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BitMEX Records Biggest Net Income Outflows in Its History

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BitMEX, is one of the most popular cryptocurrency exchanges but it seems to have had a bit of a rough streak in July. BitMEX is one of the most preferred exchange platforms in the world for Bitcoin trading and other stock related crypto transactions, thanks in no small part to its 100x leverage offering. However, recent reports have shown that the exchange saw a rather slow month in July. 

According to data on analysis platform Token Analyst, the Seychelles based exchange saw over $525 million in net income outflows for July. Corroborating just how bad this is, Ceteris Paribus, a separate blockchain analyst, posted on Twitter that this is the worst month for BitMEX, going by this metric. 

In the said tweet, the analyst revealed that in its five-year existence, BitMEX has never seen a month where its net income outflows exceeded $100 million.

This included the entirety of 2018, when the entire crypto market was in free fall. As a matter of fact, the exchange was able to record net inflows for every month of 2018, leading to a combined income cume of $1.3 billion. 

Amongst other things, it is believed that this exodus of crypto investors from the platform is a direct effect of a recent probe into the exchange by the Commodity Futures Trading Commission (CTFC). About two weeks ago, news medium Bloomberg reported that the financial regulator had launched a probe into the exchange and its user base. 

According to the Bloomberg post, BitMEX doesn’t have approval from the CTFC to provide crypto derivatives trading to United States citizens. Hence, the regulator is sniffing around to see if BitMEX rightly bars U.S. investors from accessing its platform. 

Per Bloomberg, BitMEX chief executive Arthur Hayes stated back in January that the exchange has taken measures to restrict access to investors in the U.S. However, thanks to Virtual Private Networks and other anonymity-driven resources on the Internet, it is possible for some people to mask their Internet protocol address and locations.

Essentially, the CTFC is merely looking to see how they’re doing on that front, and even though probes by the CTFC often lead to allegations of misconduct, it is possible that investors would like to distance themselves from the exchange altogether.

It is also worth noting that while BitMEX might be struggling with income flows, it doesn’t mean that crypto trading is down per se. As Ceteris Paribus further noted, Binance, another crypto exchange which launched margin trading just a few weeks back, has seen steady growth ever since.

The probe by the CTFC could also be traced to the Tangle in Taipei, a debate between BitMEX CEO Arthur Hayes and Nouriel Roubini, an American economist and popular crypto basher at the 2019 Asia Blockchain Summit last month.

At the highly anticipated debate, Roubini discussed how BitMEX’s high-risk could be problematic, as it makes it easy for anyone, accredited and newbie investors, to trade on a platform that he believes isn’t regulated. 

Hayes replied that BitMEX doesn’t force anyone to trade, and that all the exchange did was make the right infrastructure available. However, things didn’t die down at the debate. Roubini went on to publish an essay titled “The Great Crypto Heist,” accusing BitMEX of breaking U.S. securities regulations. The CTFC could have picked this up, which explains why BitMEX has taken the brunt of the fallout

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