Trump COVID Test, BitMEX Charges Bring October Shocks for Bitcoin

U.S. regulators and law-enforcement officials brought charges on Thursday against BitMEX, a Seychelles-based cryptocurrency exchange that has grown in recent years to be one of the industry’s biggest players.

According to the U.S. Commodity Futures Trading Commission, prosecutors accused BitMEX of facilitating unregistered trading and other violations, including “conducting significant aspects of its business from the U.S. and accepting orders and funds from U.S. customers,” as reported by CoinDesk’s Nikhilesh De.

The news dominated cryptocurrency news headlines and sent traders and analysts scrambling to assess the damage and implications. Some 23,000 bitcoin were apparently withdrawn from BitMEX addresses in a single hour, the cryptocurrency-markets data firm Glassnode tweeted early Friday, citing blockchain data.

BitMEX, led by CEO Arthur Hayes, said it intends to defend against the allegations “vigorously” adding that the trading platform was operating normally and that all funds were safe.

Bitcoin prices tumbled after the announcement, as illustrated by CoinDesk’s Daniel Cawrey in an hourly price chart:

btcoct1

Bitcoin hourly price chart on Thursday.
Source: TradingView

Cryptocurrency traders are conditioned to expect volatility whenever there’s major news involving one of the biggest industry exchanges, but despite the quick drop, prices quickly stabilized, as reported by CoinDesk’s Zack Voell.

BitMEX is a well-known player in the constellation of global cryptocurrency exchanges, partly because it was a pioneer, in 2016, of a new product called the “perpetual bitcoin leveraged swap.” At the time, few traders in nascent digital-asset markets could have anticipated what a major impact the obscure roll-out would have on the industry.

But the instrument, which made it easy for customers to trade the equivalent of $100 of bitcoin for every $1 down, proved hugely popular and successful among risk-hungry traders, vaulting BitMEX into…

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