BitMEXLatest release: 1.1.13 ( 5th January 2022 ) 🔍 Last analysed 10th February 2022 . Custodial: The provider holds the keys Not functioning anymore
As the provider of this product holds the keys, verifiability of the product is not relevant to the security of the funds!
As part of our Methodology, we ask:
Is the product self-custodial?If the answer is "no", we mark it as "Custodial: The provider holds the keys".
A custodial service is a service where the funds are held by a third party like the provider. The custodial service can at any point steal all the funds of all the users at their discretion. Our investigations stop there.
Some services might claim their setup is super secure, that they don’t actually have access to the funds, or that the access is shared between multiple parties. For our evaluation of it being a wallet, these details are irrelevant. They might be a trustworthy Bitcoin bank and they might be a better fit for certain users than being your own bank but our investigation still stops there as we are only interested in wallets.
Products that claim to be non-custodial but feature custodial accounts without very clearly marking those as custodial are also considered “custodial” as a whole to avoid misguiding users that follow our assessment.
This verdict means that the provider might or might not publish source code and maybe it is even possible to reproduce the build from the source code but as it is custodial, the provider already has control over the funds, so it is not a wallet where you would be in exclusive control of your funds.
We have to acknowledge that a huge majority of Bitcoiners are currently using custodial Bitcoin banks. If you do, please:
- Do your own research if the provider is trust-worthy!
- Check if you know at least enough about them so you can sue them when you have to!
- Check if the provider is under a jurisdiction that will allow them to release your funds when you need them?
- