The Complete Guide to the BitMEX Exchange

• History
• Founders
• BitMEX Overview
• How to Register on BitMEX
• Deposits and Withdrawals
• What is Leveraging?
• Trading Interface
• BitMEX Fee
• Service Locations
• API
• Mobile App
• Security
• Customer Service
• Legal and Regulatory Compliance
• Conclusion

BitMEX is one of the few crypto exchanges that’s purely derivative based. The trading services it offers is based on complex perpetual contracts that never expire. The crypto exchange holds firm at number two in the world from a derivative stand point, trading 161,400 Bitcoin or more than $1.89 billion USD at the time of writing.

Registered in the small crypto-friendly nation of Seychelles, the exchange offers never-ending derivative contracts for eight cryptocurrencies, Bitcoin (XBT), Cardano (ADA), Bitcoin Cash (BCH), EOS, Ethereum (ETH), Litecoin (LTC), Tron (TRX) and Ripple (XRP).

History

Launched in 2014, BitMEX was designed from the start to cater for the professional trader. Unlike many other crypto exchanges that offer spot trading for small or novice traders and derivatives such as margin and futures, BitMEX only offers derivatives of the traditional futures contract and its variation, called perpetual. Futures are trading contracts that have a definitive expiry, or ending, date. Perpetuals, as the name suggests, is a trading contract that can continue indefinitely as it has no expiry set.

The first few years of the exchange have been uneventful apart from its rapid growth. As a professional derivative exchange, BitMEX isn’t well-known in the general crypto trading community compared to others. However, the sheer volume of trading and leverage available on the exchange has helped put it in the second spot.

In August of 2018, the exchange decided to move its headquarters to the Cheung Kong Center, Hong Kong. At that time, it was the most expensive office building in the world. The shifting of the office coincided with the crypto exchange taking its servers offline for scheduled maintenance. In the following couple of minutes, the price of Bitcoin jumped by 4% in the market.

That year was one of the best for the exchange. The year 2018 had seen $1 trillion US worth of trades being made on the exchange. To help traders in their leverage trading, the exchange had also started an insurance fund, which helped it support the highly risky leveraged contracts. By August next year, the fund had increased by 50%. BitMEX held 0.15% of all BTC in the world then.

The exchange was slapped with a class-action lawsuit in April this year in New York’s Southern District, claiming that the exchange had manipulated XBT prices through its influence to settle prices for its contracts. The lawsuit also accused the derivative exchange of acting as a seller of unregistered securities. BitMEX was at the same time sued in May by an organisation called BMA LLC, accusing the exchange of circumventing multiple US laws.

The year 2020 also saw two DDoS attacks on the exchange. On March 13th, the BitMEX initially believed there was a hardware issue, but realised it was under attack when the same issue surfaced 10 hours later. In both cases, the exchange and its funds were safe, although BitMEX compensated more than 150 of its users with 40 XBT as their trading positions were prematurely liquidated due to the issues.

HDR, the parent company of BitMEX started overhauling the corporate structure as it raised a new holding company for the exchange, called 100x (a nod to the exchange being the first crypto trading platform that offered 100x leverage on XBT contracts).

Founders

BitMEX was founded in 2014 by the trio of Arthur Hayes, Ben Delo and Samuel Reed. Each of the founders brought a specific skill and trait to the exchange, creating one of the most professional and advanced crypto trading platforms in the world.

Arthur Hayes

Hayes, with his experience in equity derivative trading saw an opportunity to provide the same quality of services and leverage to the crypto community. He is currently the CEO of BitMEX. From an educational point, Hayes holds a bachelor’s degree of science in economics and finance from the Wharton School, University of Pennsylvania.

His LinkedIn profile also shows the Hong Kong University of Science and Technology Business School, but no information on the program or degree is available.

Professional Experience

• Deutsche Bank: Hayes started his career with Deutsche Bank. As an Associate and a Synthetic Equity Trader from June 2008 to June 2011, he acted as the market maker for the bank’s Exchange Traded Funds (ETFs) from their Hong Kong office.
• Delta One Trader: A partner of the Citi Bank, the Delta One Trader was responsible for handling the bank’s ETFs. Hayes was the head trader for the Asian ETFs of the bank, with increased responsibilities of handling different Indexes, such as Forwards and Swaps, including custom made index baskets. Hayes worked with CitiBank for two years from June of 2011 to May of 2013.
• BitMEX: Five years down the road, Hayes realised that advanced trading options in the crypto field were still immature and there existed a lot of opportunity for both traders and an exchange that would be catering to them. In January 2014, the exchange was launched from Singapore, with Hayes still sitting at the helm as the CEO.

