A tweet posted by blockchain data mining company Token Analyst on July 20 has revealed that cryptocurrency exchange BitMEX processed token withdrawals worth as much as $85 million to external wallets.

News reports published earlier this week suggested that the United States Commodity Futures Trading Commission (CFTC) would be launching a formal investigation into the exchange for allegedly allowing U.S customers to trade on its platform without a license.

Highest Withdrawals Amongst All Major Exchanges

The data provided by Token Analyst suggests that BitMEX saw the highest amount of withdrawals compared to other leading exchanges, including Binance, Bittrex, and Poloniex. While other platforms saw a high frequency of withdrawals as well, they balanced out with equally high deposits. However, BitMEX received the lowest deposits in proportion to its withdrawals. The exchange processed approximately $85 million worth of withdrawals while only receiving $12 million in deposits.

These user withdrawals are likely a direct consequence of the U.S. CFTC’s investigation announcement. The commission will be probing into the rules broken by BitMEX, since it requires exchanges to obtain a permit before offering services to American citizens. The CFTC has classified Bitcoin as a commodity and “has jurisdiction over futures and other derivatives based on them.”

Notably, BitMEX’s parent company HDR Global Trading Company refused to comment on media reports regarding the investigation.

US Citizen are Prohibited from Using BitMEX

In an interview this January, CEO of BitMEX, Arthur Hayes, acknowledged the possibility of customers using Virtual Private Networks (VPN) to mask their IP addresses and appear as if they were residing in “BitMEX permitted countries.”

In its terms of service, the exchange notes that American citizens are prohibited from using the platform. In the past, the exchange has closed user accounts over suspicion that they were trading from within the US. The Seychelles registered exchange barred American traders from using the platform after the Securities and Exchange Commission shut down 1Broker for not having a “proper broker-dealer license.”

Founded in 2014, BitMEX is currently one of the biggest cryptocurrency exchanges in the world, ranking second according to data from CoinMarketCap. It grew due to the overwhelming popularity of its referral system that rewarded users for bringing in new traders. It also allowed users to make leveraged bets on the future direction of digital currencies similar to the futures market.

BitMEX has also recently been the center of criticism from critics like NYU economist Nouriel Roubini. Earlier this month, he slammed BitMEX for permitting massive money-laundering operations, having internal for-profit trading desks and performing no independent audits of the company.

Do you believe other exchanges with non-strict VPN policies will be the next to feel the CFTC’s wrath? Let us know your thoughts in the comments below.

Rahul N.

Rahul Nambiampurath is an India-based Digital Marketer who got attracted to Bitcoin and the blockchain in 2014. Ever since, he's been an active member of the community. He has a Masters degree in Finance. Email me!

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