Bitmex shutting down is truly an end of an era — but it had a very long, and sadly predictable windup. The story of why this shutdown happens, instead of an orderly sale that would preserve a storied brand and the jobs of probably dozens of employees, was seeded years ago. It goes back to a blog post I wrote all the way back in 2018 and that was read 50k times (crazy how time flies): https://medium.com/swlh/a-storm-is-brewing-over-the-largest-bitcoin-exchange-f956324b449f I wrote back then: "If BitMEX closes a position in time, often some change from the margin is left over. This money goes into an insurance fund." and "Between 2016 and today, it has grown steadily to more than 14.000 Bitcoin (almost $100M at [2018]s prices!), 11.000 of which were added in 2018." Today, it should be around $270m. However, the size was never as much the problem as the structure, and the poor incentives it would create. "First, the money is not stored in a segregated account. Second, BitMEX doesn’t say how large they intend it to grow, or what will happen to the excess Bitcoins in it. This indicates to me that they view the fund as another asset on their balance sheet, that they can grow as much as possible and eventually liquidate." In effect, I was arguing that Bitmex's poorly structured insurance fund incentivized them to do three things: (1) liquidate customers more aggressively than necessary, (2) monetize those customers via the unnecessary liquidations, and (3) eventually liquidate the asset itself — quite possibly in a way misaligned with every other stakeholder of the exchange. It's worth remembering that in 2018, Bitmex had a quasi-monopoly on crypto perps. That became their trap: when you're quietly printing money at that scale, you're never really incentivized to fix the thing generating it. So Bitmex never seriously improved how it liquidated users — and got outcompeted on product by FTX, whose partial-liquidation engine was simply the better design for the traders who cared most about not being needlessly wiped out. Which finally brings us to why this is a shutdown and not a sale. We now know Bitmex was looking for a buyer since at least 02/25, but couldn't find a deal it was willing to take. All at a time when many other crypto exchanges found partnerships and investment from top tradfi players. I think the insurance fund is how we square that circle. My guess is that the insurance fund was such a legally toxic asset that nobody would touch it. Does this money belong to an acquirer, or the customers it was skimmed from? It's hard for a buyer to inherit that question, at least at a price that the Bitmex founders knew they could generate by simply walking away, and probably cashing out the insurance fund for themselves. So that's how it ends. Bitmex built a very profitable but misaligned business model around its insurance fund — one that left it exposed to a counter-positioned competitor and, in the end, made the business impossible to sell. It started as the golden goose, and then became the noose.(Hasu⚡️🤖)