Ben Delo

A professional with years of experience in building trading systems, Ben Delo was primarily responsible for developing a trading engine for BitMEX. He has expertise in different systems and tools for quantitative data handling.

Delo holds a Bachelor of Arts, Mathematics and Computer Science from the prestigious University of Oxford, later enhancing his education in the same field with a Master’s degree from his alma mater.

Delo’s Experience

• IBM: Having began his professional life in 2005, Delo worked for IBM as a software engineer for two years until 2007.
• GSA Capital: Using his skills and knowledge of maths and computers, Delo was an analyst for the investment firm GSA Capital for three years from 2007 to 2010.
• Peel Hunt: Peel Hunt is a specialised investment bank. Delo worked as a front office developer for two years from 2010 to 2012.
• P. Morgan: Having moved to Hong Kong from his native UK, Delo accepted the position of Vice President for the US-based bank, J.P. Morgan for the Asian branch, working there from 2012 to 2015, a total of three years.
• BitMEX: Teaming up with Hayes and Reed, Delo set up the Bitcoin Mercantile Exchange, or BitMEX. Holding no formal position in the operations of the exchange, Delo has still been nonetheless involved with the crypto derivative platform since 2015.
• 100x Group: As a co-founder of BitMEX, Delo has taken a heavy involvement in the restructuring and, in order to create a better vision of a digital financial global market, he has been instrumental as a co-founder of the new holding company for BitMEX, 100x Group.

Samuel Reed

The third founder of BitMEX, Samuel Reed is the Chief Technical Officer of the exchange. Reed keeps his public image low key. Not much is known about the CTO, apart from the little paragraph on the team page of BitMEX.

Reed holds a Bachelor’s degree from Washington & Lee University in Computer Sciences. In his 12 years of experience, Reed has worked with different technology related companies, holding CTO positions for Tixelated and Global Brand Solutions. He is primarily involved in different firms and projects for the implementation of front-end user interfaces and web apps.

Overview

The Bitcoin Mercantile EXchange (BitMEX) is a peer-to-peer advanced crypto trading platform launched in 2014. The exchange offers complex leveraged contracts for professional traders. Unlike other exchanges, the exchange only offers leveraged products and all of these are in XBT.

The atmosphere of the exchange oozes of a no nonsense approach to trading. The main page of the crypto exchange looks like a website from the late 90s in with a dark theme and high-contrast look. The exchange has always been focused on catering for professional traders who are more interested in what a platform can do for them to generate profits, the aesthetics are clearly at a lower priority. Large, bold grid on the page spells out the reasons why traders should prefer the platform, with figures such as the huge daily ($1.89 billion USD), monthly and yearly volume.

Apart from the financials, the page also gives different statistics such as its claim of the deepest liquidity in the world for XBT trades (1500% greater than any other exchange for XBT/USD). The exchange also declares that its advanced derivative trading engine automates 100 audits a second.

How to Register on BitMEX

For an exchange that’s designed for advanced traders, the registration process on the BitMEX exchange is the easiest one we have come across. It is as simple as signing up on any normal website.

Potential traders wanting to sign up to BitMEX first need to go to the registration page. Alternatively, people can click the green Register button on the top right of the welcome page of the exchange. The exchange asks for very simple data from user, such as:

• Email: The email address that the trader will use for logging in the exchange. This address will also be used by the platform for all official communications with the trader.
• Password: A strong password is advised. Careful trading on the platform can bring immense profits due to leverage and a weak password can result in others logging and siphoning all the trader’s funds.
• Country or Region of Residence: BitMEX defines regions and countries that it doesn’t allow to trade on its platform in its Terms of Service which include US, North Korea, Sudan, Iran and a few others. Ironically, this field does allow traders to select all of these nations.
• Name: The exchange asks for the first and last name of the user, but this is optional.

The user then needs to acknowledge the Terms of Service and the Privacy Notice of BitMEX. We suggest that anyone signing up on the crypto exchange read these documents carefully. When satisfied, the user can simply click on the large rectangular Register button.

The user will be sent a confirmation email on the address they submitted in the registration process. The user then needs to login to their email and locate the message in their inbox. BitMEX will thank the person in the email for registering on the platform and will ask the trader to verify that their email is the one they entered.

Clicking the Verify My Email button will tell the exchange that the email is correct and it will complete the registration. Once that’s done, the registration process is complete, and the trader has successfully created a BitMEX trading account.

Deposits and Withdrawals

The no-frills attitude exhibited by BitMEX continues with its deposits and withdrawals. The exchange has a very straightforward way to let users fund their trading account and remove their XBT.

Depositing XBT

After the user has logged in to their account, they can head over to the navigation panel on the left and in the Account/Wallet option, they must select the Deposit option.

