BitMEX shuts down, the end of the exchange that changed finance

From the invention of perpetual futures to closure

BitMEX, the exchange that in 2016 transformed perpetual futures from a theoretical concept into a financial instrument traded on a large scale, will permanently cease operations on 23 September 2026, after more than eleven years in business. The announcement, issued on 23 July, coincided with a decline of more than 90% in the BMEX token and brought renewed attention to the consolidation process under way in the exchange market. Just three days later, BitMart, a platform operating since 2017, also announced the beginning of a gradual shutdown. Although the two cases differ in several respects, they both highlight the growing difficulty faced by smaller operators in competing in a sector where liquidity, operational scale and investment capacity tend to become concentrated among a limited number of platforms.

The origins of BitMEX

BitMEX, an acronym for Bitcoin Mercantile Exchange, was founded in 2014 by Arthur Hayes, Ben Delo and Samuel Reed, three professionals with backgrounds in finance and computer science. In May 2016, the platform introduced XBTUSD, the first perpetual Bitcoin future to be traded on a large scale, with no expiry date and leverage of up to one hundred times the capital deposited. The platform expanded particularly quickly: between 2018 and 2019, BitMEX became the leading venue for trading Bitcoin derivatives, reaching daily volumes of several billion dollars and assuming a central role in price formation across the broader market. At that stage, it was not merely one of the most successful exchanges, but the primary reference point for market participants seeking leveraged exposure without directly purchasing the underlying asset.

BitMEX’s historical importance stems above all from the invention of perpetual futures in the form in which they are used today. The idea of a futures contract without an expiry date had already been developed by economist Robert Shiller in 1992, but had remained largely confined to financial theory. BitMEX turned it into a tradable instrument by introducing a periodic funding mechanism capable of keeping the contract price close to that of the underlying asset.

How perpetual futures work

A perpetual future is a derivative contract with no expiry date. Unlike traditional futures, it does not need to be closed or rolled over at predetermined intervals and can remain open for as long as the trader has sufficient margin to maintain the position. The alignment between the contract price and the price of the underlying asset is achieved through the funding rate, a periodic payment exchanged directly between long and short positions. When a perpetual future trades above the spot market price, the payment is generally made by long traders to short traders; when it trades at a discount, the flow tends to reverse. The mechanism therefore creates an economic incentive to take positions that reduce the gap between the two prices.

The possibility of operating with leverage of up to one hundred times the capital deposited played a decisive role in the instrument’s adoption. Such a high level of leverage allows traders to take positions significantly larger than the margin posted, amplifying both gains and losses and increasing the risk of liquidation. The product was subsequently replicated by Binance, Bybit, OKX and the main platforms specialising in derivatives, eventually becoming the primary instrument through which crypto-market participants take speculative positions, implement arbitrage strategies and hedge risk. For many crypto-assets, perpetual futures volumes exceed those of the spot market, making these contracts a fundamental component of the price formation process.

The reasons behind the closure

In its announcement, HDR Global Trading Limited, the Seychelles-registered company that owns and operates BitMEX, attributed the decision to a strategic review of the business and of the broader crypto-market environment. Behind this formulation, however, lies a decline that began several years earlier and involved regulatory problems, reputational damage and a gradual erosion of liquidity. In October 2020, the US Commodity Futures Trading Commission accused BitMEX of offering derivatives in the United States without the required registrations and without an adequate anti-money laundering programme. In August 2021, the group’s companies agreed to pay a total civil penalty of $100 million. Arthur Hayes and Ben Delo subsequently pleaded guilty to wilfully failing to implement a programme compliant with the Bank Secrecy Act and, together with Samuel Reed, were sentenced in 2022. In 2024, the company itself also pleaded guilty and, in January 2025, received a further $100 million penalty. In March of the same year, Donald Trump granted pardons to the founders, another former executive and the company, ending the federal criminal consequences without erasing the reputational damage accumulated over time.

The decisive factor, however, was the platform’s progressive loss of commercial relevance. According to Kaiko, a company specialising in the collection and analysis of crypto-market data, at the time of the announcement BitMEX accounted for less than 0.01% of global volumes, with estimated daily activity of around $400,000. As this is not an official figure, it should nevertheless be treated with caution. More significant than the absolute value is the comparison with the past: between 2018 and 2019, BitMEX controlled a substantial share of the global crypto-derivatives market, whereas by 2026 it had become a marginal operator.

