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Yesterday, the United States Commodity Futures Trading Commissions (CFTC) filed charges against BitMEX and its executive team, pressing both criminal and civil allegations. Its CTO, Samuel Reed, was arrested. The platformâs CEO, Arthur Hayes, and its cofounder Ben Melo are still under the radar.
The news spread quickly throughout Crypto Twitter, and of course, the community reacted with mixed but well-argued opinions.
The Bitmex Case is Bad
As soon as the news came out, the nervousness of the markets reacted as expected. Within minutes, BTC crashed, going from just over 10,900 USD to almost touching the $10,400 mark. The drop was drastic but oddly less than what would have been expected on previous occasions.
Beyond that, there is the idea that the fall of BitMEX can impact both the markets and the ecosystem, in general, since it could be a possible warning about the desire of the United States to obstruct trading at a global level.
The community was quick to point out the âhypocrisyâ of the authorities in going against BitMEX while trying to block the sun with one finger by ignoring a scandal of several trillion dollars laundered through traditional banks:
Others also pointed out that a lot of the major cryptocurrency exchanges engage in similar practices as BitMEX and are likely under the regulatorsâ radar as well.
What Iâm mainly worried about is the fact that pretty much every notable exchange engages in similar practice to BitMex.
Itâs Mex today.. what if ByBit, Binance, FTX tomorrow?
Never say never.
â Loma (@LomahCrypto) October 1, 2020
Additionally, Adam Cochran, a well-known crypto commentator, and industry expert outlined that DeFi projects are also likely to be prosecuted in the longer-term if they fail to abide by the Bank Secrecy Act and allow US-based customers.
He argued that while you canât shut down smart contracts, authorities can easily go after developers responsible for the interface, companies hiring individuals to work on the protocols, and so forth.
BitMEXâs downfall is good.
However, others claim that what is happening with BitMEX could be good for the ecosystem.
In general terms, BitMEX has a bad reputation of being used to manipulate markets due to its crashes at key price breakouts, its strong leverage, and its lax anti-money laundering policies. In fact, Hayesâ arrogance has put him on the spot in several cases.
He started calling âshitcoinsâ and âturdsâ to projects supported by his platform and was accused of mocking his domicile election based on the ease of bribing the authorities.
everything about this is just đ„„ WILD đŽ
CFTC and DoJ charging @BitMEX and key executives. one exec is already in federal custody.
FBI director Sweeney says âthey will soon learn the price of their alleged crimes will not be paid with tropical fruitâ https://t.co/O08itCctpF pic.twitter.com/jBa7btmvQG
â Meltem Demirors (@Melt_Dem) October 1, 2020
It goes without saying that itâs questionable at best to claim that regulatory conditions in a country are better compared to the US because authorities are âeasier to bribe.â A case of the kind could serve as a warning sign for exchanges and other companies to be particularly stringent when it comes to abiding by existing regulations.
Another analyst and crypto proponent pointed out that the BitMEX case is short-term bearish but long-term bullish.
Assume the CFTC & DOJ bring BitMEX down. The absence of BitMEX may then result in US exchanges and OTC desks becoming marets of âsignificant sizeâ, sharply increasing the odds of the SEC approving an ETF.
Of course, there are also the cautious ones. They prefer to wait and see how events unfold, although they claim that this could potentially be good in the long run.
This stance just reflects how the ecosystem is maturing. It is no longer prone to overreactions, but still, traders need to know what happens in other areas to have a clearer opinion. In this case, a potential lawsuit against BitMEX could have implications not only on the financial field but also at a legal, operational, and even political level.
BitMEX also has a word to say
BitMEX also has its own opinion. Of course, the platform denies breaking any law and published an official post saying it will fight back:
âWe strongly disagree with the U.S. governmentâs heavy-handed decision to bring these charges, and intend to defend the allegations vigorously. 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.â
The post The BitMEX v CFTC Case: The Good and the Bad For The Crypto Industry appeared first on CryptoPotato.
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