BitMEX users pull $340 million following criminal, civil charges

The users of cryptocurrency derivatives exchange BitMEX withdrew nearly one-fifth of all the funds stored in the company’s wallets.

Blockchain data-based crypto market analysis firm Glassnode reported on Oct. 2 that more than 32,200 Bitcoins (BTC) were withdrawn from BitMEX since yesterday’s announcement—equivalent to nearly $339 million as of press time.

As Modern Consensus reported yesterday, BitMEX CEO Arthur Hayes is facing up to 10 years in jail due to charges of violating anti-money-laundering laws. U.S. authorities accused several of the Seychelles-based firm’s executives of violating the Bank Secrecy Act and conspiring to violate the Bank Secrecy Act by failing to put sufficient anti-money-laundering safeguards in place. An FBI representative said:

“One defendant went as far as to brag the company incorporated in a jurisdiction outside the U.S. because bribing regulators in that jurisdiction cost just ‘a coconut.’”

Furthermore, the Commodity Futures Trading Commission also accused the executives of “operating an unregistered trading platform and violating multiple CFTC regulations, including failing to implement required anti-money laundering procedures.”

Those actions clearly caused panic among the exchange’s users, as they collectively withdrew 13% of all the Bitcoin in BitMEX’s vaults in a single hour the night of the announcement — equivalent to 23,200 Bitcoin or currently valued at about $245 million.

“That is the largest hourly BTC outflow from BitMEX we’ve observed so far,” Glassnode commented.

Then—just hours later—a second wave of withdrawals came pulling about 6,000 more BTC, equivalent to over $63 million as of press time. Another 3,000 BTC were pulled between the first and second withdrawal waves.

Yesterday, Glassnode also published data giving a clearer idea of the importance of the charges against BitMEX:

“According to our data, around 170,000 $BTC (~$1.8 billion USD) are being held in BitMEX wallets,” it said. “That’s almost 1% of the circulating Bitcoin supply.”

The regulator’s actions against BitMEX sent shockwaves across the cryptocurrency market. CoinMarketCap shows that the total market capitalization of all crypto assets fell from a value of $348.3 billion by over 5.4% to a low of $329.4 billion registered earlier today. Most of the price movement took place in just an hour after the regulators announced the actions undertaken against the exchange.

CoinMarketCap data also reveals that Bitcoin’s price also fell from a price of about $10,890 before the announcement to a new value to its current value of just over $10,500. In other words, the world’s first cryptocurrency has fallen by over 3.5% over the last 24 hours.