-significant-study-finds
the plaintiffs occur to me as ambulance chaser types. they were heavily invested in shitcoins during a bubble and are now looking for someone to blame for all their losses after the bubble popped. the idea that tether caused the 2017 bubble as they claim is absurd to me.
What if this is being hold as a controlled bomb against the inevitable bitcoin price rise?
It's difficult to say what will happen when USDT does finally implode. Obviously there is an awful lot of fake USDT being printed out of thin air, which has been used to pump the market at various times for the benefit of iFinex/Bitfinex/Tether. The Leibowitz v iFinex Inc. case spells it out pretty well: https://www.classaction.org/media/leibowitz-et-al-v-ifinex-inc-et-al.pdf. So when USDT collapses, all that artificial pumping will disappear and a lot of people will lose a lot of money, which could obviously lead to bitcoin's price falling. However, prior to the complete collapse of USDT, there will be millions of users trying to offload 16 billion USDT in to other assets, the majority of which will be bitcoin. It will be a volatile time, that's for sure, but just like every other hack or scam it won't kill or irreversibly damage bitcoin. I think it would be better for it to happen sooner rather than later.Looking at the mempool today, there was the usual dump of transactions just after 13:00 UTC, so looks like BitMex withdrawals are still functioning normally for the time being.
what if Tether's bank accounts are based on a huge fractional reserve.
They are. We already know that. They were audited and found to not have enough USD cash to back up USDT 1-to-1 as claimed, to not have enough reserves of any kind to back up USDT 1-to-1, and the reserves they did have included loan repayments they were making to themselves to repay the loan they gave to themselves when they printed 800 billion USDT out of thin air to stop themselves from going bankrupt. These audits were all done over a year ago when the market cap of Tether was only around $3 billion. It is now $16 billion. Tether is an outright scam. The sooner it and Bitfinex collapse, the healthier for the whole of crypto. Any idea where Reed was arrested?
From this story, he was released on bail recently: https://coinfomania.com/bitmex-cto-samuel-reed-released-5m-bond/The court documents are from Massachusetts, so it may have been there? It also says his passport has been seized, so it is reasonable to assume if it wasn't in Massachusetts then it was within the US. The articles also says (but with no source) that the three founders have transferred their positions to other staff members, so I assume that also means the ability to process withdrawals, which is a little reassuring at least.
what if Tether's bank accounts are based on a huge fractional reserve.
They are. We already know that. They were audited and found to not have enough USD cash to back up USDT 1-to-1 as claimed, to not have enough reserves of any kind to back up USDT 1-to-1, and the reserves they did have included loan repayments they were making to themselves to repay the loan they gave to themselves when they printed 800 billion USDT out of thin air to stop themselves from going bankrupt. These audits were all done over a year ago when the market cap of Tether was only around $3 billion. It is now $16 billion. Tether is an outright scam. The sooner it and Bitfinex collapse, the healthier for the whole of crypto. I am more afraid for Bitfinex and Tether. Pulling the USDT rug might show how bitcoin is very dependent on USDT for liquidity and cause a big short.
Tether is an interesting situation. It may be more complex than that. For example, if the US government were to seize Tether's bank accounts, the value of USDT would drop as USDT holders flee to other currencies. However, similar to April 2017 when Bitfinex and Tether lost banking capabilities, this could catalyze a bullish move in the overall crypto market as USDT pairs drag the rest of the market upwards.After seeing bitmex having had that service from the US believing that finex is fine is pure gullibility.
What is the latest news on withdrawals and cashouts? Bitcoin news media have been quiet about it. Many Bitmex users might be clicking the refresh button every minute hehehe.
Withdrawals are being processed. Over 40K BTC have been pulled out so far.
I think, similar to the 1Broker situation, that Bitmex should be able to refund customer deposits even if they are forced to shut down. There are no guarantees of course. I'm just speaking in practical terms and making educated guesses.
