BitMEX is about to close, but perpetual contracts are moving towards mainstream finance
Author: Little Cake
Original title: King of Leverage Closes: BitMEX Is Dead, Perpetual Contracts Live Forever
On July 23, BitMEX posted a farewell letter on its official website.
The exchange will stop trading services on September 23, 2026, without giving a more specific reason, only stating that the board of directors decided to close the exchange after reviewing the company and the entire crypto industry.
BitMEX is no longer a mainstream exchange in today's crypto market. Binance, OKX, and Bybit occupy the centralized contract market, and on-chain platforms such as Hyperliquid have taken away a new generation of traders. Many newcomers to the industry don't even know about BitMEX.
But its exit still deserves to be carefully recorded.
The most important product of almost all crypto exchanges today, perpetual contracts, was commercialized and promoted to the entire industry by BitMEX. It also brought high leverage, funding rates, tag prices, and automatic position reduction into the crypto market, which shaped the way transactions were carried out for the next decade.
If stablecoins brought the US dollar into the crypto world, then perpetual contracts represent another opposite route: a financial product that has matured in the crypto market and is accepted by traditional finance.
Exchanges will die, and perpetual contracts won't. This is probably the most decent obituary BitMEX has left for the industry.
Three people, one hundred times
In 2014, Arthur Hayes, a former Deutsche Bank and Citibank trader, registered a company called BitMEX in Hong Kong. The full name is Bitcoin Mercantile Exchange, Bitcoin Commodity Exchange. Partners are mathematician Ben Delo and programmer Samuel Reed.
Three people, one vision:Move Wall Street's derivatives gameplay to Bitcoin, and increase leverage to levels that Wall Street wouldn't dare to imagine.
One hundred times.
In the world of traditional finance, the leverage that retail investors can touch is usually two to five times, and futures professionals can survive 20 times. BitMEX directly paid a hundredfold, which meant that the price fluctuated 1% in reverse and the position returned to zero. Critics call it a “Bitcoin casino,” and Hayes never argues. He wears a “100x” t-shirt in public, using the casino's neon lights as a brand asset.
The early crypto market gave the best soil for this kind of radicalization. With no regulation, no KYC, you can open an account with an email address, and gamblers and traders from all over the world flock to the same order book. By 2019, BitMEX surpassed $16 billion in a single day, moved into Hong Kong's Cheung Kong Center and leased out the most expensive office in Asia at the time. Downstairs was Li Ka-shing.
In July of that year, Hayes debated on the same stage with “Doctor Doom” Roubini in Taipei, and the audience was full. A Wall Street abandonment, leaning on an offshore casino, sat in a position to fight with mainstream economists.
This is the pinnacle of BitMEX, and the pinnacle of the old crypto industry:It's barbaric, profiteering, and only one time zone away from Iron Fist of Regulation.
A contract to restructure the market
If you just look at BitMEX as a casino, you'll miss some key information.
In May 2016, BitMEX launched XBTUSD, the first perpetual contract in human finance history.
To understand its weight, you must first understand the trouble of traditional futures: futures have an expiration date, are delivered every quarter, traders have to keep moving positions, and liquidity is shattered in contracts of different months, like a river divided into several sections by a dam.
The perpetual contract removed all the dams. It has no expiration date, and can be held forever. The spot price is anchored by a mechanism called the capital rate: the contract price is higher than the spot price, and the bulls pay the bears a small amount of money every eight hours; below the spot, and vice versa. The farther away the price deviates, the higher the rate. Arbitragers smell money entering the market and pulling the price back to the anchor point.
No delivery, no need to move warehouses. A river runs from beginning to end, and all liquidity flows into the same pool.
The beauty of this design is that it uses a simple economic incentive to replace a complete complex delivery and settlement system for traditional futures.
Its profound impact can only be clearly seen in a larger coordinate system: stablecoins solve the “cash” problem in the crypto world, allowing dollars to circulate on the chain in the form of tokens; perpetual contracts solve the “risk transfer” problem, allowing anyone to express views on prices at any time and in any direction.
