The BMEX Rug Pull
Arthur Hayes Your Development Team May Destroy Bitmex. Please correct this now. This is a free press and free market at work for self-regulation. Thanks for listening.
On October 9, 2024, Bitmex announced a 2x+ fee hike billing it as “Simpler Fee, Bigger Rewards” that goes into effect on October 22, 2024, at 0.00 UTC. The real deal is that this is a rug pull that could threaten the very integrity of the exchange. The truth is these are at least 2x+ higher fees and crappier rewards
I make these claims as a long-time supporter of Bitmex. I have no axe to grind. Arthur Hayes and the other founders are true heroes in my book.
Brief History of Bitmex
Innovated by Arthur Hayes, Bitmex became the premier Bitcoin derivative platform with an innovative fee structure offering Bitcoin trading fees to all comers of 0.075% taker fees and -0.025 maker fees. These rates enabled a tight spread of usually one tick. And this was when rates were truly “simple”
This fee structure enabled professional traders to structure their trading so they were being paid for providing market liquidity through negative trading fees.
I outlined this in a December 11, 2020 article and again more thoroughly in my book Equity Trading.
Here is a scatter study feature that reveals the number of trades, % of winners, longest and shortest trades, worst drawdown, worst missed profits, total fees, % of fees in PNL, and % market maker. Most significantly 7.6% or 5.7 BTC of UOG profits were derived from market-making fees and funding. This is a fundamental game-changer 99.9% of all traders are missing! I have always known I was being paid for trading, but until this study I had no idea how much. This fundamental game-changer is because innovative non-regulated exchanges, most notably Bitmex, reward market-makers who openly publish their bid/ask with a negative commission that is the equivalent of 1/3 what market takers and hidden orders pay.
This rate model made Btimex the premier Bitcoin derivative market until the indictment by the feds.
This ended with the launch of the BMEX token in November 2022 outlined in the LITEPAPER below:
On January 4, 2023, the token was promoted with published trading fee discounts, refunds on withdrawal fees, rebates based on the volume and amount of Bmex tokens purchased and staked, free withdraws, and other carnival-type perks. If the link below has been disabled I saved a pdf file in the link above.
The tokens we sold were between $0.47 and $0.97 with these promised written benefits during January and February 2023.
The tokens we sold were between .50 and $1.00 with these promised written benefits and they have lost 90% of their value from the highs. But this loss was excusable for the staking in return for the negative market-making fees.
I made no secret of my disdain for creating the BMEX token. And unfortunately, my fears are about to become reality.
I am not crying over spilled milk. What is done is done. But changing this fee structure for those who have purchased and staked BMEX with anticipation of lower fees is a rug pull that will damage the reputation of Bitmex and BMEX token that was promoted as something quite different than it will be on October 20, 2024, at O.OO UTC.
Ugly Old Goat
