What happens when the CFTC and DOJ bring charges against your crypto exchange? People GTFO!
Yesterday morning, very big news roiled the bitcoin and crypto markets.
The CFTC and DOJ brought charges against the owners and operators of the Bitmex cryptocurrency exchange, which is one of the largest in the world.
Without going into the details of the charges here, the gist was that they were basically operating an unlicensed derivatives exchange and were playing fast and lose with AML and KYC laws.
The exchange isn't based in the US and it doesn't allow US based users to participated on the platform but US residents have found ways around those rules for years now.
Anyways, shortly after news broke, people started withdrawing their bitcoin from Bitmex in droves...
Check it out:
(Source:
)https://twitter.com/glassnode/status/1311944618943098880/photo/1
- glassnode
Within the first hour more than 23k bitcoin were withdrawn from Bitmex.
As you can see from the chart above, that was the largest withdrawal in such a short amount of time in the last 3 years and probably ever.
That was just the beginning...
Now that the news has been circulating for over a day and is being fully digested by crypto participants, the bitcoin exodus from Bitmex has only continued.
In a little over a day we have now seen more than 40k BTC leave Bitmex:
(Source:
)https://twitter.com/glassnode/status/1312036016891494408/photo/1
- glassnode
While that 40k BTC number may sound like a lot, and it is (it's roughly $420 million at current prices), there is still a lot of bitcoin still sitting on Bitmex.
According to data from glassnode, there was roughly 170k BTC sitting on Bitmex prior to the CFTC/DOJ Charges being announced.
That means that the 40k only has represented about 24% of the total BTC holdings on Bitmex.
170k bitcoin is a big number btw...
(Source:
)https://twitter.com/glassnode/status/1311742164158877701/photo/1
- glassnode
That 170k represents close to 1% of all bitcoin currently in circulation.
Longer term implications?
While the broader impact of these CFTC/DOJ is yet to be fully known, the initial impact has been bitcoin fleeing Bitmex and the price dropping a couple of percentage points.
There are some out there thinking this action by the CFTC and DOJ could be bad news for the defi space going forward as some of the charges in the filings could also be levied at a multitude of defi projects.
The good news is that it took them a long time to bring this action against Bitmex so my guess if there are some defi projects in their cross-hairs as well, it will probably take a while before we see them.
Either way, separating some of wheat from the chaff could end up being a good thing in the long run.
We must just have some growing pains to go through first.
Stay informed my friends.
-Doc