The adoption curve is the best proof.
Perpetual contracts first swallowed up the crypto derivatives market: Binance, OKX, and Bybit were completely copied. FTX relied on it, and Hyperliquid brought it onto the chain. Today, crypto derivatives trading volume is crushing the spot market several times, and the main force is sustainable.
Afterwards, traditional finance also began to look back at this “offshore casino invention”: US regulators publicly discussed introducing perpetual contracts into the regulated market, and compliant exchanges lined up to apply for the launch of sustainable products.
In May 2026, the US Commodity Futures Trading Commission (CFTC) officially approved the listing of Bitcoin perpetual contracts, with Kalshi and Coinbase being the first to receive approval.
Students have become teachers, tools invented by casinos, and are being repackaged into mainstream finance by people in suits.
312 and October 1
BitMEX's turning point in its burgeoning script has two precise dates.
On March 12, 2020, the global market crashed, and Bitcoin cascaded from nearly $8,000 to $3,600. Bulls on BitMEX sold out in a series, and the clearing engine poured sell orders into a thin order book, putting pressure on buying orders, and the price fell out of control.
Amidst the deepest fears in the market, BitMEX announced a “hardware failure” and an outage for maintenance. Prices on other exchanges stopped falling and rebounded during the outage.
FTX founder SBF later said that if BitMEX doesn't go down, the price of Bitcoin could return to zero.
An accident made it clear to the whole market: the exchange's clearing mechanism is large enough to determine the life or death of Bitcoin alone.
Also starting with 312, the competitor's window began, and Binance, Bybit, and FTX continued to share their market share over the next year.
On October 1, 2020, a heavier hammer fell.
The US Department of Justice and the CFTC took action at the same time to sue Hayes, Delo, Reed, and executive Dwyer for violating the Bank Secrecy Act. The core charge was that they knew US users were trading on the platform but refused to establish an anti-money laundering and KYC system.
Reed was arrested in the US, and Hayes surrendered himself in the US after leaving Singapore. The three founders collectively withdrew from management and successively pleaded guilty. Hayes was given a suspended sentence and home jail, and Delo, once the youngest self-made billionaire in the UK, also pleaded guilty to the sentence.
At the company level, BitMEX pleaded guilty and was fined an additional $100 million by FinCEN in early 2025.
Trump pardoned four people in March 2025, putting an end in the legal sense of the word, but the death penalty in the commercial sense was already carried out five years ago.
After mandatory KYC, BitMEX lost its original moat: anonymity and no barriers. Being compliant, it can't compete with Binance's scale, Bybit's product iterations, let alone the native Hyperliquid on the chain.
Market share has shrunk from absolute dominance at its peak to a color block that needs to be zoomed in to be seen in statistical charts.
A long goodbye
In the last six years, BitMEX changed four CEOs.
Hayes was followed by Höptner, who left during the 2022 bear market and Lutz took over.
At the beginning of 2025, it was revealed that the company was seeking an overall sale. After a year and a half, no buyers were willing to take over.
At the end of June 2026, three executives, Lutz, CFO Steiner, and Growth Officer Polansky, left office on the same day. There was not even an official announcement. The outside world relied on LinkedIn's title change to spell out the truth. Wilkinson, who took over as CEO, was from a legal background, and the market understood this signal at the time: the destination for hiring a lawyer to be the captain of the ship was usually to dismantle the factory at the pier, and this time, they didn't even wait for a buyer to dismantle the factory.
Looking back, BitMEX's life is a complete sample of the barbaric era of the crypto industry: a window of regulatory arbitrage, a group of smart people who understood derivatives, an original product that restructured the market structure, a late but inevitable enforcement, a loss of share that no one could escape, and an end where no one took over.
After September 23, bitmex.com will become an empty domain. Meanwhile, on trading terminals around the world, funding rates are still settled every eight hours, with the long being paid to the short, or the short paying to the long, on time like the tide.
The company that invented this set of tides has sunk, and the tide itself is still driving the entire market forward.
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