BitMEX, the exchange that invented the 100x perpetual swap, closes after 11 years; withdrawals stay open

BitMEX stopped trading on Wednesday. The crypto derivatives exchange ended trading, deposits and new positions at 04:00 UTC on Sept. 23, the closure time it set when it announced the shutdown on July 23, and posted a notice on its own blog saying customers can still log in and withdraw. "Your funds remain safe," the exchange said.

The owner, Seychelles-based HDR Global Trading, decided to close after what it called a strategic review of the business and the wider crypto industry. Cointelegraph reported that the company said the closure was not tied to legal or regulatory issues.

What customers with money still on it need to know

The headline is that withdrawals work. The detail that matters is what happens to money that stays behind. BitMEX's July closure notice says identity-verified users who had not withdrawn by the closure time "will be charged an account fee of 1% per annum (charged monthly), or USD 50 equivalent for accounts with no more than this amount, until fully withdrawn." It adds that the fee is set "to increase over time," with advance notice.

What that means in money, on our reading of the notice:

• A $10,000 balance pays about $100 a year, or roughly $8.33 a month. Small, but it is a charge for holding money on a venue that no longer does anything.
• A balance of $50 or less is charged $50. In practice, a small leftover balance is simply absorbed by the fee.
• Any balance is exposed to future increases the exchange has already reserved the right to make.

CoinDesk described the charge as 1% a year or a $50 minimum, whichever is greater. If that reading is right, the cost to small accounts is far steeper: $50 a month on a $1,000 balance would be $600 a year, 60% of the money. The notice's wording ties the $50 figure to accounts holding "no more than this amount," which is why we read it differently, but the safe conclusion is the same under both readings: there is no reason to leave anything there.

Two practical deadlines and warnings:

• BitMEX will switch off withdrawals through its API on Sept. 28, Cointelegraph reported, so automated tools and bots stop working and withdrawals have to be done on the website.
• The exchange warned about phishing that uses the closure as bait, and said no "priority or accelerated" withdrawal service exists. It also warned that Bitcoin withdrawals can be slow because it processes them from a fixed pool of addresses, and says assets exceed liabilities on its proof-of-reserves page.

Why it matters beyond BitMEX's users

BitMEX was founded in 2014 by Arthur Hayes, Ben Delo and Samuel Reed, and it popularized the perpetual swap: a futures contract with no expiry date that tracks the spot price through periodic funding payments. In its closure notice BitMEX called its 100x-leverage version "the most traded product in the crypto industry." CoinDesk reported the exchange had been losing ground in the very market it created, as larger venues took over the product.

The closure does not end its legal exposure. Cointelegraph reported that the Celsius bankruptcy estate sued five BitMEX-linked companies days ago, alleging fraud, manipulation and wrongful liquidations tied to 6,360 bitcoin during the March 2020 crash. At Wednesday afternoon's Coinbase price of about $84,330, those coins would be worth roughly $536 million (our calculation). BitMEX has not been found liable, and the claims have not been tested in court.

For traders elsewhere, the shutdown is a reminder of a basic exchange risk that has nothing to do with price: a venue can wind down on a schedule it controls. Prices on the rest of the market: crypto prices. Earlier today: Bitcoin falls below $84,200.

Sources: BitMEX closure notice and closure-day notice; CoinDesk; Cointelegraph; Coinbase. Fee examples are our calculations from the notice's wording. This is market information, not investment advice.