The Hong Kong-based Bitcoin Mercantile Exchange (BitMEX) has announced it will sell all its customers’ airdropped bitcoin cash balances and distribute the proceeds in bitcoin form.
The exchange — which offers BTC/USD swaps but is best known for its futures market — made the announcement on Wednesday, explaining that because bitcoin cash was created through a “contentious hard fork” it will not allow users who received BCH at the time of the August 1 fork to withdraw the coins to their personal wallets:
“BitMEX does not agree with contentious hard forks, and does not accept the manner in which Bitcoin Cash was forked, or the lack of preparation or notice before the fork; we consider this a dangerous action that imposes unacceptable costs on end-users and businesses.”
BitMEX has not looked fondly upon attempts to fork away from the main bitcoin blockchain. The exchange had also taken a hard stance against the SegWit2x hard fork, which has since been called off. Prior to the fork’s cancellation, the exchange had stated that it did not intend to support SegWit2x coin trading on its platform, nor did it plan to distribute airdropped coins to its customers.
However, noting that bitcoin cash “still has value and popular demand” more than three months after the fork, BitMEX decided to credit users with the value of their airdropped BCH by selling the coins for bitcoin and then depositing the proceeds into users’ BTC exchange wallets. Over-the-counter (OTC) trading platform LocalBitcoins took a similar route in September.
Notably, BitMEX also announced that it has added bitcoin cash futures to its popular derivatives exchange, enabling users to bet on the future value of the cryptocurrency that claims to fulfill the true vision of bitcoin.
The BitMEX selloff could have a significant impact on the bitcoin cash price. BitMEX is the highest-volume cryptocurrency exchange, with daily volumes consistently cracking the $1 billion mark. Consequently, the dump could place significant downward pressure on bitcoin cash’s rally, which has carried the coin above $1,200.
Several other liquidation events are on the horizon as well. Grayscale Investments recently announced its intention to sell the bitcoin cash held by its Bitcoin Investment Trust (OTC: GBTC) — a fund that currently holds more than $1 billion in assets — and distribute a dividend to its shareholders. Several other services — most notably bitcoin exchange Coinbase — have yet to make BCH coins available for users to withdraw.
Nevertheless, bitcoin cash advocates can find a silver lining in the announcement because, although the selloff will likely depress the coin’s price in the short-term, it is tacit validation that bitcoin cash has proven its viability.
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Last modified: May 20, 2020 9:48 PM UTC