BitMEX Top Brass Arrested – Cryptos Tank

by Bogdan Giulvezan

Bitcoin and Top Cryptocurrencies Tumble

The U.S. Commodity Futures Trading Commission (CFTC) and the U.S. Department of Justice filed charges against BitMEX – one of the largest crypto-exchanges in the world – which resulted in a swift drop in Bitcoin’s price and $15 billion being wiped off the crypto market.

The charges are related to BitMEX’s failure to register as a derivative exchange in the U.S. and failure to implement basic Know Your Client and Anti-Money Laundering procedures. The U.S. Attorney for the District of New York indicted Arthur Hayes, Benjamin Delo, Samuel Reed, and Gregory Dwyer on federal charges of violating the Bank Secrecy Act and conspiracy to violate said act. Out of the four, Reed (Chief Technology Officer) was arrested Thursday morning, while the other three remain “at large”.

BitMEX stated that “From our early days as a start-up, we have always sought to comply with applicable U.S. laws, as those laws were understood at the time and based on available guidance.” Also, for a long time the exchange claimed that it does not offer its services to U.S. clients, however, given the lack of KYC procedures, the picture is unclear. How can they know if they offer services to such clients if they don’t know who their clients are? Then again, can we really believe that a huge exchange doesn’t truly know where its trading volume comes from? I guess not, but either way, that’s not something for us to decide.

The Technical Scene – What’s Next for Bitcoin

Just a few days ago, Bitcoin was wrestling the key level at $11,000 but recent developments took it as low as $10,400. It did bounce up slightly, currently trading around $10,500 but it doesn’t look like a full recovery is underway.

The first “line of defense” is the trend line seen on the 4-hour chart below, followed by the support zone between $10,250 and $9,900. It should be noted that the trend line is not strong support mostly because price is making lower highs, and the pattern forming could very well be a bearish flag.

Given the latest Bitcoin bearish pressure, a break of the nearest support is very likely, followed by a move into $10,000 – $9,900. From a larger timeframe perspective, price is still ranging, without a clear direction but keep in mind that any new developments in the BitMEX case, will likely have an impact on the pair’s movement and on the crypto market in general.