BitMEX is currently the biggest Bitcoin exchange based on the volume of exchanges and BitMEX research is going quite well as far as market research is concerned, but is BitMEX really so ethical? Let us explore.
Registered in Seychelles, BitMEX is not required to report any regulator. This article comes from various articles posted on media, Reddit and social media like Twitter.
Does BitMEX work against its customers?
Before starting to answer this question, let's try to understand the concept of Market Making. Market makers are responsible for completing orders. In addition, they buy and sell continuously, demonstrating the necessary liquidity on the market.
Market makers quote on both sides of the book, which means both the buy side and the sell side. If their purchase order is executed, their immediate plan is to also execute the sales order, thus acting as a neutral market maker. So a market maker benefits from a spread rather than a downward movement in the market, offering quick liquidity to users in return.
The question is therefore, is BitMEX acting as a neutral market maker (which is a positive service for its customers) or not.
On April 30, 2018, MitMEX updated its Terms of Service. He says:
"BitMEX has a for-profit business that, among other things, transacts in products traded on the BitMEX platform.The trading activity mainly operates as a market maker"
BitMEX also states that its profit is NOT from trading:
BitMEX states that its goal is to achieve a balance in terms of profits and losses and make money with the service fee paid by the company. Unfortunately, there is no way to check the BitMEX audit report as they have never released an external audit of their business.
The BitMEX legal advisor, Sullivan & Cromwell has been silently removed from their blog post since April. It is post precedent declared this:
Later, in May 2018, the updated post said this:
It is possible that Sullivan & Cromwell separated from BitMEX because it had problems with exchange plans.
The BitMEX desk should not be allowed to operate freely on the exchange
Suppose the owner (or employees of the owner) of an online casino is allowed to play his own game, can he resist not looking at everyone else's cards?
The same applies to an online Bitcoin exchange. If the BitMEX desk is allowed to trade freely with its bag, we can expect a similar result. This provides "more information" to the desk, which is not available to all other customers. While some information is available to all customers, for example, the order book or previous transactions, additional information such as the degree of leverage of each position or the price at which the margin will run out is private and is only available for the desk. of BitMEX.
In a blog post, BitMEX denied providing this information explicitly at his desk, but BitMEX did not agree to provide the same information to all customers, especially the two mentioned above.
Many users suspect that BitMEX gives unfair advantages to his desk. What are your opinions on the above? Comment below and let everyone know.