@exstasie. The ending of the story would be similar. The end of Bitmex.If so, it wouldn't be that bad. When 1Broker shut down, all customers got their money back. It took several days or maybe a couple weeks, but they eventually reached an agreement with the US government that let them process withdrawals.
I am more afraid for Bitfinex and Tether. Pulling the USDT rug might show how bitcoin is very dependent on USDT for liquidity and cause a big short.
Tether is an interesting situation. It may be more complex than that. For example, if the US government were to seize Tether's bank accounts, the value of USDT would drop as USDT holders flee to other currencies. However, similar to April 2017 when Bitfinex and Tether lost banking capabilities, this could catalyze a bullish move in the overall crypto market as USDT pairs drag the rest of the market upwards.
This announcement by the United Kingdom's Financial Conduct Authority, the FCA, might be related after Bitmex's legal issue.
I have mentioned this before. I speculate that it might not stop with crypto derivatives. The bans might also begin to crawl towards real cryptocoins and legally allow only people from a higher income bracket to buy and sell bitcoin.
I have mentioned this before. I speculate that it might not stop with crypto derivatives. The bans might also begin to crawl towards real cryptocoins and legally allow only people from a higher income bracket to buy and sell bitcoin.
Utter balls and bit late now. Still feels odd to see the UK pay some actual legal attention to cryptoland. It's been almost entirely silent up until recent times.
Our Arthur has just stepped down from Bitmex along with a few others.
https://www.theblockcrypto.com/post/80163/bitmex-announces-leadership-changes-arthur-hayes-no-longer-ceo
What is the latest news on withdrawals and cashouts? Bitcoin news media have been quiet about it. Many Bitmex users might be clicking the refresh button every minute hehehe.
@exstasie. The ending of the story would be similar. The end of Bitmex.
I am more afraid for Bitfinex and Tether. Pulling the USDT rug might show how bitcoin is very dependent on USDT for liquidity and cause a big short.
@exstasie. They have done it before, I am quite certain they can takedown the service, seize the domain and begin imprisoning more of Arthur Hayes' group. They might have other Bitmex servers everywhere, however, would you deposit your bitcoin?
No, but I would be a lot more worried if they were a fiat exchange with huge exposure to bank accounts that can be seized. That's the argument against using an exchange like Bitfinex or holding Tether, who have also been probed by the CFTC and I believe the DOJ within the last couple years. The Crypto Capital seizure that led to Tether having only 74% cash reserves is a perfect example of what can go wrong.
I think, similar to the 1Broker situation, that Bitmex should be able to refund customer deposits even if they are forced to shut down. There are no guarantees of course. I'm just speaking in practical terms and making educated guesses.
Since many a country won't let you buy anything in good old cash over a certain sum anyone expecting a fully untraceable coin to be left to flourish in peace is a crazyhead. It's the way of the world. It's crap but it is what it is. If I was balls deep in privacy I would have planned accordingly from the moment I entered.
and it seems to me that after Bitmex the other targets will be the privacy altcoins:
The only thing they can really do is telling exchanges to drop them and they will, apart from the no shits given outliers. It'll be the least surprising development in cryptoland's history.
It'll be interesting to see how this moulds their markets.
the problem is in some people who do not know how to take advantage of good things, I believe that when people created anonymous coins it was not to commit crimes, but thanks to scammers the future will have to be dealing with documents to make KYC ( for me to have a residence document I have to go through a lot of bureaucracy in my country, even though I have been living in the same place for over 10 years ) on exchanges that take days to approve and are a headache and fear because such exchanges do not even have a physical office and there are no guarantees that they cannot sell people's documents on the black market!
and it seems to me that after Bitmex the other targets will be the privacy altcoins:
The only thing they can really do is telling exchanges to drop them and they will, apart from the no shits given outliers. It'll be the least surprising development in cryptoland's history.
It'll be interesting to see how this moulds their markets.
This announcement by the United Kingdom's Financial Conduct Authority, the FCA, might be related after Bitmex's legal issue.
