Troubled BitMEX loses chief exec amid BMEX token delays
The chief exec of troubled BitMEX crypto exchange has suddenly quit, just weeks before listing its own BMEX token in a 2017-style ICO. The firm has operated for five years sans token, yet plans to list BMEX on its spot markets before the end of the year.
The founder and original executives of BitMEX have pleaded guilty to federal crimes brought by the US Department of Justice. Arthur Hayes, for instance, is currently under house arrest and will serve another year of probation.
CEO Alexander Höeptner left BitMEX on Tuesday. Its CFO, Stephan Lutz, will serve as interim chief exec.
Read more: BitMEX has now lost all US profits after founders plead guilty, lawyer says
Why is the BMEX token needed, anyway?
The most obvious utility of BMEX is a fundraising mechanism for BitMEX. Revenues have suffered multi-year declines since its early executives were criminally indicted.
BitMEX, opting for a more positive spin, is advertising BMEX as an Ethereum-based token that investors can stake for rewards. Stakers will receive discounts on trading fees, refunds on withdrawal fees, access to giveaways, enhanced customer service, and early access to new BitMEX products. The exchange will use a tier system based on the amount of BMEX staked to determine stakers’ access level.
BitMEX set a cap of 450 million tokens, which it plans to vest in tranches for up to five years. It promises to use most of the tokens to reward users and grow the exchange’s ecosystem.
BitMEX airdropped 1.5 million BMEX in January. Its litepaper says it ended the BMEX airdrops for exchange users in May.
According to an early litepaper, BitMEX planned to launch spot markets denominated in BMEX by June 2022. However, a search for BMEX on its spot exchange didn’t turn up any trading pairs. CoinMarketCap lists no trading volume.
Responding to a question on Twitter, BitMEX said it would list BMEX-denominated trading pairs when market conditions become more favorable.
ICO Analytics slots the launch of the BMEX ICO somewhere “before 2023.” A disclaimer indicates that US investors should not buy BMEX tokens, and it may suspend the perks in some jurisdictions for regulatory reasons. It denies that BMEX is a security or share in BitMEX.
BitMEX faces various challenges
BitMEX offers fiat-to-crypto and crypto-to-crypto spot and derivatives markets. It also offers a BitMEX Earn program, in which users can earn yield for staking coins like bitcoin and tether.
Like most crypto exchanges, BitMEX became an occasional target for regulators and law enforcement authorities over the years. On August 10, 2021, a US federal court ruled against BitMEX in a case brought by the Commodity Futures Trading Commission (CFTC) and levied a $100 million fine against the companies that operated BitMEX, including its ultimate parent company 100X.
The CFTC alleged that BitMEX improperly offered its derivative products to US customers between November 2014 and October 2020.
BitMEX co-founder Arthur Hayes is serving two years of probation after pleading guilty to failing to prevent money laundering on the exchange in May 2022.
Other exchanges’ tokens might not inspire confidence
Other exchanges and their native tokens have had a rough year.
- Crypto.com had to lay off many of its employees.
- Coinbase laid off 18% of its workforce in June 2022. CEO Brian Armstrong cited an “economic downturn.”
- Binance had to coordinate with validators to pause BNB Smart Chain after yet another bridge exploit stole millions of dollars worth of BNB tokens. CEO Changpeng Zhao expressed confidence that they are beginning to narrow their search for the attacker.
Read more: Crypto.com is in big trouble — but the warnings were there
With all the obstacles and lackluster market conditions, investors may reasonably wonder whether BitMEX picked the best time to list its ICO for trading. Even with the challenges, though, BitMEX insists that it plans to go ahead with listing BMEX soon.
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