Bitcoin users are leaving crypto exchange BitMEX en masse, as its CEO Arthur Hayes has been arrested by US authorities for enabling criminals to use the exchange for illegal activities.
According to crypto market research and analytics firm Arcane Research, BitMEX users have withdrawn a total of 45,112 BTC from the exchange after receiving criminal charges from the US Commodity Futures Trading Commission (CFTC).
The dramatic impact of the CFTC announcement becomes clear when zooming in on the hourly open interest data from the XBTUSD perp.
The last hours has seen the OI of the XBTUSD perp (measured in BTC) fall by 11%.
Traders are definitely closing their positions on BitMEX. pic.twitter.com/PeLGIl82JV
— Arcane Research (@ArcaneResearch) October 1, 2020
Users have transferred about 20,000 of the said amount of bitcoins to major exchanges like Binance, Gemini, Huobi, and OKEx, while the remaining 25,000 BTC were deposited on other exchanges. Moreover, open interest on BitMEX’s bitcoin derivatives has plummeted to a yearly low of 61,869 BTC.
As per the CTFC announcement, BitMEX is alleged to be operating an unregistered cryptocurrency derivatives trading platform on top of violating multiple CTFC regulations. Aside from arresting CEO Arthur Hayes, US authorities have also charged three co-owners namely Samuel Reed, Benjamin Delo, and Gregory Dwyer. Reed has already been arrested in Massachusetts, while Hayes, Delo, and Dwyer remain at large.
BitMEX expressed strong disagreement with the charges, saying that the decision was “heavy-handed and that they will be defending the allegations vigorously”.
The exchange added,
From our early days as a start-up, we have always sought to comply with applicable U.S. laws, as those laws were understood at the time and based on available guidance.
BitMEX assured all users that their operations will remain normal and that all funds are safe.