Noted crypto sceptic Nouriel "Dr. Doom" Roubini believes important crypto players are "openly involved in systematic illegality,” he wrote in his commentary on Project Syndicate. As an example, Roubini pointed to Seychelles-based cryptocurrency derivatives exchange BitMEX.
The exchange allows retail investors to place bets with 100-to-1 leverage, applies high fees, and “siphon[s] customers’ savings into a ‘liquidation fund’.” He cites research that estimated liquidations comprise as much as half of BitMEX’s revenue.
Roubini also claims that according to his sources inside the company, terrorists and criminals from Russia and Iran purportedly use BitMEX services for money laundering “on a massive scale,” while the exchange allegedly allows the transactions so it can still profit from them.
He also said the exchange uses its internal for-profit trading desk for “front running its own clients.” He believes it is impossible to check what is really going on in the company since it is unregulated and does not carry out any independent audits of its accounts.
For its part, BitMEX CEO Arthur Hayes told Bloomberg, “BitMEX provides safe, fast, professional and liquid ways for those who see the potential of crypto and to trade and hedge cryptocurrency risk. We continue to monitor all legal and regulatory developments around the world and will comply with all applicable laws and regulations; we reject any allegations of criminality, manipulation or unfair treatment of our customers, who are at the center of everything we do.”
Earlier this month, Roubini and Hayes debated in Taipei City whether cryptocurrencies are the future, or a scam.