I have mentioned this before. I speculate that it might not stop with crypto derivatives. The bans might also begin to crawl towards real cryptocoins and legally allow only people from a higher income bracket to buy and sell bitcoin.
I have mentioned this before. I speculate that it might not stop with crypto derivatives. The bans might also begin to crawl towards real cryptocoins and legally allow only people from a higher income bracket to buy and sell bitcoin.
Utter balls and bit late now. Still feels odd to see the UK pay some actual legal attention to cryptoland. It's been almost entirely silent up until recent times.
Our Arthur has just stepped down from Bitmex along with a few others.
https://www.theblockcrypto.com/post/80163/bitmex-announces-leadership-changes-arthur-hayes-no-longer-ceo
today I read this article and I was thinking:
what changes to remove Ben Delo and Arthur Hayes? the charges are against Bitmex too and it does not seem to me that United States authorities will simply forget about the case from what I saw:
DOJ states it has jurisdiction over foreign crypto companies that touch US servers
the best thing Bitmex should do is close while there’s still time
and it seems to me that after Bitmex the other targets will be the privacy altcoins:
DOJ says use of privacy coins is 'indicative of possible criminal conduct'
the future of cryptocurrencies are regulations (I hate KYC)
This announcement by the United Kingdom's Financial Conduct Authority, the FCA, might be related after Bitmex's legal issue.
I have mentioned this before. I speculate that it might not stop with crypto derivatives. The bans might also begin to crawl towards real cryptocoins and legally allow only people from a higher income bracket to buy and sell bitcoin.
I have mentioned this before. I speculate that it might not stop with crypto derivatives. The bans might also begin to crawl towards real cryptocoins and legally allow only people from a higher income bracket to buy and sell bitcoin.
Utter balls and bit late now. Still feels odd to see the UK pay some actual legal attention to cryptoland. It's been almost entirely silent up until recent times.
Our Arthur has just stepped down from Bitmex along with a few others.
https://www.theblockcrypto.com/post/80163/bitmex-announces-leadership-changes-arthur-hayes-no-longer-ceo
@exstasie. They have done it before, I am quite certain they can takedown the service, seize the domain and begin imprisoning more of Arthur Hayes' group. They might have other Bitmex servers everywhere, however, would you deposit your bitcoin?
Bitmex is BTC-only and obviously keeps its servers in jurisdictions where seizure is not possible. So the authorities really can't seize customer funds.
Pesky international borders or international law/treaties have never stopped the US government or their agencies before. If they want to seize BitMex's servers or hardware then they will certainly try, regardless of which jurisdiction they are located in.I'm sure they could seize some servers. I very much doubt they could seize all servers in all jurisdictions, rendering Bitmex not operational. Even if they could, servers can be spun up again and databases reseeded. My point was more about the fact that BTC is incredibly difficult to seize. Bitmex, like BTC-e some years ago, is obviously set up in a way where their wallets could never be compromised by a server seizure.
Imagine taking down a few servers and a domain, seizing zero money, and then watching Bitmex spin up mirrors and continue operating as normal a couple days later.
I assume that's why they didn't even bother attempting to seize anything. They were hoping to leverage arrests of the owners to achieve their ends.
And even if they can't seize the servers or the wallets, arresting 3 people who potentially hold 3 of the 4 necessary keys has the same result as far as customers are concerned - complete loss of funds. As you say, there is no good reason to leave your coins on BitMex at a time like this, but there is certainly a huge amount of risk.
Any idea where Reed was arrested? I didn't see it mentioned. The key is to stay out of countries that have extradition treaties with the US. That should have been standard operating procedure, especially after news of the CFTC probe broke last year.
This announcement by the United Kingdom's Financial Conduct Authority, the FCA, might be related after Bitmex's legal issue.
I have mentioned this before. I speculate that it might not stop with crypto derivatives. The bans might also begin to crawl towards real cryptocoins and legally allow only people from a higher income bracket to buy and sell bitcoin.
