Enormous Bitmex Outage Creates A Possible Crypto Crisis

The leader in derivatives crypto exchanges, BitMEX, has been on the verge of crisis many times over the past few years. As Bitcoin’s price is steadily forming support zones to attack the $10,000 boundaries, the exchange was hit with lawsuits for several large-scale crime acts, including racketeering, market price manipulations, conspiracy, and other illicit activities.

Meanwhile, BitMEX is undertaking a shocking move, as the exchange’s trading engine stopped operations on May 19, 2020. The engine outage resulted in users being unable to access their crypto funds for over an hour.

Amid the outage, crypto analyst Scott Melker raised another voice of concern about the reliability of BitMEX, adding that he has been “warning traders about BitMEX’s unreliability for over three years”. Crypto trader Mitoshi Kaku also jumped on the negativity bandwagon, citing that he “just doesn’t understand why people still trade there”.

Source: Twitter

BitMEX, on the other hand, announced that a “post-mortem” report of the reasons behind the trading engine malfunction will be published “in the next few days”.

The most probable reason behind the trading engine outage is the increased cryptocurrency market demand during the COVID-19 lockdown. Throughout the global crisis, most of the home-situated users referred to the crypto sector more often. New users also marked a boost, which may be the cause why Coinbase shut down operations earlier in May.

Sterling Trading Tech’s president Jim Nevotti commented on the recent exchange havoc, stating that “the COVID-19 outbreak essentially stress-tested the entire crypto exchange community, as the increased usage resulted in infrastructure cracks.”

Market analysts worldwide warned leverage traders that such outages may lead to “large market corrections”.

BitMEX’s performance, however, did not suffer solely from the engine shutdown, as the exchange is losing market share over the past few months. Other crypto exchanges ramped up their crypto derivatives exchanging, seeking to grab the disappointed BitMEX users.

Source: Skew

BitMEX’s reputation has also been damaged by community disbelief due to releasing personal information about users such as their emails.