After selecting this, the deposit page will be opened. In a very strange move here, the exchange will ask the user to select his or her country of residence before they can proceed to make any deposits. This question was already asked during the registration process, so it seems redundant.

Since the BitMEX exchange is a derivative that deals in different leveraged crypto products that have their base in XBT, the exchange will only accept Bitcoin. There are a few important instructions and information for the users that we advise you to read. This includes:

• Minimum amount to be sent, XBT 0.0001.
• The average time taken (20 minutes max).
• Credit transaction is 1 confirmation
• A warning not to send LTC to the address. LTC is a fork of XBT and apart from tokenomics and performance changes, the network is essentially the same and the address will accepted by a LTC wallet when it comes to sending the coins, but they will be lost as the Litecoin will be sent on a wallet with the same address on its own network.
• The exchange will also inform the user to not be confused with the address. BitMEX exchange was one of the first to give multi-signature wallets and these wallets have a slightly different combination compared to regular ones.

Once the resident country option is selected, the user is presented with their personal wallet address. This address is the one a trader should give or enter in the wallet from where the funds will be sent. For the convenience of users, BitMEX also presents them with a QR code that they can scan if the wallet is on a mobile device and supports QR code scanning.

BitMEX is oriented towards performance and that’s reflected with their policy of allowing its traders’’ Bitcoin funds to be realised in their BitMEX wallet with only a single confirmation. As soon as the first confirmation is received on the Bitcoin blockchain, the funds are reflected in the trading dashboard and an email is also forwarded to the user’s registered address.

Withdrawing XBT

BitMEX has the same ease of withdrawing XBT as in depositing it. Users need to go to their Account/Wallet option like before in depositing, but this time they have to select the Withdraw option.

The withdrawal page will have a few data fields that need to be entered. The first one is the obvious address of the destination wallet. Users can simply copy the address to where they want the XBT to go. Users then need to enter the amount of Bitcoin they wish to transfer.

The third field is the network fee. Users have the option of setting any amount of fee they desire. However, the minimum BitMEX asks is XBT 0.001 and advises 0.002. A higher fee means that there is a greater chance of a miner or a node processing the transaction, so if the persons are in a real hurry, they should go for as high as they’re willing to spend. The transaction fee is deducted from the user account’s balance.

Before the transaction is confirmed, the traders need to enter a 2FA code in the field below. Two-Factor Authentication is a method of binding a mobile app to the exchange, in which auto codes are generated. This creates a layer of security which is hard to break. The section on BitMEX Security later on will detail on how users can set up a 2FA to protect their funds.

Once the right 2FA is entered, the exchange will display a detail of the transaction. At the end of the page, a user will need to press the Submit button to initiate a withdrawal. For security reasons, the founders of BitMEX have a multi-signature wallet that requires all of them to enter their private keys together to access the wallet. The exchange manually reviews withdrawal requests and if there’s nothing wrong or no objection exists, the transaction details are forwarded to the founders who release the funds once a day. This helps them to accumulate the different requests and release them in a batch.

On the right side of the page, there is a Withdrawal History that users can check to see the status of their withdrawals.

What is Leveraging?

For people who have little-or-no experience in leveraged trading, BitMEX’s trading interface can be daunting at first. However, a little bit of homework on what’s to be expected of the future and carefully calculating how much should be borrowed can help users to potentially increase their profit margins by many folds. Depending on the type of contract you buy, traders can be given a leverage (or margin) of up to 100x.

For example, XBT is going at $10,000 USD and a user believes that there’ll be a price jump of about $800 in the coming few days. The trader only has 1 XBT as funds. If the market prediction is correct, the user will only be making $800 if the trader decides to sell out at the expected price of $10,800. However, using the leverage, the profit is multiplied. Let’s assume that the person is comfortable with a 10x leverage. This means that for the single XBT, the trader will be using to open a position, he will be borrowing 9 XBT.

Essentially, the trader is making a contract to buy 10 XBT at $10,000 USD. As with the previous assumption that the market does indeed rise to $10,800 USD, the user will hold not one, but 10 XBT at the new price. The trader can then simply close the contract or position at this price and will have made a decent profit of $8,000 instead of $800 ($800x10 XBT), minus the trading charges.

There is a catch though. Leveraging, where it gives a chance for multiplying profits without the need of investing proportionally, also can be a disadvantage for traders in case of a loss in value of the contract. If the prediction made by the trader is wrong and the price actually starts to fall, the losses will also be leveraged. In the above contract, for every single dollar lost in price, the trader accumulates a loss of $10 US. If the price of XBT had fallen to $9,500 by the time the trader decided to terminate the contract, the user would have made a net loss of $5,000 US ($500x10) and left with only the remaining $5,000 or 0.52 XBT (remaining $5,000/$9,500, the new value of XBT).

