5 ms·

This isn’t “bad behavior” like actually providing banking services to drug cartels and criminal gangs, like HSBC did. BitMEX basically committed a victimless pr

This isn’t “bad behavior” like actually providing banking services to drug cartels and criminal gangs, like HSBC did. BitMEX basically committed a victimless process crime, and the gubmint wants a bribe. Edit: Downvoting doesn’t make me less right

nullc 5y ago
> actually providing banking services to drug cartels and criminal gangs I don't get that allegation. My understanding is that Bitmex is effectively a cryptocurrency casino. You can only deposit and withdraw Bitcoin. After depositing you could make bets on the price of various things against the house, then withdraw your winning or losses. It's not like banking services, nor is it like an exchange-- you couldn't deposit Bitcoin and withdraw a different cryptocurrency or US dollars.
- jkhdigital 5y ago
  I... agree with you? I said that HSBC, a "regulated" banking institution, did those things while BitMEX obviously has not since it is basically a Bitcoin cul-de-sac with no connection to the rest of the economy, virtual or otherwise.
  - nullc 5y ago
    I know it's shocking, but people who agree with you are allowed to reply too. :)
- gruez 5y ago
  >My understanding is that Bitmex is effectively a cryptocurrency casino. >You can only deposit and withdraw Bitcoin. After depositing you could make bets on the price of various things against the house, then withdraw your winning or losses. I disagree with the "cryptocurrency casino" characterization. Do you think CME is operating a "USD casino" by offering cash-settled futures?
  - pushrax 5y ago
    It might be fair to characterize some products traded on CME as gambling products, because people often use them to gamble. Though of course cash settled futures have other purposes too.
  - hanniabu 5y ago
    Thank you for pointing this out. This type of double standard is all too common with people biased against crypto.
  - graeme 5y ago
    Futures have substantial utility for anyone who needs to hedge the underlying commodities. What underlying economic purpose is served by Bitmex? I don’t exclude the possibility of such a purpose eventually but it is silly to pretend the two cases are both currently economically useless.
    - gruez 5y ago
      > Futures have substantial utility for anyone who needs to hedge the underlying commodities. 1. CME has futures for much more than just commodities. They have futures for S&P 500, interest rates, and cryptocurrencies (lol) 2. The daily volume for corn futures is 350,000 contracts[1]. Each contract corresponds to 5,000 bushels, which means 1.75 billion bushels worth of corn are being traded daily. On the other hand the US only produces 14.18 billion bushels yearly, and the world only produces 44.64 billion bushels[2]. Given the large disparity between trade volumes and actual production, I doubt most of the trading activity are from people "who needs to hedge the underlying commodities". [1] https://www.cmegroup.com/markets/agriculture/grains/corn.html https://www.cmegroup.com/markets/agriculture/grains/corn.htm... [2] https://www.worldofcorn.com/charts/world-corn-production_21.svg https://www.worldofcorn.com/charts/world-corn-production_21....
      - graeme 5y ago
        All the trading in corn futures aids in liquidity and price discovery. Things which seem meaningless until you actually try a thinly traded trade and find that you can lose 30% simply from buying something on the bid-ask spread. Maybe someday we’ll have a recession caused by excessive leverage in corn futures but so far the activity you mentioned has seemed fairly harmless while producing much liquidity.
- fighterpilot 5y ago
  The bets aren't against the house. Bitmex isn't market making their own products (unless you're trading one of the super illiquid products nobody uses). They're analogous to regular derivatives exchanges that provide a platform in exchange for a trading fee.
- eftychis 5y ago
  (FYI casinos have among the highest daily throughput of money and do not even compare with the crypto-token industry.) The whole financial system is based on risk management. Options and other derivatives are fundamental tools to that extent. Here is a simplified example: you have two products A and B. You toss a coin: on heads A returns $100 otherwise $0 and B does the reverse. What is the expected value of A or B? What is that of A and B together -- do you want to re-evaluate A or B now? That is what options give you. And there is no such thing as the house kicking you out if you have any advantage. Which casinos do. So comparing casinos and selling or buying options is fundamentally flawed. If you go in and start selling or buying with no idea what you are doing, well yeah you are doomed. It is like asking a 5 year old to fix a jet engine. It might manage to do so, but guess what is most likely to happen. Any serious broker will get you through a bunch of questions to allow you to trade options or even basic stocks. And they will offer assistance etc. That is something you should blame some platforms with. They are not blameless. But they are not casinos or lotteries. But serious people spend time modeling etc before even thinking of placing a trade. They don't walk in and buy a next day expiration contract... Which is something that a lot of people entering for a quick buck do. I am sorry but at some point we need to say to the patient "ok, you want to kill yourself, go ahead but don't damage your family." There are other industries that the casino metaphor better fits: gaming (EA aka most hated company) and lotteries (aka state theft/extra tax) are some.
  - nullc 5y ago
    Bitmex products are not ordinary options in that there is no physical deliver of the underlying. They're a cash settled side bet (in the case of bitmex the cash in Bitcoin, but that doesn't at all change it from being cash settled) where the house is the counterparty (even if there is an offsetting trader, it's the houses "insurance fund" that provides for the likelihood of delivery). It's not reasonable to compare the service to a US retail stock brokerage. You could compare it to the sort of CFD platforms that are popular in the UK, but those services (at least as retail offerings) are unlawful in the US in part because they're very far towards gambling on the gambling/investment spectrum. Besides, I wasn't complaining that bitmex is a casino. I'm pointing out that the specific casino-ness of their operations (that it's purely bitcoin in and out) undermines the argument that they were providing banking or exchange services to criminals.