FCA bans the sale of crypto-derivatives to retail consumers
The FCA considers these products to be ill-suited for retail consumers due to the harm they pose. These products cannot be reliably valued by retail consumers because of the:
inherent nature of the underlying assets, which means they have no reliable basis for valuation
prevalence of market abuse and financial crime in the secondary market (eg cyber theft)
extreme volatility in cryptoasset price movements
inadequate understanding of cryptoassets by retail consumers
lack of legitimate investment need for retail consumers to invest in these products
These features mean retail consumers might suffer harm from sudden and unexpected losses if they invest in these products.
Unregulated transferable cryptoassets are tokens that are not ‘specified investments’ or e-money, and can be traded, which includes well-known tokens such as Bitcoin, Ether or Ripple. Specified investments are types of investment which are specified in legislation. Firms that carry out particular types of regulated activity in relation to those investments must be authorised by the FCA.
Source https://www.fca.org.uk/news/press-releases/fca-bans-sale-crypto-derivatives-retail-consumers
I have mentioned this before. I speculate that it might not stop with crypto derivatives. The bans might also begin to crawl towards real cryptocoins and legally allow only people from a higher income bracket to buy and sell bitcoin.
FCA bans the sale of crypto-derivatives to retail consumers
The FCA considers these products to be ill-suited for retail consumers due to the harm they pose. These products cannot be reliably valued by retail consumers because of the:
inherent nature of the underlying assets, which means they have no reliable basis for valuation
prevalence of market abuse and financial crime in the secondary market (eg cyber theft)
extreme volatility in cryptoasset price movements
inadequate understanding of cryptoassets by retail consumers
lack of legitimate investment need for retail consumers to invest in these products
These features mean retail consumers might suffer harm from sudden and unexpected losses if they invest in these products.
Unregulated transferable cryptoassets are tokens that are not ‘specified investments’ or e-money, and can be traded, which includes well-known tokens such as Bitcoin, Ether or Ripple. Specified investments are types of investment which are specified in legislation. Firms that carry out particular types of regulated activity in relation to those investments must be authorised by the FCA.
Source https://www.fca.org.uk/news/press-releases/fca-bans-sale-crypto-derivatives-retail-consumers
I am no fan of centralized exchanges, but this is nonsense. US citizens are not allowed to trade on BitMex, and BitMex itself is incorporated in the Seychelles. This is the US government/associated agencies trying to police the world again. Also, banks launder money in far greater amounts all the time, and instead just get slapped with measly little fines that they don't even feel. But as soon as a bitcoin exchange is suspected of the same thing, the owners are arrested? This should be seen as an attack on bitcoin.
If you have any funds on BitMex, I would be trying to withdraw them ASAP. If the FBI are arresting the owners, you can guarantee they will be trying to seize assets as well.
If you have any funds on BitMex, I would be trying to withdraw them ASAP. If the FBI are arresting the owners, you can guarantee they will be trying to seize assets as well.
This is called gross jurisdictional overreach by the American government. I had a similar argument for Bitfinex, iFinex and Tether which many went against me. However, when I created the big short thread arguing against Tether, many were against me also. Why hehehe.
However, yes. Agreed!
Bitmex is BTC-only and obviously keeps its servers in jurisdictions where seizure is not possible. So the authorities really can't seize customer funds.
Pesky international borders or international law/treaties have never stopped the US government or their agencies before. If they want to seize BitMex's servers or hardware then they will certainly try, regardless of which jurisdiction they are located in. And even if they can't seize the servers or the wallets, arresting 3 people who potentially hold 3 of the 4 necessary keys has the same result as far as customers are concerned - complete loss of funds. As you say, there is no good reason to leave your coins on BitMex at a time like this, but there is certainly a huge amount of risk.
^ It's been days since the news and I would have expected everyone left Bitmex by now. BTC120K is still a lot and I don't understand why some traders are still not withdrawing their funds. One of them probably created this site as a response to CFTC https://bit.mex.com/ 
Perhaps Bitmex is withholding other withdrawal requests?
