I agree that Bitmex basing its settlement price on two less liquid exchanges is a bad thing. Personally given the number of margin traders being force liquidate

I agree that Bitmex basing its settlement price on two less liquid exchanges is a bad thing. Personally given the number of margin traders being force liquidated, I suspect that BitMEX likes the lack of liquidity. However, if the issue was only a thin market on Bitstamp, the price fluctuations would have remained localized to Bitstamp and the futures market on Bitmex. But instead the price for bitcoin dropped by about $1k across the board, which to me signals thin markets everywhere.