BitMEX has an advanced trading engine that protects traders from bankruptcy by automatically liquidating a contract to prevent the margin balance going below zero. When a trader attempts to open a position on BitMEX, he or she must have a minimum balance in the margin, called the Initial Margin. To avoid overextending funds, the user is required to increase the funds in the trading account if required. This is called the Maintenance Margin. If the losses being incurred in open positions is such that the funds are unable to cover for the contracts, the exchange will initiate an auto liquidation.

Trading Interface

The BitMEX trading interface follows suit from the exchange’s performance-based outlook. The interface has a combination of light and dark themes, which are surprisingly pleasing to the eye instead of causing a migraine. Of the eight different sections in its trading interface, the Order, Leverage and the Contract Details on the left side are using the dark theme, while the Crypto selection, Orderbook, Chart, Positions and the advanced Depth Chart are using a white theme.

Crypto Selection

On the top of the trading interface, taking up a sizable position horizontally is the crypto selection section. BitMEX allows its traders to open up positions on eight different cryptocurrencies: Bitcoin (XBT), Cardano (ADA), Bitcoin Cash (BCH), EOS, Ethereum (ETH), Litecoin (LTC), Tron (TRX) and Ripple (XRP). Each cryptocurrency has its own percentage change in the last 24 hours displayed.

Clicking any of the tabs will make the whole interface adjust to give information on the asset and available contracts in question. Right under the tabs, there will be a contract information. Depending on the cryptocurrency selected, the contracts will be displayed. This includes information such as:

• Contract Type: BitMEX has two types of contracts: Futures and Perpetuals. Future contracts are basically a position in which a trader agrees to buy an asset at an agreed price in the coming future. At the time of expiry, the trader will end the contract and buy the asset according to the contract price, regardless of the market price. A Perpetual has the same conditions, but without an expiry date.
• Expiry Date: The ending date of the contract is displayed for the trader to determine if opening up a leveraged position is feasible or not. In the case of a perpetual contract, the word Perpetual is only displayed.
• Leverage: For each type of contract available, the exchange also mentions the amount of maximum leverage a trader can employ. This can range from anywhere from 20x to 100x.
• Expiry Price: The contract price of the asset at the time of the expiry is available for viewing. In case of a perpetual, the value changes in real time according to the market.

Orderbook

Below the Crypto Selection is the Orderbook. The Orderbook is essentially where all the buy and sell orders are placed. Any position that’s open, i.e. it’s available but not bought or sold yet, is in the Orderbook.

The Orderbook on BitMEX is divided into two sections. The upper portion is where sell positions are located, while the one below is for buy orders. The Orderbook contains information on the open orders such as the price per token of the contract, the size of the contract and the total value of the contracts. Placed in the middle is the average price of the expiry of the positions. In case of a perpetual contract, the expiry price is replaced by the current price of the asset.

Chart

On the right side of the Orderbook is the trading Chart. This is the main action center in terms of asset data. The chart, like any other exchange, uses a candlestick version. The candlestick trading pattern consists of simple bars, colour coded in red and green to show fall or rise of asset price respectively. Each bar represents a specific timeline, which is customisable in increments of:

• Minutes: One, three, five, 15 and 30.
• Hours: One, two, three, four, six and 12.
• Days: One and three.
• Weeks: One and two.
• One month.

Other customisable options include different kinds of indicators.

The chart allows a trader to read the movement of the asset value over a period of time and in conjunction with the indicators, make predictions on the future movements of the asset. If the technical indicators point towards an expected rise, the trader can place a long position. In a situation where the asset seems overbought and a fall is expected, the trader can read the data and go for a short position.

Depth Chart

Depth Chart is another form of data gathering and analysis tool. The chart essentially shows the amount of buy and sell orders, with their price and values. The more the buy and sell orders meet in the middle, the more liquid the orders are and are being swapped. If one of the depths rises too much in comparison to the other, this shows a pressure on that side. For example, the green buy order increasing shows that there is an interest in buying of the asset and if the sell doesn’t rise in the same strength, this can lead to a rise in value as the supply is limited but the buy demand is rising.

The trader will have to make a judgement if one of the depth rises too much. This can show chances of the pressure collapsing when traders would realise that the pressure is artificial and a market correction can occur.

Recent Trades

On the right is a section that shows all the recent trades that are executed. This window in the past gives an idea to the user as to how trades were done in size and value. The Recent Trade and the Orderbook combined can give the trader the essential insight he or she might need to make predictions on price movements and allow for better placements of orders.

