More than 45,000 bitcoins have been withdrawn from BitMex after the US government filed charges against the stock exchange and its management. On October 1, BitMex received two devastating blows. First, the CFTC and the Justice Department brought charges against the exchange. Shortly thereafter, the US government sued its founders (including CEO Arthur Hayes). The market reacted to this news with a sharp drop in many blockchain assets.
BitMex Bitcoin Reserves. Source: Glassnode.
This is not the first time BitMex has contributed to a downside reversal in recent months. The stock exchange initially began to lose confidence among participants after Black Thursday, which prevented users from trading or recovering their assets. Although users have withdrawn over 100,000 bitcoins in the six months between this episode and these latest allegations, the massive migration over the past two days seems unique in scale.
Bitmex Bitcoin flows and flows from October 1st to 2nd, 2020. Source: Crystal Blockchain.
According to Crystal Blockchain data, the net outflow from the exchange exceeded 45,000 BTC in less than 48 hours. Meanwhile, Gemini and Binance appear to be the largest recipients of these outflows, followed by OKEx and Huobi. Over 20,000 BTC has been transferred from BitMex to the last four exchanges.
It is unclear if BitMex will disappear into the abyss of time, like many unsuccessful exchanges before it, or the company will survive to trade another day. Lance Morgin, chief executive of the Blockchain Intelligence Group and former chief of the Department of Homeland Security, told Cointelegraph that the most likely outcome would be financial sanctions and a pledge from BitMex executives not to engage in future illegal activities.