Perhaps Bitmex is withholding other withdrawal requests?
No, on the contrary. They are processing withdrawals more often than their usual once every 24 hours:
They are in damage control mode, trying to keep their customers calm. Processing withdrawals faster than expected is one way to do that.
As a customer, I probably wouldn't be that worried about the funds. Bitmex is BTC-only and obviously keeps its servers in jurisdictions where seizure is not possible. So the authorities really can't seize customer funds.
On the other hand, there is obviously no reason whatsoever to store coins there at a time like this.
To be fair, the signs were coming a long time ago already for Bitmex, and people should have seen it coming. I mean Bitmex has long been under the US radar because of how they used to allow US accounts.
it's hard to know exactly what that would entail, if anything. remember, bitfinex offered its services to USA residents for several years before giving them the boot. bitfinex was also being investigated by the CFTC beginning in 2017, and continues to offer no-KYC accounts to this day. yet the feds never took down bitfinex or tried to arrest its owners.
the feds work in mysterious ways, and CFTC probes often end without incident. until the hammer actually comes down and arrests get made and domains get seized, it's tough to know whats gonna happen.
1/ Since the announcement of the CFTC's charges against #BitMEX, over 45,000 BTC have been pulled from the exchange.
According to our data, the $BTC balance on BitMEX dropped to 120,000 BTC – a decrease of 27%.
2/ The largest drop happened on Friday (Oct 2nd), where 44,000 $BTC were withdrawn from the exchange – the largest negative net flow observed to date.
Around 30% of those funds were transferred to #Genimi and #Binance in equal amounts.
3/ #Bitcoin open interest in perpetual futures contracts on BitMEX saw a significant decline as well.
It decreased by almost 24%, from $590M to currently $450M – levels not seen since May 2020.
According to our data, the $BTC balance on BitMEX dropped to 120,000 BTC – a decrease of 27%.
2/ The largest drop happened on Friday (Oct 2nd), where 44,000 $BTC were withdrawn from the exchange – the largest negative net flow observed to date.
Around 30% of those funds were transferred to #Genimi and #Binance in equal amounts.
3/ #Bitcoin open interest in perpetual futures contracts on BitMEX saw a significant decline as well.
It decreased by almost 24%, from $590M to currently $450M – levels not seen since May 2020.
^ It's been days since the news and I would have expected everyone left Bitmex by now. BTC120K is still a lot and I don't understand why some traders are still not withdrawing their funds. One of them probably created this site as a response to CFTC https://bit.mex.com/
Perhaps Bitmex is withholding other withdrawal requests?
To be fair, the signs were coming a long time ago already for Bitmex, and people should have seen it coming. I mean Bitmex has long been under the US radar because of how they used to allow US accounts. And the CEO has always been so vocal on Twitter now so with all their users I'm reading apparently leaving the platform, seems like the death has begun finally.
Not surprised with this news at all, and Bitmex owner is known for manipulation and earning bunch of Bitcoins.
Many users also remember strange errors on pick traffic and they even created lot of gifs for that.
Many users also remember strange errors on pick traffic and they even created lot of gifs for that.
are there DEXs that offer 100x leverage yet?
Yeah, fair point, haha. Although I'm sure one of the various Ethereum/DeFi/wrapped BTC DEXs probably offers leverage trading. Still, these things take time. The more that centralized exchanges are hacked, scam or shutdown then the more desire there is for DEXs and the more growth and development they will see.based on this estimate, that's in the range of 20% of their total holdings.
How many people do you think have made a conscious decision to leave their coins on BitMex, and how many just haven't seen the news yet? We know from previous exchange hacks and scams that a lot of people don't pay attention to crypto news.are there DEXs that offer 100x leverage yet?
Yeah, fair point, haha. Although I'm sure one of the various Ethereum/DeFi/wrapped BTC DEXs probably offers leverage trading. Still, these things take time. The more that centralized exchanges are hacked, scam or shutdown then the more desire there is for DEXs and the more growth and development they will see.based on this estimate, that's in the range of 20% of their total holdings.
