BitMEX is one of the most talked-about trading platforms in the cryptocurrency world. It’s known to offer bitcoin derivatives trading that includes liquidation services and margin trading.
Being one of the world’s largest trading platforms for cryptocurrency, it was placed third by CoinMarketCap in 2019. In this post, we shall discuss everything about the history of this crypto exchange in detail. If you’re looking for an overview, the pros and cons, etc. of the platform, you will most likely want to read our complete BitMEX review.
Who Are The Founders Of BitMEX?
The platform was founded by British entrepreneur Benjamin Delo, Washington & Lee University graduate Samuel Reed, and American banker and Bitcoin advocate Arthur Hayes in 2014. With operations and ownership by HDR Global Trading Limited, this platform is headquartered in Seychelles.
Is BitMEX Regulated?
Unfortunately, the giant trading platform is not regulated. Due to the fact that it’s an unregistered trading platform, its services cannot be used in the US markets. However, users could still access BitMEX in the event that they get an IP address from a city or country where it’s accessible.
History And Background Of BitMEX
A year after its foundation, BitMEX went on to complete a simple agreement for future equity (SAFE) investment, after which it saw an induction into the accelerator program of SOSV batch 8 China.
By 2016, this exchange had gone on to introduce perpetual features. This contract or swap became one of its most popular products, allowing for the entry of more people into the cryptocurrency exchange world. Two years later, Ben Delo went on to become the UK’s first bitcoin billionaire and the youngest self-made one to do so at age 34.
In 2018, the blockchain moved to Hong Kong’s Cheung Kong Center, and during this time, Bitcoin’s prices shot up by 4% immediately after BitMEX’s servers were under maintenance. This allowed for an addition of $10 billion to all cryptocurrency assets’ market cap.
One of its blog posts in February 2019 mentioned that there had been an increase in the BitMEX insurance fund by as much as 50% since the beginning of the year. The same year, in May, it went on to mention that most traders don’t go about trading at maximum leverage, even though it offers 100x leverage when it comes to crypto trading.
Legal Issues – What Went Wrong?
In July, Iranian-American economist and crypto critic Nouriel Roubini made suggestions that BitMEX has been seen being involved in illegal activities, where it allows traders to take high risks while trading against clients.
Even though these allegations were denied by the company, Roubini further went on to comment that the company, Hayes, and other cryptocurrency trading platforms overseas need to be investigated thoroughly.
Soon after, the exchange saw Commodity Futures Trading Commission (CFTC) investigating into details about whether it has actually been breaking the rules laid out by the United States law or not. This was initially reported by Bloomberg.
After a series of allegations and raising questions against BitMEX executives, in April 2020, the company was under the target of the US federal class-action suit of New York in the Southern District.
In the filed suit, it was alleged that the company went on to offer unregistered securities to the residents of the US. The complaint also mentioned that BitMEX’s actions were responsible for manipulating other spot markets for affecting settlement prices that were usually used in its contract settlements.
In May, BMA (Bitcoin Manipulation Abatement) LLC sued HDR Global Trading for violating US laws, and this entity was also responsible for suing other companies like Ripple and FTX in the past.
By October, the US Justice Department and CFTC charged the parent company along with its affiliates and subsidiaries, including founders Samuel Reed, Ben Dolo, and Arthur Hayes.
The complaint mentioned that the company failed to comply with the requirements of the US anti-money laundering regulations. Furthermore, the defendants willfully operated in conducting businesses with US residents through unregistered derivatives trading.
Among those charged with these indictments was the head of business development, Gregory Dwyer. The same year, in October, Reed was arrested in Massachusetts, while the others were reportedly ‘missing.’ A week after this, in the company newsletter, it was stated that Hayes had reportedly stepped down as the CEO.
Last year in April, Hayes surrendered to the US authorities, where bail amounting to $10 million was served to him for his release. A resident of Singapore, he was allowed to live abroad while arrangements were made for him to make court appearances in New York through video conferencing.
Later on, he started appearing in the New York court in person. This year, in February, both Hayes and Dolo pled guilty to violating the Act, while Reeds surrendered to the US Justice Department in March.
BitMEX Background FAQs
BitMEX is currently owned by HDR Global Trading Limited and was founded by Arthur Hayes with co-founders Benjamin Dolo and Samuel Reed. They founded the trading platform in 2014.
In 2021, the giant trading platform was banned in several countries as its three founders were reportedly accused of money laundering. As of today, it is still operational in some countries. However, not much can be said as to whether users invest in it or not.
Due to the criminal charges against its founders and a lack of regulatory compliance, investing in BitMEX may upset potential investors. Even though it is a highly professional crypto platform that allows for deep liquidity, there may still be some setbacks for users who are looking forward to long-term investments.
BitMEX continues to be one of the largest crypto trading platforms in the world. The platform successfully harnessed the power of the digital financial system through its innovative trading features and products.
The platform sees numerous new registrations every day, with its traders earning major income from the crypto industry. So if you haven’t yet created a BitMEX account, maybe now’s the time?