Positions

In spot trading, there is always a section in the trading interface which shows open and executed orders of the trader. The Positions section in BitMEX is exactly the same, this time the data showing in the following tabs:

• Open Positions: A leveraged position, this contains all the data of the position, such as the size, total value, the starting price, what is the strike or mark price, at what value will the contract be liquidated and other. A trader can use this area of the section to view the status of the open positions and decide on whether to close them based on the data in the Chart and the Depth Chart of BitMEX.
• Closed Position: Any position that’s closed, or expires, is presented here for the trader to look at the past and decide what future actions should be taken. The detailed data is the same as in Open Positions.
• Active Orders: Any orders placed for the positions are mentioned here which are open or partially filled. This tab details the orders with the order price, how much is filled, the value of the order in XBT, type, status and the time.
• Stops: Stop orders from the active ones are shown separately here. Advanced traders can have multiple orders placed and having a designated tab for Stop orders can help them in quickly viewing their orders and be able to cancel and place new ones as market shifts.
• Fills: Fill-based orders, just like Stops, have their own tab for quick viewing.
• Order History: All positions and orders are combined here for the user to view what he or she has been doing in the past.

Order

On the left side of the trading interface, users will find the section to place their orders. The whole left side is in a dark theme, designed to be aesthetically pleasing and make an emphasis that this is where people can make all the trading actions. BitMEX offers three types of basic buy and sell orders, with advanced functionalities for fine tuning the control on when and how the orders are opened up or executed.

Market Order

This is the simplest form of an order. The order accepts whatever the prevailing market price of the asset is. The trader simply needs to enter the amount of cryptocurrency he or she wishes to buy or sell. The order is opened up and executed immediately at the current price.

Limit Order

Limit Order basically defines what value of the cryptocurrency the trader is willing to accept. This order type can help traders in getting the best price they can accept on BitMEX. However, this comes at a slight cost. Unlike the Market Order which is executed at the fastest rate possible, Limit Order can be filled partially if there’s not enough matching buy or sell orders in the Orderbook. If a trader places an order that’s very far from the average values in the Orderbook, the order might not be executed at all. To place the order, a trader simply needs to enter the quantity of the cryptocurrency to be bought (or sold) and the required price. The order will be opened up and placed in the order book for trading.

Stop Orders

Limit Orders give the users the ability to make trades on their preferred cryptocurrency rate, but it still lacks one vital element on when to trade. Stop Orders have the additional component of the Stop price, which defines what should be the market rate when the order is opened up. The Stop Order can be used for both, entering a market on BitMEX when there is an up tick and ensuring that the trader liquidates assets in case of a market downturn to mitigate losses.

BitMEX offers three variations of Stop Order to allow users to have more control on how to protect their investments or open new ones:

• Stop Market Order: When the Stop (or trigger) price desired by the trader is achieved, the order will open up with the current market price.
• Stop Limit Order: If the Stop price is achieved, a normal Limit Order will be placed.
• Trailing Stop Order: Along with the Stop price, users can enter a Trailing value. When the Stop price is achieved and if the market corrects itself in the other direction equivalent to the Trail price, then only the order will be triggered. This type of advanced Stop order can be helpful if traders are sure that the buy or sell pressure will exhaust at a certain level and the market will go into correction.

Take Profit Order

Take Profit Orders are very similar to Stop Orders in terms of execution. However, there’s a fundamental difference that Take Profit Orders are designed to be opened up when the price movement of the crypto asset is favourable for the user on BitMEX. Traders define a market or a limit order that will be opened up when a specific trigger price is achieved, letting them create an order in market conditions that guarantees them a profit if the order is filled.

BitMEX offers two types of Take Profit Orders:

• Take Profit Market Order: When the defined trigger is achieved by the market, a Market Order will be placed.
• Take Profit Limit Order: Once the trigger price becomes the same as the market, a Limit Order will be opened up for the trader.

Leverage

As a derivative exchange, BitMEX allows its users to multiply their profits through leveraging loans. Under the Order section, traders will find the Leverage one, which has a slider. Depending on the type of cryptocurrency selected, they have the option to leverage anywhere from 1 to a maximum of 20 or 100 times their trading funds.

Leverage, when used carefully, can be a game changer for traders. Let’s assume that XBT is being traded at $10,000 USD. The trader has $1,000 USD in funds. The user has carefully looked at the market and is confident that a bull market is coming soon. The user can set the Leverage slider to 10x and will be able to leverage enough money to buy 1 XBT (the person’s own $1,000 USD plus $9,000 USD through leverage, totaling $10,000 USD).