The concentration of trading volumes

Following the record volumes reached during the platform’s initial expansion, perpetual futures trading gradually became concentrated on Binance, OKX and Bybit, platforms capable of offering more liquid markets, a larger user base and greater order-book depth. Hyperliquid later joined these operators, demonstrating that a decentralised exchange could also attract significant derivatives trading volumes. In this segment, liquidity represents a particularly difficult competitive advantage to recover: deeper markets allow larger orders to be executed with a more limited impact on prices, narrower spreads and lower implicit trading costs. BitMEX’s progressive loss of volume therefore weakened the quality of execution available to users, pushing the most active market participants towards competing platforms and fuelling a cumulative process of further liquidity contraction. The rise of new operators was therefore not the sole cause of BitMEX’s decline, but it accelerated the downsizing of a platform that could no longer benefit from the network effects built during its years of expansion.

The closure plan

The shutdown process has been structured in several stages. New registrations were suspended on 23 July, while from 26 August 2026 users will no longer be able to open new positions or increase existing ones, but only reduce or close them. Any contracts still open will be liquidated before trading permanently ceases on 23 September. BitMEX has also invited users to withdraw their funds by that date, while clarifying that balances will remain accessible afterwards.

Verified accounts that continue to hold funds on the platform after closure will be charged a maintenance fee of $50 per month or, if higher, 1% of the account balance per year. The measure is intended to facilitate the gradual transfer of assets and the closure of the remaining accounts.

The consequences for the BMEX token

The announcement had an immediate impact on BMEX, the utility token launched by the platform in 2022. The token offered discounts on trading fees, early access to certain products and other benefits linked to the use of the exchange. On the day of the announcement, its price fell from approximately $0.06 to a low of around $0.002, a decline of more than 90%, before partially recovering. The movement reflects the strictly functional nature of the token, whose demand depended almost entirely on access to the services and benefits offered by BitMEX.

The case highlights a structural weakness of tokens issued by exchanges. Unlike a stablecoin backed by reserves or a crypto-asset linked to an underlying asset, BMEX did not embed any claim on assets external to the platform: its value depended primarily on the discounts, incentives and other benefits granted by the issuer. When the exchange ceases operating, the token’s utility can therefore decline almost instantly, without any underlying asset capable of independently supporting its value. This differs from crypto-assets used across several networks or independent applications, whose demand may survive the disappearance of a single intermediary. For an exchange token, by contrast, the asset’s risk largely overlaps with that of the company that issued it.

The BitMart case

On 26 July, BitMart, an exchange founded in 2017 and based in the Cayman Islands, also announced the gradual closure of its global platform. The company attributed the decision to operating conditions, the market environment and its strategic direction, without identifying a specific financial, regulatory or technical event. The timetable provides for the suspension of new registrations and deposits, the cessation of spot and derivatives trading by 26 August 2026 and the complete closure of the platform on 31 January 2027. During the transition period, users will be able to withdraw their funds, although some requests may be subject to additional checks on user identity, source of funds and compliance with anti-money laundering regulations.

The BMX token also reacted with an initial decline of close to 60%, which continued in the following days. As in the case of BMEX, the prospect of services being discontinued immediately reduced the token’s future utility and the market’s willingness to hold it. The closure also reflects the growing difficulty faced by smaller operators in competing globally with platforms that have greater liquidity, resources and investment capacity. This is compounded by a significant security precedent: in December 2021, BitMart suffered the compromise of two hot wallets, with approximately $196 million in assets stolen, an incident that contributed to weakening confidence in the platform among users and investors.

Conclusions

The significance of BitMEX’s closure does not lie in its immediate consequences for the market. At the time of the announcement, the platform’s market share was already marginal, and the cessation of operations had no material impact on the price of Bitcoin or on overall market liquidity. The reaction was concentrated primarily on BMEX, whose value was directly linked to the exchange’s continued operation. The event therefore carries mainly historical and symbolic significance, rather than systemic implications.

BitMEX is ending its operations while perpetual futures continue to represent one of the main segments of crypto finance and are also finding applications in more recent areas, such as pre-IPO markets. The innovation has therefore outlived the operator that first transformed it into a tradable product, moving towards platforms characterised by greater liquidity, a larger user base and a stronger capacity to adapt. The history of BitMEX thus shows how difficult it is to preserve a competitive advantage over time in a market where technological and financial innovations can be rapidly replicated and become shared industry standards.