BitMEX

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BitMEX
BItMEX.jpg
Founded 2014
Headquarters Eden Island, Mahé
Key People Arthur Hayes, CEO, Co-founder; Samuel Reed, CTO, Co-founder; Ben Dolo, CSO, Co-founder
Employees 51-200 employees
Products Cryptocurrency trading platform
Twitter @BitMEXdotcom
StockTwits bitmex
LinkedIn Profile
Facebook bitmex1
Website BitMEX Home
Blog BitMEX

BitMEX is a peer-to-peer cryptocurrency trading platform based in the island of Mahé.[1]

Overview

BitMEX offers bitcoin derivitives trading, including margin trading and liquidation services.[2] It is one of the largest cryptocurrency trading platforms in the world, ranking third by traded volume according to reported trading volumes by CoinMarketCap.[3]

In August 2018, BitMEX moved into the 45th floor of the Cheung Kong Center in Hong Kong, one of the most expensive offices in the world.[4] Around the same time as the move-in, BitMEX servers went down for scheduled maintenance. Almost immediately, bitcoin prices increased by 4%. This ended up adding $10 billion to the market cap of all cryptocurrency assets.[5][6][7]

In a February 2019 blog post, BitMEX reported that it had traded a $1 trillion notional worth of cryptocurrency contracts in 2018. In the same blog post BitMEX described the functioning of its insurance fund, which supports their leveraged contracts.[8] In August 2019, The Block Crypto reported that The BitMEX insurance fund had increased by about 50% since January 1, 2019.[9]

In May 2019, BitMEX wrote on its blog that, although the company offers a maximum of 100x leverage on its derivatives trading, the majority of traders do not trade at maximum leverage. BitMEX CEO Arthur Hayes said that this reflected "quite responsible" behavior on the part of BitMEX's customers. According to BitMEX's data, the average leverage used by BitMEX traders is 29x on long positions and 26x on short positions.[10]

In July 2019 Nouriel Roubini released a report in which he suggested that BitMEX may be involved in "systemic illegality." He said that BitMEX allows its users to take on too much risk. He also said that it's possible that liquidation of user accounts may contribute significantly to the exchange's income, and that BitMEX may trade against its clients, citing a widely-circulated post on Medium from 2018. Though representatives from BitMEX denied these claims, Roubini wrote that Hayes, BitMEX, and anybody else facilitating cryptocurrency trading from overseas regulatory "safe havens" should be investigated.[11][12]

Over the first half of 2019, BitMEX's Insurance Fund increased by over 50 percent, meaning that the exchange held nearly 0.15 percent of the world's total supply of bitcoins.[13]

Against a backdrop of rumors that the CFTC was investigating the exchange and less than a year into the job, COO Angelina Kwan left her position. Kwan had previously been a senior regulatory executive at the Stock Exchange of Hong Kong.[14]

Geographical Access Restrictions

Also in July 2019, Bloomberg reported that BitMEX was under investigation by the CFTC, the federal regulatory agency that oversees commodity and futures marketplaces in the U.S. for permitting U.S residents to trade on its platform without BitMEX being registered as a designated contract market.[15] On July 20th, numerous Twitter users began tweeting that BitMEX's trading volume had fallen by 33%.[16]

On August 19 BitMEX announced it would also block persons in Seychelles, Bermuda and Hong Kong, all locations where HDR Global Trading, BitMESX's parent, has offices.[17]

Products and Services

Perpetual Contracts

BitMEX offers what it calls "perpetual" contracts, which are similar to futures contracts. The difference between perpetual contracts and futures is that, unlike futures, perpetual contracts do not have expiry dates, allowing the trader to hold on to a position until the trader chooses to end it.

BitMEX UP/DOWN

BitMEX also offers what it calls "BitMEX DOWN" and "BitMEX UP" contracts. "BitMEX DOWN" contracts are designed to help investors participate in a market decline. "BitMEX UP" contracts are designed to help investors participate in a market rally. In both cases, an investor's potential loss is limited to the investor's initial investment, taking the form of a premium paid on a specified trade date in bitcoin (BTC). Gains are paid out in BTC. Investors cannot short sell using these contracts.[18]

Options

CEO and Founder Arthur Hayes revealed in a podcast in mid April 2019 that BitMEX was developing an options trading platform that would be launched a year to a year-and-a-half later. Hayes said that BitMEX was working with university professors on the design.[19]

Trading Technologies

In April 2019, the Chicago-based trading software developer Trading Technologies (TT) announced a new partnership with HDR Global Trading, owner of BitMEX. TT said in a blog post that through this partnership, TT's users eligible to trade at BitMEX will have full access to BitMEX's products, including its XBT/USD Perpetual Swap. Arthur Hayes, the CEO of BitMEX, said that this new partnership will "advance our mutual vision to unlock access to cutting-edge cryptocurrency products."[20][21]

Background

BitMEX was founded in 2014 by Hayes, a former Citigroup equities trader who wanted to create a bitcoin derivatives exchange. Hayes was reportedly bored by the traditional financial services industry, and became interested in cryptocurrency asset trading, which he regards as similar to traditional asset trading in the '80s and '90s.[22][23]

Key People

  • Arthur Hayes, CEO, Co-founder
  • Samuel Reed, CTO, Co-founder
  • Ben Dolo, CSO, Co-founder

References

  1. BitMEX. Linkedin.
  2. BitMEX. BitMEX.
  3. Top 100 Cryptocurrency Exchanges by Trade Volume. CoinMarketCap.
  4. Crypto Exchange BitMEX Rents World’s Most Expensive Offices in Hong Kong. CCN.
  5. Newsflash: Bitcoin Price Spikes Near $6,900 as BitMEX Goes Offline. CCN.
  6. Bitcoin spiked after a major trading platform went down, and it created a golden opportunity for traders. Business Insider.
  7. Crypto Market Adds 4% After BitMEX Experiences Temporary Outage. NewsBTC.
  8. The BitMEX Insurance Fund. BitMEX.
  9. The BitMEX Insurance Fund is up 50% since the beginning of 2019; holds more than $300 million. The Block Crypto.
  10. Crypto Exchange BitMEX Reveals Most of Its Users Don’t Use Maximum Leverage. Cointelegraph.
  11. Nouriel Roubini Ramps Up Campaign Against Crypto Exchange BitMEX. Bloomberg.
  12. The Great Crypto Heist. Project Syndicate.
  13. The BitMEX Insurance Fund is up 50% since the beginning of 2019; holds more than $300 million. The Block.
  14. Crypto Firm COO Exits After Less Than a Year in Role. Bloomberg.
  15. U.S. Regulator Probing Crypto Exchange BitMEX Over Client Trades. Bloomberg.
  16. BitMEX Bitcoin Volume Slumps 33% After CFTC Investigation. NewsBTC.
  17. BitMEX to Block Users in Hong Kong, Bermuda and Seychelles. CoinDesk.
  18. FAQ: Contracts. BitMEX.
  19. BitMEX CEO Arthur Hayes Reveals Plans to Open Crypto Options Platform. CoinDesk.
  20. A Chicago trading tech firm is partnering with BitMEX to unleash crypto derivatives on professional traders. The Block.
  21. Trading Technologies Launches Direct Market Access to Leading Bitcoin-based Trading Venue BitMEX Through the TT® Trading Platform. Trading Technologies Blog.
  22. BitMEX. Linkedin.
  23. Bored With Banking, This Former Citi Trader Went Full Crypto. Bloomberg.