If the trader’s predictions are correct and there is a 1% increase in price of XBT (now $10,100 USD), the trader can sell out the XBT and pocket the $100 USD. If there was no leverage used, the profit would have been $10 USD (on investing $1,000 USD from own funds), but with $100 USD as profit (apart from the trading and leverage charges), the user potentially increased profits by 10x.

Leverage should be used very carefully at BitMEX. It can be very appealing as the higher the leverage, the more profits a trader stands to make. On the other hand, this multiplier effect also extends towards losses. A 1% loss in the above example would mean that the user would now be able to cash out XBT at a rate of $9,900 and would be liable to pay back the $9,000 USD of the leverage. Since leverage was 10x, the losses would also be amplified by that and instead of parting with 10 Dollars, the loss incurred would be $100 USD leaving the trader with a negative balance after trading fee.

BitMEX has an auto liquidation system to protect the user from going bankrupt. In all cases, the trading engine monitors the leverages and if the losses incurred go deep to a level where the original asset of the trader is just enough to cover for that, the trading engine will automatically liquidate the contract, returning the leveraged amount back and leaving the trader with zero money against the contract. At first, this action may seem harsh, but it has been specifically placed to ensure that the trader's balance doesn’t end up in negative, leaving the user in debt.

Contract Details

Under the Leverage sections are the complete details of the contracts made by the trader. This has information such as:

• The source of pricing mechanism
• The currency price of the asset in the index
• Turnover for the last 24 hours in terms of the asset
• What was the opening value
• Funding rate
• Contract value etc.

BitMEX Fee

Since BitMEX is a middleman, acting as an automated brokerage which allows users to sell and buy leveraged crypto products, there are certain charges associated with the trading. The crypto exchange uses a standard maker/taker fee model, with different rates charged for traders who add liquidity and who take liquidity. Along with these charges, there are other charges associated in terms of what type of leverage and contract the person takes.

Traditional Futures

Future contracts are when a user agrees to buy a contract which has assets available for purchase at a set price in the future, regardless of the market price at that time. The following charges are made by BitMEX on Futures:

Perpetual Contracts

Perpetual Contracts are in essence, everything that Futures Contract are. There is one difference, however. There is no expiry on the contract and the trader has the option to let it run as long as desired on BitMEX.

Since the Perpetual Contracts can run for long times and a contract maker or buyer can’t calculate for how much their money will be locked in the contract, there’s a funding fee that’s charged on an 8-hour basis interval:

Deposit and Withdrawal Fee

BitMEX doesn’t charge any fee for deposits or withdrawals from the exchange. What charges traders see when they withdraw their cryptocurrencies are the network fee. This fee is what miners earn to verify the transactions and record them in the distributed ledger. This fee is dynamic, depending on the type of the network and the load on it. Users also have the option of increasing or decreasing the fee. A higher fee is more attractive to miners, guaranteeing a quicker transaction confirmation as miners will take it up first. A lower fee can lead to delays in confirmation, sometimes even no confirmation as miners have more attractive transactions to confirm.

Service Locations

Cryptocurrency exchanges such as BitMEX are designed to cater to users and traders from all over the world. However, due to certain restrictions by law and other regulatory bodies, BitMEX doesn’t allow the following to trade on its platform:

• Citizens and Residents of the US, Province of Ontario and Quebec (Canada), Hong Kong, Bermuda, Crimea, Sevastopol, Syria, Iran, North Korea, Sudan, Cuba and the Republic of Seychelles.
• Any other state or country that faces embargo by the US.
• Jurisdictions where it’s illegal to use cryptocurrencies or crypto exchange services
• Jurisdiction in which the trading can lead to any legal action towards the parent company of BitMEX, HDR Group.

All of these are clearly defined in the Terms of Service available at the BitMEX website.

BitMEX API

BitMEX, like all other good crypto exchanges, offers its users the option of using APIs. Application Program Interfaces are small executable software programs which create a whole new interface to allow users to create a bridge between two different programs and let them interact. APIs in crypto exchanges are used by traders to connect their automated trading bots to their exchange accounts, leveraging advanced buy and sell tools to increase their profitability margin.

Setting API Keys

To use APIs in their trades, traders first need to set up the API keys. There are two keys, the API key itself, which acts like a username and the Secret Key, which is in actuality the password for the API Key.

Users first must make sure they are logged in their BitMEX to proceed for generating their API Keys. Once logged in, users can head over to their account settings by clicking their email address mentioned at the top-right of the BitMEX interface. Clicking it will make a drop down menu display. They can go down the menu and select the Accounts & Security option.

