Nick Chong · 2 hours ago · 2 min read · Insights via Grayscale Investments
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Net outflows show that more than half a billion dollars worth of Bitcoin left BitMEX in July, making the month the single-biggest for total customer withdrawals on record.
With a net outflow of $524 million in BTC, July was the first month the exchange (the largest crypto margin trading platform by daily volume) had parted ways with more than $100 million in customer deposits.
Outflows charted in terms of Bitcoin reveal a markedly similar trend, with more than 50,000 BTC leaving the Seychelles-registered derivatives exchange in July.
— Ceteris Paribus (@ceterispar1bus) August 4, 2019
Are BitMEX customers getting cold feet?
The revelation comes on the heels of what just might be BitMEX’s most turbulent month to date, stirred up by the discovery that the Commodities and Futures Trading Commission (CTFC) quietly started an investigation into whether the non-US-registered platform has been illicitly allowing American residents to trade.
News of the CTFC probe broke July 19, just days after a damning op-ed by Nouriel Roubini accusing BitMEX of “systematic illegal activity” including money-laundering and dodging KYC/AML regulations, seemingly spurred on by its author’s earlier, fiery debate with BitMEX CEO Arthur Hayes.
They are hiding the whole video as @CryptoHayes and @BitMEXdotcom got totally reckt for once since their daily biz model is to @BitmexRekt "degenerate gamblers" retail suckers with 100x leveraged toxic crypto derivatives. These folks are worse than blood-sucking leeches. https://t.co/UiJcn5Mfjf
— Nouriel Roubini (@Nouriel) July 8, 2019
Several members of the cryptosphere have stepped in to blame Hayes for BitMEX’s poor performance in July, suggesting it was a mistake to engage such a dangerous adversary as Roubini in a high-profile debate. As one commentator said:
“Goes to show why Arthur would have been better suited not to stir the pot and maintain a low-profile. Instead he chose to instigate a pissing match with an egocentric, well connected, adversary of all things Bitcoin. Beyond foolish.
BitMEX customers certainly appear to have been spooked by the announcement of the probe, with July 19 seeing a net outflow of 8200 BTC leave BitMEX, the second-largest day of the month for outflows.
Or moving to Binance?
Questions of regulatory scrutiny aside BitMEX could simply be losing custom to its newfound competitor, Binance, which as reported by CryptoSlate announced plans to enter the leveraged derivatives space within months.
Further research by Ceteris Paribus could support this theory, with Binance seeing significant inflows of BTC in June and July.
Daily @binance net $BTC flows this year: Activity did a 180 in June. First thought was traders entering alts, but beta margin trading opened in June, and the large spike in July is right before they opened it to everyone.
— Ceteris Paribus (@ceterispar1bus) July 26, 2019
With Binance expected to soon launch a fully regulated arm in the U.S., the exchange may be a safer bet in the eyes of Bitcoin derivatives traders.
However, some anticipate drama with Binance’s first BTC futures offering, if is launched in the U.S., because the contract reportedly will be paired with the controversial USDT stablecoin.
The company behind the partially-USD-backed crypto, Tether, is no stranger to legal action—having been scrutinized by a number of US regulatory bodies including the CTFC, Justice Department, and New York Attorney General—and has publicly disclosed USDT coins may be “subject to the risk of default, insolvency, inability to collect, and illiquidity.”