Why BitMEX Is Charged With “Trading Bitcoin Against Its Clients” – Cryptocurrencies

BitMEX, the exchange known for its chic blog “BitMEX Research” and its criminal leverage 100x, is finally before the US courts. After years of rumors and constant accusations all over Twitter, the trading platform is at risk of being held accountable. This article exposes the techniques complained of by the complainants that BitMEX is accused of using against its customers...

Insider trading

It all starts in 2018 when founder Arthur Hayes reveals that BitMEX has its own trading activity, which is also headed by Nick Andrianov, a former Deutsche Bank trader…

A confession confirming the suspicions that BitMEX is pouring into the insider trading to trade against own clients (explanation in a moment).

Arthur Haye then defends himself by ensuring that his traders are only there for trading operations. “Market Making”. Marketmakoi ?? A market maker is an operator who improves liquidity by constantly buying or selling.

The prices offered by market makers are placed a little above and below the last price quoted. This gap is called a ” spread Which allows them to take advantage of those who want to immediately execute their buy or sell order. #liquidity

The market maker therefore permanently offers a buy and sell order in the order book. If a trader stands in front of his sell order, the market-maker must in the moment take the opposite position. The reason being that the Market Maker is not there to take bets but to stay as neutral as possible.

He makes his mark thanks to the difference between purchase and sale prices that his customers are ready to pay to be able to place their orders immediately. The lower this spread, the more traders will prefer to go through it.

Watch these two Bitcoin price charts on the same time frame.

Bitcoin spread difference between Bitfinex and BitMEX
Bitcoin on BitMEX (left) and Bitfinex (right)
Source: @lowstrife on Twitter

The difference you can see between the Bitcoin price on BitMEX (left) and the Bitfinex exchange (right) is a difference in spread. Sacred spread … Butter and butter money …

Margin Call

Let’s put the question of the spread aside and ask ourselves this question now:

If an online casino owner was allowed to play their own poker games, do you think they would resist the temptation to look at the cards of his opponents?…

In the case of traders (“Market makers”) from BitMEX, opponents’ cards are stop loss. Knowing them makes it possible to place large buy or sell orders to trigger these stop losses and force cascading liquidations. To do what ?


Suppose you know where there is a string of stop loss. Let’s say it’s stop loss placed by traders who are positioned to buy. We agree that these stops, if triggered, will generate sell orders who will settle short positions in order to cut losses?

However, if the price approaches a level where there are a lot of stop loss, then triggers what is called in the jargon a “Cascade” of stops which will mechanically trigger the following stops and force the price down. The perfect example of a domino effect.

Therefore, if you know where these strings of stops are located, you are interested in push the price until you reach first stops. Once the waterfall over, you can resell / redeem and pocket the difference from at the price you entered to initiate the first stops of the waterfall.

BitMEX denies as a whole but there are clues that do not deceive…

Server Overload

Now let’s look at the recurring server problems since OF years.

Several times a day, the BitMEX platform stops working for a while… BitMEX calls these moments “Servers overload”. Which means too many orders arrive simultaneously for the BitMEX bike to be able to process them all.

In other words, if you are in position at this time, you are at the mercy of the market without being able to close your positions.

But guess who can continue to place orders on the platform during “Servers overload”. Bingo, the traders “Market makers” of BitMEX who can take advantage of it to make arbitration fraudulent.


Imagine … “Servers overloads”. The platform closes. You are logged out of BitMEX while you have a pending order to sell Bitcoin for $ 10,000. And let’s say that while you are disconnected from the platform, the price of Bitcoin goes up to $ 10,500 on other exchanges.

Well BitMEX traders, for whom the platform IS accessible, can buy your Bitcoin at $ 10,000 and simultaneously sell it on the other exchange at $ 10,500. $ 500 profit without taking no risk.

When you can finally reconnect, you end up with a position with an unrealized loss of $ 500 that you could have cut earlier if only BitMEX hadn’t had a “servers overload”.

Hence the accusations of ” trade against clients

You can fool a thousand people once…

It’s hard to know what BitMEX market makers are up to Seychelles tax haven. But the fact is, these overloads happen daily and BitMEX executives have never lifted a finger to fix this problem. Which strongly suggests that BitMEX purposely blocks its platform to trade against its own clients…

The ceremonial lamborghini of the founder of BitMEX
Arthur Hayes and his rental lambo

This suspicion was confirmed by Michael Kirovych of the Bitquant site. The latter scoured the BitMEX blog and discovered the amount of transactions derailing its servers, just to compare it to other exchanges …

On the one hand, it emerged that “BitMEX handles around 200,000,000 transactions per week” ((or 330 transactions per second on average). On the other hand, overloads happen when the number of transactions is multiplied by 20 or 30 compared to the average.

To put it another way, BitMEX is overwhelmed by 10,000 transactions per second. It does little for one of the biggest exchanges in the world, especially when you know for example that the exchange Bybit can handle it 100,000

BitMEX claims that the colossal leverage offered to its customers forces it to use a risk management system that is very demanding in terms of calculation capacity. Yes except that Binance which also introduced leverage – can handle it 1.2 million… 10,000 / 1,200,000… ..

How is it possible that an exchange as rich as BitMEX does nothing to remedy such a problem? The most plausible explanation is that he leaves his market maker play against clients …

Many traders also report winning positions arbitrarily closed by BitMEX. As long as to do … And what about totally cans volumes which aim to attract new aspiring traders who think they can benefit from exceptional spreads… In the business, this is called “wash trading“.

Exchange = crypto cancer

To summarize, BitMEX has its own trading room (long concealed) who is very officially accused of trade against clients via unfair techniques consisting in block its users and take advantage of privileged information (stop loss locations).

The invisible hand of the market does not exist. All is orchestrated and manipulated by state-of-the-art titans. And even if these accusations remain difficult to prove, many are comforted by knowing that BitMEX is today accused of having let Americans trade on his platform without having the license going well.

San Francisco court complaint says illegal amount of 3 billion a day on average. A record in the whole history of US market regulation …

As al Caponethat the American police never managed to corner for its mafia activity – BitMEX could fall for second-rate fraud. It’s already that…

By the way, other exchanges are currently being pursued: Binance, KuCoin, BiBox,, Quantstamp, KayDex, Civic, BProtocol, the Tron foundation. Hopefully we are on the verge of a purge …

What is Bitcoin the name of?

Satoshi Nakamoto’s revolution continues to be defiled by profiteers. Between the shitcoins and casino exchanges, you no longer feel the wind of freedom that cryptocurrency was to embody. Exchanges have turned Bitcoin into rattle for golden boys, the reverse of what it was invented for: stop playing with money.

Debt, money printing, inflation, fraudulent bank failures, speculation, are all ways of make the pockets of the people against which Satoshi Nakamoto protested. Have we forgotten?

The fact is all the more ironic that the best way to raise the price of Bitcoin would be to repatriate our Bitcoins on our own wallets. This drying up of Bitcoin’s supply would mechanically raise the stakes without doing anything …

But no doubt that the social dystopia in the making will soon give Bitcoin its letters of nobility.


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