Unlike traditional brokerage firms, cryptocurrency exchanges are not members of the Securities Investor Protection Corp. (SIPC). Therefore, unless user terms specify otherwise, investors with cryptocurrency assets commingled on a custodial cryptocurrency exchange could potentially lose their funds as unsecured creditors.
Pros Explained
- Professional derivatives trading platform: BitMEX offers an institutional-grade crypto derivatives trading experience built by seasoned traders.
- Up to 100x leverage on Bitcoin and Ethereum: BitMEX customers can use 20x to 100x leverage, depending on the asset.
- Deep liquidity for Bitcoin perpetuals: BitMEX possesses some of the deepest liquidity for Bitcoin perpetual futures contracts in the market.
- Low trading fees: BitMEX offers very low trading fees and a maker fee rebate.
Cons Explained
- Only crypto-to-crypto trading: BitMEX users cannot deposit fiat currency into their trading accounts.
- Lack of regulatory compliance: This Seychelles-based exchange is unregulated, and its founders are facing criminal charges in the U.S. for violating the Bank Secrecy Act.
- Not available to U.S. customers: BitMEX is not regulated in the United States and is not available to U.S. customers.
Introduction
BitMEX is a leading crypto derivatives exchange that enables traders and investors to buy futures and perpetual swap contracts on a wide range of cryptocurrencies.Founded in 2014, the Seychelles-based crypto-only trading platform managed to establish itself as a leading crypto derivatives exchange known for deep liquidity and a professional trading dashboard.Experienced and professional traders looking to execute crypto derivatives trading strategies will find what they need on BitMEX.
Investing in cryptocurrencies, Decentralized Finance (DeFi), and other Initial Coin Offerings (ICOs) is highly risky and speculative, and the markets can be extremely volatile. Consult with a qualified professional before making any financial decisions. This article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies nor can the accuracy or timeliness of the information be guaranteed.
Company Overview
BitMEX, which stands for Bitcoin Mercantile Exchange, was launched in 2014 by Arthur Hayes, Ben Delo, and Samuel Reed to provide a professional-grade Bitcoin derivatives trading platform. Owned and operated by HDR Global Trading Limited out of Seychelles, BitMEX quickly established itself as the preferred leveraged trading platform for Bitcoin traders.
In 2016, BitMEX created and launched perpetual leveraged swap contracts on Bitcoin to allow traders to trade Bitcoin futures with up to 100x leverage and no expiry date. The innovative new crypto derivative helped BitMEX become of the highest-volume Bitcoin exchanges in the world.
Despite the trading platform's sophisticated user experience and product offering, BitMEX has not been without controversy. BitMEX has been subject to numerous lawsuits by former customers, alleging that BitMEX has engaged in market manipulation, money laundering, trading against its customers, and breaking international compliance laws. In 2020, the Commodity Futures Trading Commission (CFTC) also charged BitMEX for illegally operating a virtual currency exchange and breaking anti-money laundering laws while conducting business outside the U.S. and allowing U.S. customers to trade on the platform.
As of 2023, BitMEX is trying to shake off its bad reputation and aims to become the world's largest regulated crypto derivatives exchange. In 2020, BitMEX introduced identity verification for all users, marking the first step in the exchange's new direction.
Cryptocurrencies Available on BitMEX
The crypto derivatives exchange supports 23 digital currencies and tokens, including but not limited to:
- Bitcoin (XBT)
- Ethereum (ETH)
- Dogecoin (DOGE)
- Litecoin (LTC)
- Bitcoin Cash (BCH)
- Binance Coin (BNB)
- Cardano (ADA)
- Polkadot (DOT)
- Shiba Inu (SHIB)
- Avalanche (AVAX)
Cryptocurrencies are a risky asset class. Always conduct thorough research before investing in any digital currency or token.
Trading Experience
BitMEX is known for offering an institutional-grade trading platform for experienced users.While beginners may struggle with the platform’s professional setup, seasoned traders will likely find all the features they need to execute a wide array of crypto derivatives trading strategies.The trading platform’s standout features include the following:
- The ability to trade bitcoin with 100x leverage
- Low latency market data and trade execution
- State-of-the-art crypto trading and pricing APIs
- The option to place idle funds into BitMEX Earn to receive up to 10% APR
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Fees
BitMEX offers some of the lowest fees in the crypto exchange landscape. Price takers pay only a 0.075% commission.
BitMEX doesn’t charge deposit fees or withdrawal fees for Bitcoin. Only Bitcoin network fees apply for withdrawals.Tether USD deposits are also free of charge. However, BitMEX does charge withdrawal fees for USDT, which vary depending on Ethereum network fees.
