An industry researcher initially gives credence to the idea that BitMEX was negligent in the face of crashing Bitcoin, but then U-turned on the idea.
According to a tweet from the company, problems arose during frenzied trading activity on the evening of March 12.
BitMEX “hardware issue” sparks delays
As a result, BitMEX was offline for around 25 minutes, managing to address the issue by 3 am UTC. The tweet stated:
“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.”
The exchange saw more liquidations than any other day over the past year, while aggregate volumes for Bitcoin futures also broke records.
BitMEX liquidations chart. Source: Skew.com
Exchange rejects “conspiracy theory”
Against a backdrop of heavy losses for Bitcoin traders everywhere, however, BitMEX is currently fielding intense criticism. Aside from technical reliability, one theory even suggests the exchange contributed to BTC/USD’s record daily losses.
“Insane theory of the day: there was no BitMEX hardware issue,” Sam Bankman-Fried, CEO of research outfit Alameda and competitor exchange FTX wrote as part of a series of tweets following the turmoil.
For Bankman-Fried, it was BitMEX’s unwillingness to address market conditions which hastened Bitcoin’s fall. After the platform went offline, Bitcoin recovered, he noted.
“BTC rallied without the gigantic sell wall of the BitMEX liq,” he summarized.
“And even more than that–BTC rallied, so fewer people *had* to be liquidated….. Creating a self-fulfilling prophecy. If we could will BTC up above $5k, maybe then it would no longer *need* to go down.”
BitMEX responded by calling the allegations a “conspiracy theory.”
“‘Insane’ is right. Sam, you know better than to deal in this type of conspiracy theory, especially since you operate a platform in the space and understand what kind of problems can occur at scale,” staff wrote.
Bankman-Fried later said that he “believed” BitMEX’s denial of his version of events.
BitMEX’s insurance fund, as of Thursday, was down 1,600 BTC ($8.6 million) in 24 hours in what appears to be its biggest drop on record.
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