Cryptocurrency Exchanges Got Weird Last Week. Real Weird.

A confused toddler in front of a laptop

The business of running a cryptocurrency exchange has undoubtedly proven the most lucrative of any sector operating in what is the burgeoning industry encompassing cryptocurrency and blockchain technology.

Because of this, you rarely go a day without seeing exchanges among the top cryptocurrency headlines. Last week was no different. In fact, it was perhaps the most jam-packed week—from a news perspective—that the sector has seen in quite some time. Let’s recap!

BitMEX’s Big-Time Blunder

In an email sent to the majority of its users, world-leading cryptocurrency derivatives exchange operator BitMEX compromised their privacy when it mistakenly included their email addresses in the “To” field. On November 4, an apologetic BitMEX published a comprehensive summary of the email privacy issue.

For those who have followed the cryptocurrency space for many years, the leak of BitMEX customer data drew similarities to the 2014 data dump of the now-defunct Mt. Gox. This leak was much more severe instance, however, with user balances and transaction history included in the leak.

Following news of BitMEX’s widespread user data leak, control of the exchange’s official Twitter account was seized by hackers. The anonymous hackers were in control of the account for long enough to post two tweets, which were deleted soon thereafter.

Deribit Flash Crash

The popular cryptocurrency futures and option exchanges experienced issues with its BTC index calculation mechanism, causing the price to plummet and many traders to get falsely liquidated.

In a blog post authored by Deribit founders John Jansen and Marius Jansen, “a total of more than 150 BTC or $1.3 million got reimbursed” to traders that got falsely liquidated and those who got affected by unwarranted stop-loss orders.

Coinbase Pro a No-Show

Likely a major reason why Deribit suffered a flash crash was because Coinbase Pro temporarily went down. Being such a major cryptocurrency exchange, it’s safe to assume Coinbase comprises a sizeable chunk of the price index that Deribit uses to settle the contracts traded on its derivatives exchange.

And so when Coinbase Pro went offline—and with all other major exchanges experiencing a period of wild price fluctuation—it likely caused Deribit’s index calculation mechanism to fail to exclude some incorrect outlier presses; exposing a latent bug in its system.

FTX’s ‘Nuisance Suit’

Adding to what was already an intense week of news, it emerged on Sunday that FTX—a cryptocurrency derivatives exchange built by the Alameda Research team—was the subject of a complaint written by a patent lawyer who was suing FTX for as much as $150 million; alleging it and senior Alameda staff partook in market manipulation, racketeering, unlicensed securities sales, and more.

In the letter, it was alleged FTX attempted to manipulate prices on Binance’s futures exchange platform. Upon scanning over the parts of the complaint relevant to Binance, the co-founder and chief executive of the world-leading cryptocurrency exchange, Changpeng ‘CZ’ Zhao, tweeted that the allegations all seem “very far fetched.”

Sharing this sentiment was Alameda Research, which stated in a blog post that “the nuisance suit is riddled with laughable inaccuracies, including mistaking the entire business model of Alameda.”

Binance Branching Out

Speaking of Binance, CoinDesk—citing two sources with knowledge of the matter—reported that the exchange giant is “opening an office in Beijing.” The news came just days after Chinese President Xi Jinping outlined the country’s ambitions regarding blockchain technology.

That was not the only geographic expansionary move that Binance is currently making. According to reports out of CoinDesk Korea, Binance registered Binance Co. Ltd. with South Korean authorities during the week.

Binance.US Bolsters BNB Utility

The Binance-affiliated Binance.US announced that users are now able to buy cryptocurrency with debit cards and that Binance Coin (BNB) can now be used to pay for trading fees, with those who do so receiving a discounted rate.

“When Binance.US users hold BNB and use BNB to pay for trading fees,” a blog post explained, “[they] will receive a 25% discount on these fees.” Accompanying the BNB trading fee discount was the introduction of a tiered VIP trading fee discount program, also.

Bitfinex Blame Game

Crypto Capital principal Oz Yosef was indicted on three criminal counts by the U.S. Attorney’s Office of the Southern District of New York, confirming an October 25 statement made by Bitfinex’s general counsel Stuart Hoegner. Joseph has been indicted on conspiracy to commit bank fraud, bank fraud, and conspiracy to operate an unlicensed money transmitting business, according to court documents.

Bittrex vs. Bennett

Seattle-based angel investor Gregg Bennett is suing longstanding cryptocurrency exchange operator Bittrex over a SIM-swap attack that saw criminals seize control of 100 bitcoin (BTC)—the equivalent of almost $1 million at the time of publication.

In a lawsuit filed in the King Country Superior Court, Bennett alleges that Bittrex violated its published security protocols and ignored industry standards. Because of this, he alleges Bittrex missed the opportunity to intervene and halt the SIM-swap hackers.

Independent Reserve Goes Green

As Nugget’s News covered earlier in the week, Independent Reserve announced several initiatives towards carbon neutrality; a first among the 246 cryptocurrency exchanges registered in Australia. One of these was subscribing to technology company Climeworks to capture one tonne of carbon dioxide per year.

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