BitMEX is a peer-to-peer cryptocurrency exchange and derivatives trading website founded by Arthur Hayes, Ben Delo and Samuel Reed. Originally founded in 2014 in Hong Kong, the exchange is currently based in the Seychelles. Hayes is the CEO.
The platform only handles prices in bitcoin rather than fiat currencies, meaning that all gains and losses are in BTC. BitMEX offers a variety of trading services, including margin trading with up to 100 times leverage (meaning that a deposit of $1,000 will result in a trader having the ability to trade $100,000 worth of BTC) and futures trading (allowing investors to bet on the future prices of BTC). In 2016, BitMEX became the first Bitcoin denominated futures contract on a Chinese A Share index.
BitMEX also has a research department that produces reports on the cryptocurrency and blockchain ecosystem.
In 2019, the U.S. Commodity Futures Trading Commission (CFTC) reportedly opened an investigation into BitMEX pertaining to whether the exchange allowed U.S. traders to use its platform. The CFTC has jurisdiction over commodities and derivatives trading in the U.S., and BitMEX would be required to register with the commission if it wanted to allow Americans to use its platform to trade those products.
On Oct. 1, 2020, the U.S. Attorney’s Office for the Southern District of New York unsealed a criminal indictment against Hayes and several other BitMEX executives, alleging they failed to comply with the Bank Secrecy Act in allowing U.S. residents to trade funds on the platform. Specifically, they said the exchange did not conduct know-your-customer (KYC) checks, which opened the door for potential criminal activity. As one example, the office said proceeds from an exchange hack were laundered through BitMEX. Hayes and his team knew this was happening but did nothing to stop it, the prosecutors alleged. On the same day, the Commodity Futures Trading Commission alleged BitMEX, its leaders and it related entities violated the Commodity Exchange Act by letting U.S. residents conduct transactions on an unregistered platform operating in the U.S.