Is The Bitmex Internal Trading Desk A Serious Conflict Of Interest?

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Is The Bitmex Internal Trading Desk A Serious Conflict Of Interest?

By ICNN News
January 20th, 2019
  • Did you know that Bitmex has its own trading team for market-making, that trades for profit against its customers?

  • Did you know that mostly all retail brokers implement this strategy?

  • Furthermore, did you know that under the hood, Bitmex uses a index created via a price taken from Bitstamp and GDAX so moving the underlying is invisible to Bitmex orders?

First of all - just to clarify things before we begin. The price you see on Bitmex is not dictated by your trades, but rather by the movements on Bitstamp and GDAX, weighted 50/50 between the two, designed to try and give some allure of fairness to the unwitting public.

It still stuns me that most retail traders just don’t know that Bitmex is actively market making against them.

Yes that’s right - creating a market by taking the other side of the trade is common practice for retail brokers, and in this unregulated world it’s really no problem to spoof order, and manipulate the order book of the underlying on Bitstamp and GDAX to great gain on Bitmex.

This is due to the way the XBT contract works and how much smaller volume it requires to affect its market.

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Bitmex Internal Trading Desk - A Serious Conflict Of Interest?