How many people do you think have made a conscious decision to leave their coins on BitMex, and how many just haven't seen the news yet? We know from previous exchange hacks and scams that a lot of people don't pay attention to crypto news. As I said above, even if the keys are passed on, the FBI will still be looking to seize the wallets. Withdraw anything on BitMex as soon as possible. Yet another reason to start using DEXs.
are there DEXs that offer 100x leverage yet?
if there are, i can't imagine they compare to bitmex's market depth.
Bitmex mass withdrawals might occur similar to a bank run after release of this news, I reckon.
over 32k bitcoins were withdrawn from bitmex in their latest withdrawal batch, after the news dropped. based on this estimate, that's in the range of 20% of their total holdings. https://www.theblockcrypto.com/post/79670/32000-bitcoin-withdrawn-bitmex-government-charges
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More than 32,000 bitcoin, currently worth about $335 million, has been withdrawn from BitMEX in less than 24 hours after the U.S. government filed charges against the crypto derivatives exchange’s owners.
BitMEX currently still holds between 135,000 and 170,000 bitcoin, meaning many of its customers are staying put — at least for now.
BitMEX currently still holds between 135,000 and 170,000 bitcoin, meaning many of its customers are staying put — at least for now.
If i remember correctly, didn't bitmex say they used a 3/4 multisig wallet split between the founders?
They've definitely said they use a 3-of-4 multisig, but I don't recall them ever saying who was holding those 4 keys. Given there are only the three founders - Reed, Hayes, and Delo - then there must be either a 4th "back up" key, or some employees have access to a key.Looks like the daily 13:00 UTC BitMex transaction spam still hit the network just there, in addition to a couple of other extra withdrawal broadcasts over the last 24 hours, so funds aren't locked - yet. I would hope that if it is the two remaining founders who are signing those transactions that they have made arrangements to pass the keys on to trusted employees or similar, and that all users' funds won't become inaccessible should they be arrested.
As I said above, even if the keys are passed on, the FBI will still be looking to seize the wallets. Withdraw anything on BitMex as soon as possible. Yet another reason to start using DEXs.
https://www.cftc.gov/PressRoom/PressReleases/8270-20
This is a huge violation, I have a feeling that they won't survive on this, this isn't about the owner but the company as a whole, so I can understand if people get panic, and I think another competitor will get down soon.
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Washington, D.C. — The Commodity Futures Trading Commission today announced the filing of a civil enforcement action in the U.S. District Court for the Southern District of New York charging five entities and three individuals that own and operate the BitMEX trading platform with operating an unregistered trading platform and violating multiple CFTC regulations, including failing to implement required anti-money laundering procedures. This case is brought in connection with the Division of Enforcement’s Digital Asset and Bank Secrecy Act Task Forces.
This is a huge violation, I have a feeling that they won't survive on this, this isn't about the owner but the company as a whole, so I can understand if people get panic, and I think another competitor will get down soon.
Samuel Reed was apparently already arrested, while Arthur Hayes and company is apparently "at large".
Huh, that's kind of interesting.If i remember correctly, didn't bitmex say they used a 3/4 multisig wallet split between the founders?
Although i can't ascertain whether this was only for the insurance funds, or also for normal withdraws/deposits. (I believe it was/is also for customer deposits, which could prove even more disastrous, no?)
If you have any money left on Bitmex, I'd withdraw A$AP.
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So, there are still no effects as of now on the Bitmex users and still operational. But it's really scary. Do you have still funds on Bitmex and you still continue to trade here?
They're basically running a 3/3 multisig now with indictments out for the other Perhaps their wallet keys are in the hands of a (for them) trusted third party, in which case Bitmex probably won't suffer that much operational difficulties, but I've yet to hear/get confirmation of this.