Security
BitMEX operates multi-signature wallets, holds all funds in cold storage, and at least two employees audit all withdrawals. Additionally, BitMEX deploys a multi-party computation (MPC) system that lets two or more parties complete a function on encrypted data without any information leaving the encrypted domain except for the desired outcome. BitMEX claims that the MPC prevents an attacker from stealing funds even if all of BitMEX’s systems are compromised.
Opening a BitMEX Account
Opening a BitMEX account is fairly straightforward. First, you’ll need to provide your email address and a password.
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Next, you’ll complete the identity verification process. To get verified, you need to provide a photo of your ID, a presence capture video or selfie, your location, a declaration of your citizenship, and how you will fund your account. There is also an option for businesses to set up corporate accounts on BitMEX.
It’s important to note that BitMEX isn’t available to U.S. users. The exchange also does not provide services to customers in Cuba, Crimea and Sevastopol, Iran, Syria, North Korea, and Sudan. Additionally, persons located in Seychelles, Bermuda, Hong Kong Special Administrative Region of the People’s Republic of China, Japan, Canada (in Ontario and Quebec), Burundi, Central African Republic, Democratic Republic of Congo, Eritrea, Guinea-Bissau, Libya, Mali, Palestine, Somalia, South Sudan, Western Sahara, and Yemen are also prohibited from using BitMEX.
Customer Service
BitMEX provides customer service via support tickets and email. Like many other crypto exchanges, it does not offer phone support.
Customer Satisfaction
While experienced traders praised BitMEX’s professional trading experience in the early days of crypto when high-quality trading platforms were few and far between, the list of BitMEX user complaints has grown longer and longer as the years passed.
Some users complain of market manipulation, problems withdrawing assets, and a complicated user experience. Some former users have even filed lawsuits against the exchange, alleging that BitMEX engages in market manipulation and trades against its clients.
Moreover, due to the exchange’s incorporation in Seychelles, BitMEX was able to operate without having to verify the identity of its users or requiring licenses in the jurisdictions where many of its customers were based.
As a result, the Seychelles-based exchange was hit with a $100 million fine from the CFTC and U.S. Financial Crimes Enforcement Network (FinCEN) in 2021 for willfully violating the Bank Secrecy Act (BSA) and FinCEN regulations.
Additionally, all three of the exchange’s founders plead guilty to charges of violating the Bank Secrecy Act and conspiracy to violate the Bank Secrecy Act in the Southern District of New York in 2022. They no longer work for the exchange.
Account Management
BitMEX provides a web-based trading platform and a mobile app for Android and iOS.While the BitMEX mobile app doesn’t have all of the exchange’s products and features, it allows users to seamlessly manage their trading positions on the go.
In addition to individual customer accounts, BitMEX also supports corporate accounts. Corporate clients can benefit from individualized solutions, such as 24/7 customer support, consulting, or institutional crypto strategies.
How BitMEX Compares to Other Cryptocurrency Companies
BitMEX pioneered Bitcoin's perpetual futures contracts, establishing itself early as one of the leading Bitcoin derivatives trading platforms in the crypto market. However, the exchange’s initial lack of KYC procedures and the ability to take highly leveraged positions gave BitMEX a reputation as more of a casino than an exchange.
While the Seychelles-based company has been trying to clean up its image in recent years, introducing an identity verification process in 2020 and parting ways with its founders who are facing criminal charges, other crypto exchanges have been able to grab a large share of the crypto derivatives pie.
BitMEX’s main competitors include Binance, ByBit, and Huobi Global. Each of these platforms offers similar tools and features to BitMEX, and it may be worth considering if you’re interested in trading crypto.
Derivatives are risky investment vehicles that can amply trading profits as well as losses.
Final Verdict
In the early days of crypto, BitMEX established itself as the go-to Bitcoin derivatives trading platform for professional investors. This exchange made a name for itself by allowing traders to take 100x leveraged positions on bitcoin and providing a highly professional crypto-to-crypto trading experience.
However, it has made more headlines recently due to a lack of regulatory compliance, and its founders are facing criminal charges in the U.S. for violating the Bank Secrecy Act. Regardless, BitMEX has managed to retain a leading position as a crypto derivatives exchange and an institutional-grade trading dashboard. Inexperienced investors should probably steer clear of BitMEX as its sophisticated trading dashboard and advanced financial products are likely to overwhelm new crypto buyers.
Methodology
Investopedia is dedicated to helping those interested in cryptocurrency investing make informed and safe decisions. We are committed to providing our readers with unbiased reviews of the top cryptocurrency exchanges for investors of all levels. Exchanges were reviewed on points including security, fees, number of cryptocurrencies available, and more. We also considered if the exchange is regulated by a proper agency or entirely decentralized. Our full cryptocurrency exchange methodology, including the review process and weighted data points, is available for review.