Now, on the left side of the interface screen, users will see options for Accounts & Security. The last option in the heading will be for API Keys. Selecting this option will bring the creation screen in front. The first option is for naming the API Keys. BitMEX allows for multiple keys to be set, each with different levels of access. Naming the keys makes them easy to identify later on. The second option is CIDR. Classless Inter-Domain Routing is a protocol for allocating IP addresses. If a user enters an IP address here, the API Keys will connect with their BitMEX account only if the API program is connected through the defined IP. If users have a dynamic IP or don’t want to set these restrictions, they can leave it blank.

Next, the trader will need to set the type of permission the API Keys will allow. By default, API Keys are set to only read data. This includes any positions that are open, margins, orders placed or executed. The drop-down menu can be used for different permissions. Selecting the Order permission will allow creation and cancellation of orders. The second option of Order Cancel will block any placement of new orders, but still allow for cancellation of orders on the exchange. There’s a checkbox for selecting the Withdraw option under this. If selected, users will be able to remotely request and confirm withdrawals from their account.

The last data field is where users will need to enter their Two-Factor Authentication (2FA) code. BitMEX employs different levels of security and one of them available at the user end is 2FA. Under this, users will need to enter a special code that’ll be generated for them for a limited time. Traders can find information on how to set up 2FA in the BitMEX Security section further below in this guide.

Once the correct 2FA code has been entered, the user can proceed to click the Create API Key button at the end. The users will then be presented with two different keys. The ID (the API Key) and the Secret (API Secret Key). Users should note these down carefully and store the keys in a safe place. Once the message is dismissed, the keys will never be shown again.

Using any compatible API or creating their own, users can now remotely access their trading account and use advanced trading options.

Mobile App

On 1st of September, 2020, BitMEX announced that it has launched its mobile trading app. This is the first time the derivative crypto exchange has shown any interest in giving its users mobility options. According to a report by blockchain and crypto dedicated news website CoinDesk, the trading app will be available to users from 140 countries. There is also news on BitMEX’s own blog that discusses the launch. The blog doesn’t reveal much information about the mobile app itself. It does, however, give a good idea of what the graphical interface of the app will look like, along with functions such as order builder, management positions, real-time charts, deposits and withdrawals and even biometric authentication.

A search in Google’s Play Store and Apple Store doesn’t reveal any app as of yet. There’s a link for mobile on the website, but right now it simply points towards the login page. Given that the mobile app has been launched only a few days ago, more details will follow as days go by.

Security

BitMEX is a highly secure platform that has withstood the test of time. The crypto exchange has been targeted by hackers in the past, who were able to bring down the exchange’s services, but were never able to breach its defences. The exchange categorises its security in five sections, each with its own set of technical aspects.

Wallet Security

A pioneer of multi-signature wallets, BitMEX has been using this security method since its inception. BitMEX requires more than one person to enter the keys to access the wallets, which are themselves kept offline for users’ protection. The exchange claims that even if the whole platform is hacked and compromised, the hackers wouldn’t have access to the complete set of keys required to get their hands on the wallet funds.

Every withdrawal on the BitMEX exchange is manually audited by a minimum of two different employees before being approved. When it comes to deposits, each user’s wallet address is verified by a third party to make sure the control is in the hands of the exchange. In case of any mismatch, the account’s complete system is shut down to prevent loss of funds.

System Security

BitMEX has built its system on top of the Amazon Web Services, giving the exchange one of the most secure cloud services in the world. All versions of access to the system are backed by multiple authentication, hardware token identification and other securities, with the system components only able to communicate through approved channels.

Trading Engine Security

Using the same coding technology employed by leading financial institutions to secure their trading systems, BitMEX was the first crypto exchange to use the kdb+ database and toolkit.

The trading engine does around 100 audits a second, making sure that the accounts always balance out and the sum remains zero. Furthermore, the exchange conducts a risk check of each and every trade, order, withdrawal and deposit before approving.

Communication Security

BitMEX only communicates with its users through their registered email address. Users have the option of setting up PGP encryption so that only the mail intended from them is received and any interception would mean that the hacker would read just gibberish.

Two-Factor Authentication

Apart from these securities, the exchange also employs Two-Factor Authentication. This can be enabled by users through the Security Centre, accessible through Accounts & Settings. Here, the user has the option to either use a mobile-based app for 2FA or YubiKey dedicated hardware devices.

TOTP

Time-based One-Time Password, TOTP is a 2FA method where an app generates rolling passwords which aren’t only time-based and expire in less than a minute, but are also only usable once. This creates a secure method of ensuring that not enough time or a chance is available for any malicious person or group to break the code.

To enable this, users must first download a compatible 2FA mobile app such as Authy or Google Authenticator. These mobile apps attach themselves to the user’s mobile, making sure that no one else can access the mobile app account to replicate the TOTP.

