GuShiio.com Original title: “BitMEX, the early exchange king, asked for sale. Is the former derivatives leader still expected to turn over?”
Original author: Editor Jr., BlockTempo dynamic trend
According to sources quoted by CoinDesk yesterday (27th), BitMEX, the former leader of the cryptocurrency derivatives exchange (the industry’s earliest platform to provide perpetual contract trading), is seeking the possibility of selling and hired investment bank Broadhaven Capital Partners to assist in the sales at the end of last year.
Sources pointed out that although the exchange is in preliminary discussions with potential buyers, the identity of the buyers and the progress of negotiations are unclear, and the final valuation of the exchange may depend on the market’s views on the future of the cryptocurrency industry and whether BitMEX has the opportunity to re-emerge.
Why did BitMEX decline?
BitMEX was officially founded in 2014 by legendary trader Arthur Hayes and two other founders Ben Delo and Samuel Reed. In the field of cryptocurrency trading, BitMEX was once the most influential existence, especially in the derivatives trading market. It was once an industry leader. Its main achievements include:
·Create highly leveraged derivatives trading:BitMEX is one of the first platforms to provide highly leveraged cryptocurrency derivatives trading. Its signature product is Bitcoin perpetual contracts, which allow users to trade with leverage up to 100 times. This innovation attracted a large number of speculators and professional traders, allowing BitMEX to rise rapidly in the 2017-2019 crypto bull market.
·Top trading volume in the world:At its peak (especially in 2018), BitMEX’s daily trading volume often reached billions of dollars, and at one point even exceeded the derivatives trading volume in many traditional financial markets.
·Technical stability:BitMEX’s trading engine was considered one of the most advanced systems in the industry at the time, capable of handling high-frequency trading and large-scale orders without common downtime or delays.
·Establish an insurance fund mechanism:BitMEX has introduced a unique Insurance Fund mechanism to compensate for losses when users open positions and cannot fully close their positions.
As a former leader of derivatives trading platforms, BitMEX’s current trading volume has been left far behind by many latecomers. Looking back at its development history, the reasons for its decline include:
·Regulatory and legal disputes:BitMEX has attracted attention from regulators for its lack of strict KYC and anti-money laundering (AML) measures. In October 2020, the U.S. Commodity Futures Trading Commission (CFTC) and the Department of Justice filed a lawsuit against BitMEX and its founders, accusing them of violating the Bank Secrecy Act by operating an unregistered trading platform and allowing U.S. users to trade without permission. In the end, BitMEX ended the case in 2021 with a $100 million settlement, and founder Arthur Hayes also pleaded guilty to some of the charges and accepted a fine and suspended sentence.
·Risks and controversies of high leverage:BitMEX is known for offering perpetual contract trading with leverage up to 100 times, which attracts a large number of speculators. However, this high-risk product has also caused controversy. When the market fluctuates violently, highly leveraged transactions can easily cause users to open positions, and BitMEX’s clearing mechanism has also been accused of being suspected of manipulation.
·Increased market competition:With the development of the cryptocurrency market, other trading platforms such as Binance, Bybit and OKX have emerged rapidly. They provide similar derivatives trading, improve user experience, reduce transaction fees, and invest more resources in compliance.
·Management turmoil:During the legal proceedings, BitMEX founder Arthur Hayes and other executives withdrew from the leadership, causing internal instability.
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