Crypto exchange BitMEX airdropped 1.5 million BMEX to its users. It’s, basically, an effort to rekindle retail interest. Moreover, the airdrop of the tokens was based on a user’s prior exchange activity.
But, before we look into this matter, let’s first learn a little about BitMEX and its history.
What is BitMEX?
BitMEX is a P2P trading platform. It specializes in margin and futures trading for cryptocurrency derivatives. It is a platform more suited to seasoned traders. Moreover, it emphasizes leveraged trading and derivatives.
The exchange came into existence in 2014. It provides contracts on a variety of cryptocurrencies including but not exclusive to Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), Ripple (XRP), and Tezos (XTZ). The exchange, unlike many others, uses Bitcoin as its base currency. Besides, it does not allow deposits or withdrawals in fiat money.
BitMEX’s controversial past
The business operates a reputable derivatives trading platform with reasonable trading costs.
However, two factors might discourage investors from BitMEX. The first is its lack of regulation. And the second is its founders’ involvement in illegal operations.
Moreover, it has recently had some of its own controversies. A U.S. Federal Court ordered BitMEX to pay $100m in the summer of 2021 for running a cryptocurrency trading platform outside the law. The Court also determined that BitMEX had broken AML regulations.
Further, in October 2020, the Commodity Futures Trading Commission (CFTC) initiated legal proceedings against BitMEX. Additionally, the CFTC discovered that BitMEX had not adopted the proper AML. Meanwhile, it also didn’t follow KYC and Customer-Information-Program (CIP) protocols.
However, the August 2021 CFTC Notice mentioned that BitMEX worked to address the problems. It created an AML and user verification program.
Marked change in the regulatory environment
The regulatory environment has significantly changed since the BitMEX fine. Moreover, the cryptocurrency sector is now under closer regulatory scrutiny.
Regulators have taken action in response to calls for a global regulatory framework for cryptocurrencies from the Bank of England and others. We can expect more as governments around the world seem to be getting more involved in the cryptocurrency world.
However, despite the heightened scrutiny, the cryptocurrency business is still evolving. With exchanges actively marketing their platforms to enhance brand recognition, the crypto world keeps on rising. One of these efforts to spark the retail market is the distribution of BMEX tokens.
What are BMEX tokens?
BMEX Tokens are tokens based on Ethereum with a supply of 450 million. As a result, the exchange can only mint them once. Additionally, the vesting period (ownership/locked) for tokens is five years.
These tokens will help in rewarding holders and expand the BitMEX ecosystem. Besides, through this, the company wants to link up and introduce new products.
The company’s Litepaper states that in 2022, token issuance would take place in two stages. Users can earn BMEX in Phase 1 by trading on the site up until the beginning of Q2 2022.
Moreover, on the platform, users can earn more tokens by engaging in more trading. Meanwhile, users can also distribute the tokens through their accounts.
In early Q2 2022, customers can access the tokens in Phase 2 on the company’s spot exchange platform. Moreover, the exchange platform and additional partner marketplaces will allow the trading of the tokens.
Allocation of the tokens
The distribution of the tokens will follow this pattern:
- 5% are set aside for upcoming airdrops.
- 20% will go for liquidity when BMEX spot trading launches.
- 20% will go as incentives to BitMEX employees. 30% are allocated for marketing and affiliate rewards.
- Finally, 25% is set aside as a long-term reserve.
Benefits of the tokens
According to BitMEX’s token whitepaper, BMEX tokens enable the exchange to grow its services and draw in more users. This is a step up from when it was first founded as a cryptocurrency exchange that only traded futures contracts. Futures are popular financial tools that monitor asset prices. The exchange plans to burn BMEX once every three months to boost utility for holders.
Whereas talking about the benefits for holders of tokens, they will receive greater rates of return on BitMEX EARN deposits. Also, they will get the exchange’s passive earning product, as well as free access to BitMEX Academy classes and exclusive community channels.
For holders of 500,000 BMEX and higher, more sophisticated incentives include invitations to private parties, BitMEX merchandise, and VIP seats to sporting events.
So, holders are able to stack BMEX from February 1. Also, the BitMEX spot market started in early Q2, and spot trading of BMEX tokens will begin. As of the time of writing, it was impossible to withdraw the tokens.