Edit: Downvoting doesn’t make me less right
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.
>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?
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.
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.htm...
[2] https://www.worldofcorn.com/charts/world-corn-production_21....
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.
You cannot transfer physical commodities through digital means. Stocks and money can be transferred digitally. When you want to sell your commodity you do not send it to a central depot that stores all corn. You tell people that they can buy your corn and you deliver it when the commodity future reaches its expiry date. Thus, there is no commodity trade without futures. That excuse doesn't apply to financial assets.
(Requirements for qualifying as an ECP:
(1) Entities with $10 million in total assets; (2) Entities with a guarantor that is an entity which has $10 million in assets; (3) Entities with a net worth of at least $1 million and are using the swap to hedge a commercial risk; (4) Individuals with "amounts invested on a discretionary basis" that exceed $10 million, or $5 million if the individual is using the swap to hedge a commercial risk; (5) An entity who meets all of the following conditions: (i) all of its owners are ECPs; (ii) it and its owners have, in the aggregate, $1 million in net worth; (iii) it is entering into a "swap"; and (iv) it is using the swap to hedge a commercial risk.
)
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.
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.
This is something US regulators weigh so I was wondering if you do too.
Can you provide some context for people who's not in the loop?
1. Africrypt - 3.6B USD, founders disappeared (https://www.bloomberg.com/news/articles/2021-06-23/s-african...)
2. Bitfinex 36% haircut hack (https://www.reuters.com/article/us-bitfinex-hacked-hongkong-...) - not to mention being in bed with Tether for a long time.
3. MtGox... the list goes on.
The question that was asked was:
>> They [BitMEX] have consistently been by far the shadiest and scummiest 'exchange' around.
> Can you provide some context for people who's not in the loop?
Your examples show some negatives of cryptocurrencies, but none of them have anything to do with BitMEX and therefore don't answer the question asked.