BitMEX exposed thousands of client emails, but big OTC traders say they're unfazed

It was an interesting Friday morning for cryptocurrency exchange giant BitMEX. 

The Hong Kong-based derivatives exchange sent a mass email to users with their email addresses exposed. Vivien Khoo, the company's chief operating officer, told The Block that while the email was sent to "the majority" of the firm's users, not all of its clients' information was jeopardized. The morning frenzy didn't end there. Later in the morning, it appears the firm's Twitter account was tampered with. 

"Take your BTC and run. Last day for withdrawals," one tweet read before being quickly deleted. 

The firm's trading system was not jeopardized, nor were any funds at risk, the company said, but the incident speaks to the immaturity of the cryptocurrency market. Bad actors could use email addresses tied to trading accounts to identify the passwords of those accounts. BitMEX has also struggled to maintain its platform during high-traffic periods, which has resulted in the cancellation of client orders en masse. 

Still, despite these issues, traders are sticking by the marketplace. Several executives at trading firms said they didn't think the incident would impact volumes in the short term. One trader said she planned to still use the platform.

"Dumb mistake, but it is one of those things that happens not infrequently," they said. 

"I would think they might do some gesture/offer to compensate the people but it's not like they were hacked."

Similarly, another trader said he didn't think the incident would result in traders using other platforms, despite the competitive landscape — Binance, Bitfinex, and Kraken all recently launched their own derivatives platforms. 

"It's not like a coin was stolen," the trader said. 

A trader at an Asian derivatives trading shop put it more succinctly: "Who cares?"

BitMEX's secret sauce 

It makes sense that these folks are reticent to leave BitMEX. Despite the increase in competition, BitMEX has a number of attractive qualities that set it apart. Namely, leverage and liquidity. 

"They are a behemoth," a trader said, referring to the firm's volumes. In total, $2.3 billion worth of crypto trades hands on a given day at BitMEX. That dwarfs volumes at rivals Binance, which sees $790 million in volumes a day, and FTX, which sees $150 million, as per data from skew. 

"Where else can you get that combo of liquidity and leverage," the trader added. 

That speaks to the firm's other strength, its high leverage. Traders on the platform can go long on BitMEX's perpetual swaps with as much as 100X leverage. That presents the opportunity to unlock more upside out of a trade without having to put as much money on the table. 

Rival Binance announced recently that it would offer 125X leverage, but the firm caps trades at that leverage amount at $250,000, whereas BitMEX offers 100X leverage for a max size of $1.6 million.