As we reported, on Thursday, the US authorities brought criminal charges against the owners of the popular cryptocurrency derivatives platform BitMEX, accusing them of engaging in illegal transactions and allowing money laundering.
While one of the owners was arrested, the other two, along with the CEO Arthur Hayes, remain at large.
“BitMEX is an illegal casino whose executives are frequently caught bragging about ripping off their customers. No doubt, the authorities have been on them for a long time, just looking for something that'll stick,” wrote analyst Mati Greenspan in his daily newsletter Quantum Economics.
CFTC is wrecking BitMEX for wrecking Bitcoiners. It's a necessary clean up step before an ETF can be approved. This is one of those "the herd is coming" events.
— Willy Woo (@woonomic) October 2, 2020
“We strongly disagree with the U.S. government’s heavy-handed decision to bring these charges, and intend to defend the allegations vigorously. From our early days as a start-up, we have always sought to comply with applicable U.S. laws, as those laws were understood at the time and based on available guidance.”
Founded in 2014, the Seychelles incorporated exchange handles over $1.5 billion trades daily and is famous for allowing $100x leverage trading.
Why they trying to jail @CryptoHayes but they ain’t trying to jail the CEO of every FinCEN Files company?
Because the Dollar Ponzi must continue and they are the enablers.
— KING CO฿IE (@CryptoCobain) October 1, 2020
“The vast majority of firms that service the U.S. are compliant, so it’s not surprising that the government would now turn to those that refuse to follow the law,” said Jerry Brito of Coin Center.
The general consensus of the market has been as Galaxy's Mike Novogratz said, “I do think that BTC and crypto is far bigger than any one exchange or person. So buy dips.”
As a first reaction to the news, Bitcoin’s price dropped $450 but started recovering soon after. Moreover, the pullback was “WAY LESS than a proper liquidation event on BitMEX. It didn't even break support,” noted on-chain analyst Willy Woo.
Much like many market participants, Woo believes this is actually good news for bitcoin adoption, bullish in the medium and long term.
— SpartanBlack (@SpartanBlack_1) October 2, 2020
“Every asset in crypto has basically pulled back,” which is usual for the crypto market as when BTC price drops, other assets follow as “people move to stable assets in fear,” said trader Josh Rager.
“But not going to panic yet over this BTC drop, still a higher low on trend but want to see price back above $10,600 soon.” And BTC did, it went to nearly $10,700 when the news of US President Donald Trump and the First Lady got tested positive for Covid-19 came, and the digital asset dropped under $10,400.
due to scarcity of longs being margin long on bitmex is new yield farming pic.twitter.com/un1QJBzSEn
— loomdart (@loomdart) October 2, 2020
It’s important to note that the authorities have been investigating the exchange for years, and “CFTC knows very well Bitmex blocks US IP addresses. They also know there is no KYC/CIP and any VPN gets around this,” said Bill Barhydt, co-founder & CEO at Abra.
As a matter of fact, this “likely be a boon for other regulated futures exchanges that offer significant leverage,” he said.