Users will need to click the Add TOTP in the Security Centre on BitMEX. The exchange will show the user a QR code that they need to scan with the preferred mobile app downloaded. After the mobile app has scanned, it will bind the app to the mobile. Once this is done, any time the exchange requests for a 2FA, users will need to access the mobile app and enter the code generated before it expires.

YubiKey

YubiKey are hardware devices that users can connect to their computer and then click on the YubiKey option. The exchange will then communicate with the hardware device and will link with it. Next time, whenever the exchange will ask for a 2FA, the user will need to connect the hardware device with the computer to perform the task.

Customer Service

As a derivative exchange with advanced tools for trading using leverages, BitMEX users are no ordinary traders. The exchange doesn’t offer simple spot trading and as such, it’s expected that its users have good knowledge of the complexities of margin trading. However, the exchange does have extensive support for its traders.

Contact Page

If BitMEX traders face any issues, they can get in touch with the exchange through its Contact form. The contact page is available as a link at the bottom of every web page on the BitMEX site. Users need to enter their registered email address, give the subject of issue and then write out in detail the problem they are facing.

To help expedite the problem, users can also provide attachments, such as screenshots or any other supporting documents.

FAQs

BitMEX has an extensive FAQ section, which details nearly every aspect of the exchange and trading. The FAQs covers important details on contracts, leverages, liquidation, fee and deposits and withdrawals. The FAQ section also features detailed definitions and explanations for margin trading terminologies.

Social Networking

The BitMEX exchange also uses various social media platforms to communicate updates and other news to its users. Channels used are its own internal Blog, Reddit, Twitter and Telegram. Surprisingly, the exchange also uses IRC, a communication channel that’s nearly three decades old.

Legal and Regulatory Compliance

BitMEX has had its own share of tussles with laws and regulations. In 2019, the famous Dr. Doom, Nouriel Roubini had released a report in which he reflected that the exchange was cleverly operating in systematic illegality. According to his report, the exchange was offering very high-risk leverage and that this trapped traders into high-risk investments, leading to liquidation of their assets and becoming a significant source of income for the platform.

The exchange is also being investigated by the US CTFC, leading to the exchange’s then COO, former executive of Stock Exchange of Hong Kong, Angelina Kwan, to resign.

In 2020, The exchange was given a class-action lawsuit from the Southern District of New York and its parent company of HDR sued in the Northern District of California.

BitMEX is an international exchange that has been controversial for the most part of its existence. Until August this year, the exchange didn’t require any sort of verification of its users -- an anomaly in the crypto world, amongst exchanges. The exchange doesn’t support fiat and only Bitcoin deposits are allowed. As such, it has been able to steer clear of issues that other exchanges have faced, including financial and regulatory compliance as money handling, transmitting or exchange-related challenges.

The BitMEX has given a six-month grace period to its users since August to voluntarily verify themselves. After the period expires in the start of 2021, users who aren’t verified will have their accounts blocked. Any new users from then onwards will also need to verify their identity in order to trade on the platform.

Verification as Individuals

Individual users who wish to verify their identities are requested by the exchange to provide a scanned image of their photo ID and proof of address, along with a selfie. The users will also need to answer a few questions that the exchange will have for them. These questions will relate to how much trading experience they have and the source of their crypto funds.

Verifying as a Corporate Entity

BitMEX is pretty vague on the details of its corporate verification process, only asking them to submit their company documents and identity of relevant individuals.

BitMEX Offices

BitMEX publicly declares that it has two offices. The platform has been controlled from its Hong Kong office, situated in the Cheung Kong Center, from the building’s 45th floor. The LinkedIn profile, however, doesn’t give a street address, only stating the location as Hong Kong. The platform’s website does state that it’s registered in the Republic of Seychelles, but again, the LinkedIn profile states only the Island of Mahe as the location.

Conclusion

BitMEX is the leading exchange in the crypto derivative trading market. The exchange has very professional services when it comes to trading, allowing users to use leverage to substantially increase their profits. Not for the faint hearted, the high level of leverage also means that users are exposed to increased chances of their investments being lost. Novice leverage traders are not advised to use this platform unless they’re absolutely sure they have their homework done properly.

The exchange has been famous for requiring no KYC or AML checks for traders. In the last year, however, the exchange has started to comply with regulations and has announced that from February 2021, all users will need to have their identifications verified in order to trade on the exchange.

Cryptocurrencies are highly volatile digital assets that have no governmental or commodity backing. Users are advised to be extremely cautious in leveraged trading of crypto assets. A proper study of how futures and perpetual contracts work is highly recommended for anyone interested in trading on an exchange.