I am no fan of centralized exchanges, but this is nonsense. US citizens are not allowed to trade on BitMex, and BitMex itself is incorporated in the Seychelles. This is the US government/associated agencies trying to police the world again. Also, banks launder money in far greater amounts all the time, and instead just get slapped with measly little fines that they don't even feel. But as soon as a bitcoin exchange is suspected of the same thing, the owners are arrested? This should be seen as an attack on bitcoin.
If you have any funds on BitMex, I would be trying to withdraw them ASAP. If the FBI are arresting the owners, you can guarantee they will be trying to seize assets as well.
If you have any funds on BitMex, I would be trying to withdraw them ASAP. If the FBI are arresting the owners, you can guarantee they will be trying to seize assets as well.
It is not the first time for a panic to occur, but the occurrence of any problem related to withdrawal or liquidity or trading will cause this panic.
Khaled is famous for a lot of dark activities so be careful when you deal with them.
I do not think that anyone will withdraw a lot of money because of this news, and if you have put a lot of money on that platform then I think you know some rationale for that.
Khaled is famous for a lot of dark activities so be careful when you deal with them.
I do not think that anyone will withdraw a lot of money because of this news, and if you have put a lot of money on that platform then I think you know some rationale for that.
Samuel Reed was apparently already arrested, while Arthur Hayes and company is apparently "at large". There was some rumours from some Twitter personalities last year about BitMEX already being somewhat "observed" by the fed, and up to yesterday everyone(including the U.S. BitMEX users) were being too comfortable with using the platform. And suddenly, BOOM, CTO/Co-Founder suddenly arrested. This news is completely nuts! Wouldn't be surprised if other exchanges(even the spot-trading ones) will come next.
Another reason to not unnecessarily store funds on exchanges, ladies and gentlemen.
Another reason to not unnecessarily store funds on exchanges, ladies and gentlemen.
@GreatArkansas. They want everyone to relax hehehe.
Bitmex mass withdrawals might occur similar to a bank run after release of this news, I reckon. Its users should try to withdraw, however, it would not be shocking if Bitmex blocked them.
There is also the danger of a government takedown of the domain.
Bitmex mass withdrawals might occur similar to a bank run after release of this news, I reckon. Its users should try to withdraw, however, it would not be shocking if Bitmex blocked them.
There is also the danger of a government takedown of the domain.
So, there are still no effects as of now on the Bitmex users and still operational. But it's really scary. Do you have still funds on Bitmex and you still continue to trade here?
After i had able to read up the entire news then i do immediately withrawn all of my funds for the fear of some lock-up or being disabled.For now i do just let my funds do stay away on this platform and observe on what would be the next word, because i cant just let myself too confident on leaving my coins behind specially if you do know that U.S. Commodities and Futures Trading Commission (CFTC) is now involved.Next in line would be Binance and Bittrex.News like this can really trigger out some panic sell but i cant let myself not to believe into that possibility.
Few hours ago US Commodity Futures Trading Commission (CFTC) released a charges on Bitmex owners for illegal operating cryptocurrency derivatives and anti-money laundering violation.
Here is the press release of CFTC: https://www.cftc.gov/PressRoom/PressReleases/8270-20
Charged Bitmex owners are Arthur Hayes, Ben Delo, and Samuel Reed.
Bitmex already released their statement 2 hours ago regarding of the charges by CFTC here: https://blog.bitmex.com/united-states-cftc-doj-filing/
So, there are still no effects as of now on the Bitmex users and still operational. But it's really scary. Do you have still funds on Bitmex and you still continue to trade here?
Here is the press release of CFTC: https://www.cftc.gov/PressRoom/PressReleases/8270-20
Charged Bitmex owners are Arthur Hayes, Ben Delo, and Samuel Reed.
Bitmex already released their statement 2 hours ago regarding of the charges by CFTC here: https://blog.bitmex.com/united-states-cftc-doj-filing/
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In the meantime, the BitMEX platform is operating entirely as normal and all funds are safe.
So, there are still no effects as of now on the Bitmex users and still operational. But it's really scary. Do you have still funds on Bitmex and you still continue to trade here?
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