BitMEX Faces Fallout After Trading Downtime Amid Bitcoin Plunge

Unexpected Downtime Raises Eyebrows

Trading enthusiasts were taken aback on March 12 when BitMEX, one of the world’s largest derivatives exchanges, suffered significant downtime during a period of heightened trading frenzy. As Bitcoin (BTC) plummeted to a staggering low of $3,700, rumors began swirling that the downtime may not have been just a mere technical glitch.

Details of the Incident

According to a statement from BitMEX, the outage lasted about 25 minutes, largely attributed to issues with their cloud service provider. This prompted them to tweet:

“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.”

However, the timing of the incident raised suspicions among traders, who saw unprecedented liquidations and record volumes for Bitcoin futures.

Chaos in the Trading World

On that fateful day, the exchange recorded the highest number of liquidations the platform had seen in a year. With traders scrambling to manage their positions, many felt the exchange’s downtime contributed to the chaos that resulted in massive losses across the board.

Almost Like a Soap Opera: Conspiracy Theories Unfold

Not one to shy away from controversy, Sam Bankman-Fried, CEO of competitor exchange FTX, offered a spicy take on the situation. He tweeted that the hardware issue could very well be an elaborate ruse and framed BitMEX’s downtime as an event that “hastened Bitcoin’s fall.” He concluded dramatically,

“And even more than that—BTC rallied, so fewer people *had* to be liquidated… Creating a self-fulfilling prophecy.”

BitMEX’s Response

In response to the swirling conspiracy theories, BitMEX quickly dismissed Bankman-Fried’s remarks as absurd. They remarked,

“‘Insane’ is right. Sam, you know better than to deal in this type of conspiracy theory…”

However, the criticism did not stop there. The truth remained foggy, leaving traders cautiously eyeing the platform.

BitMEX’s Financial Standing

As the dust settled, the chase for answers continued. BitMEX’s insurance fund took a significant hit, reportedly down 1,600 BTC (around $8.6 million) in just 24 hours, marking what appears to be its largest drop on record. With this kind of volatility, one has to wonder if traders will maintain their faith in the exchange.