nullc 5y ago

> actually providing banking services to drug cartels and criminal gangs I don't get that allegation. My understanding is that Bitmex is effectively a cryptocurrency casino. You can only deposit and withdraw Bitcoin. After depositing you could make bets on the price of various things against the house, then withdraw your winning or losses. It's not like banking services, nor is it like an exchange-- you couldn't deposit Bitcoin and withdraw a different cryptocurrency or US dollars.

jkhdigital 5y ago
I... agree with you? I said that HSBC, a "regulated" banking institution, did those things while BitMEX obviously has not since it is basically a Bitcoin cul-de-sac with no connection to the rest of the economy, virtual or otherwise.
- nullc 5y ago
  I know it's shocking, but people who agree with you are allowed to reply too. :)
gruez 5y ago
>My understanding is that Bitmex is effectively a cryptocurrency casino. >You can only deposit and withdraw Bitcoin. After depositing you could make bets on the price of various things against the house, then withdraw your winning or losses. I disagree with the "cryptocurrency casino" characterization. Do you think CME is operating a "USD casino" by offering cash-settled futures?
- pushrax 5y ago
  It might be fair to characterize some products traded on CME as gambling products, because people often use them to gamble. Though of course cash settled futures have other purposes too.
- hanniabu 5y ago
  Thank you for pointing this out. This type of double standard is all too common with people biased against crypto.
- graeme 5y ago
  Futures have substantial utility for anyone who needs to hedge the underlying commodities. What underlying economic purpose is served by Bitmex? I don’t exclude the possibility of such a purpose eventually but it is silly to pretend the two cases are both currently economically useless.
  - gruez 5y ago
    > Futures have substantial utility for anyone who needs to hedge the underlying commodities. 1. CME has futures for much more than just commodities. They have futures for S&P 500, interest rates, and cryptocurrencies (lol) 2. The daily volume for corn futures is 350,000 contracts[1]. Each contract corresponds to 5,000 bushels, which means 1.75 billion bushels worth of corn are being traded daily. On the other hand the US only produces 14.18 billion bushels yearly, and the world only produces 44.64 billion bushels[2]. Given the large disparity between trade volumes and actual production, I doubt most of the trading activity are from people "who needs to hedge the underlying commodities". [1] https://www.cmegroup.com/markets/agriculture/grains/corn.html https://www.cmegroup.com/markets/agriculture/grains/corn.htm... [2] https://www.worldofcorn.com/charts/world-corn-production_21.svg https://www.worldofcorn.com/charts/world-corn-production_21....
    - graeme 5y ago
      All the trading in corn futures aids in liquidity and price discovery. Things which seem meaningless until you actually try a thinly traded trade and find that you can lose 30% simply from buying something on the bid-ask spread. Maybe someday we’ll have a recession caused by excessive leverage in corn futures but so far the activity you mentioned has seemed fairly harmless while producing much liquidity.
fighterpilot 5y ago
The bets aren't against the house. Bitmex isn't market making their own products (unless you're trading one of the super illiquid products nobody uses). They're analogous to regular derivatives exchanges that provide a platform in exchange for a trading fee.
eftychis 5y ago
(FYI casinos have among the highest daily throughput of money and do not even compare with the crypto-token industry.) The whole financial system is based on risk management. Options and other derivatives are fundamental tools to that extent. Here is a simplified example: you have two products A and B. You toss a coin: on heads A returns $100 otherwise $0 and B does the reverse. What is the expected value of A or B? What is that of A and B together -- do you want to re-evaluate A or B now? That is what options give you. And there is no such thing as the house kicking you out if you have any advantage. Which casinos do. So comparing casinos and selling or buying options is fundamentally flawed. If you go in and start selling or buying with no idea what you are doing, well yeah you are doomed. It is like asking a 5 year old to fix a jet engine. It might manage to do so, but guess what is most likely to happen. Any serious broker will get you through a bunch of questions to allow you to trade options or even basic stocks. And they will offer assistance etc. That is something you should blame some platforms with. They are not blameless. But they are not casinos or lotteries. But serious people spend time modeling etc before even thinking of placing a trade. They don't walk in and buy a next day expiration contract... Which is something that a lot of people entering for a quick buck do. I am sorry but at some point we need to say to the patient "ok, you want to kill yourself, go ahead but don't damage your family." There are other industries that the casino metaphor better fits: gaming (EA aka most hated company) and lotteries (aka state theft/extra tax) are some.
- nullc 5y ago
  Bitmex products are not ordinary options in that there is no physical deliver of the underlying. They're a cash settled side bet (in the case of bitmex the cash in Bitcoin, but that doesn't at all change it from being cash settled) where the house is the counterparty (even if there is an offsetting trader, it's the houses "insurance fund" that provides for the likelihood of delivery). It's not reasonable to compare the service to a US retail stock brokerage. You could compare it to the sort of CFD platforms that are popular in the UK, but those services (at least as retail offerings) are unlawful in the US in part because they're very far towards gambling on the gambling/investment spectrum. Besides, I wasn't complaining that bitmex is a casino. I'm pointing out that the specific casino-ness of their operations (that it's purely bitcoin in and out) undermines the argument that they were providing banking or exchange services to criminals.