Trading giant BitMEX finds itself at the centre of a controversy, as an unexpected downtime started rumours of foul play with Bitcoin (BTC) falling to a low of $3,700. BitMEX issued a tweet, explaining how hardware problems arose due to crazy trading activity on March 12. As a result, BitMEX went offline for approximately 25 minutes and only managed to resolve the issue by 3 am UTC.
The tweet said:
“Between 02:16 and 02:40 UTC 13 March 2020 we became aware of a hardware issue with our cloud service provider causing BitMEX requests to be delayed.”
March 13 saw the largest number of liquidations over the past year, and aggregate volumes for Bitcoin futures are also suffering unprecedented lows.
As a result of heavy losses for Bitcoin traders all across the globe, a conspiracy theory has been running against BitMEX claiming they purposefully caused the massive losses by closing their servers and “faking” a hardware failure.
Sam Bankman-Fried, CEO of research outfit Alameda and competitor exchange FTX tweeted amidst the turmoil: “Insane theory of the day: there was no BitMEX hardware issue.”
Sam thinks that BitMEX’s inaction and unwillingness to address market conditions sped up Bitcoin’s fall. He also noted how after the platform went offline, Bitcoin recovered some of its value, saying
“BTC rallied without the gigantic sell wall of the BitMEX liq. And even more than that–BTC rallied, so fewer people *had* to be liquidated….. Creating a self-fulfilling prophecy. If we could BTC up above $5k, maybe then it would no longer *need* to go down.”
Salsatekila, who is a prominent crypto trader, also identified BitMEX as the black sheep triggering all the selling pressure. Remarking on how the spot buyers are cashing in on the panic, he tweeted,
“Bitmex (top left) goes down and buyers come in across the board”
BitMEX has rubbished the allegations, calling it a “conspiracy theory.”
“‘Insane’ is right. Sam, you know better than to deal in this type of conspiracy theory, especially since you operate a platform in the space and understand what kind of problems can occur at scale,” BitMex staff wrote.
Bankman-Fried later remarked that he “believed” BitMEX’s denial of his assertions and version of events.
The last day has seen over $478 million long orders being liquidated on BitMEX. This massive drop of orders has been identified as the leading cause of the general BTC bearish behaviour at the moment.
The liquidation on Bitfinex was around 3,356 Bitcoins, approximately $15 million dollars. The open interest on Binance lost value by more than $20 million during the same time, pinning the losses on liquidations.
On a daily scale, the total liquidations on BitMEX were around $1.44 billion, which is by far the largest ever recorded.
Jacob Canfield, who is the leading derivatives and crypto trader, tweeted on the price action,
“Market is NOT SAFE to trade right now. Bitmex price just went from 3600 to 4400 to 3600 and prevented all logins. Coinbase just went to $5500.”