The largest exchange globally of bitcoin futures, BitMEX, is reportedly at risk of losing a not insignificant share of its customer base as it is reportedely shutting down U.S. and Quebec-based accounts, due to regulatory pressure.

Drawing on sources close to BitMEX, the SCMP reported that “while Asia accounted for the bulk of BitMEX’s revenue, US was its other major market.” Those sources claim that about fifteen percent of BitMEX’s business came out of the U.S., however, BitMEX has since refuted the accuracy of SCMP’s sources. BitMEX also stated that they have been banning U.S. users since 2015, although not effectively as some U.S. accounts have only been shut down in recent months, crypto analyst Tone Vays was one such user.

In addition to the U.S. crackdown, there have been reports since the summer of additional limits on Quebecois users, after the region’s financial regulatory body notified BitMEX that it was not allowed to conduct business with those users early last year.

He Sells Seychelles

A Seychelles-registered entity, BitMEX offers what many see as a popular product, with high security (100% cold storage), and large volumes – although there have been loud criticisms and suspicions that the exchange weaponizes its service outages in order to unfairly countertrade its own customers.

BitMEX’s trading definitely falls afoul of both the principal U.S. financial regulating bodies, the Securities and Exchange Commission and the Commodities Futures Trading Commission, which is why it blocks users from those prohibited jurisdictions in North America.

And although the exchange makes the perfunctory effort to block those users from connecting, BitMEX makes no effort to block VPN connections and services. This means that the exchange’s defenses are easy to circumvent.

It therefore remains an open question how long BitMEX can avoid legal headaches and threats to its service from the U.S. According to data from CryptoCompare, the BTCUSD perpetual futures market has seen volumes trend down over the past 6 months. However, it is hard to say whether this is a direct result of the dwindling US customer base, or larger market forces.

BitMEX Bitcoin USD CryptoCompare Chart

Featured image courtesy of BitMEX