Last month an independent crypto researcher who goes by the name, Hasu, posted an article exploring some of the most prevalent concerns users have with crypto exchange behemoth BitMEX, one of which is that the exchange trades against its customers to make a profit. BitMEX CEO Arthur Hayes publicly came out against the allegations on Monday in an interview with Yahoo Finance.
Foul play at BitMEX? Exploring the biggest concerns
https://t.co/yG6sspN1Vg — Hasu (@hasufl) October 22, 2018
Hasu brought up three shady practices in his article that he claims the people he spoke with – on condition of anonymity, had concerns about. While there is no hard evidence to support them, he still views them as valid in consideration of the incentive BitMEX has through them to make money.
1. BitMEX trades against its customers.
2. The exchange “weaponizes” server problems.
3. BitMEX monetizes customer liquidations via its insurance fund.
The DeskBitMEX has its own trading desk that acts, according to BitMEX’s website, as a market-maker posting bid and sell orders to bring liquidity to the market. They fill an exchange order book, and others match those orders. Any money made by a market-maker is gained through the spread of pricing, not through trades.
This is exactly what Hayes claims BitMEX’s trading desk does, stating in the interview with Yahoo that no one is granted exclusive or special access to the desk’s information:
“They have the same trading rights as any other regular trader, they can’t see the liquidation prices of any of our customers. We don’t trade against our customers. It’s actually pretty bad business model and introduces a lot of risk into what is right now a riskless business model, BitMEX. We match trades, that’s it, we have no risk. Trading against our clients is nonsensical.”
Hayes also states on BitMEX’s official blog that “no front office personnel are shared between the trading business and [BitMEX],” and
“that the trading business operates from a separate physical location, and…does not have access to any platform order flow, execution, customer or other information on terms that are not otherwise available to any other platform user.”
In his post, Hasu alleges that the exchange kept its trading desk a secret, and even insinuates that that may have lost their legal counsel after making it known to the public. He asserts most of BitMEX’s customers “don’t believe” that their trading desk breaks even, and cites a lack of an external audit of their business practices as the source of customer concern.
Continue:
https://cryptoslate.com/bitmex-ceo-denies-allegations-of-trading-against-customers/
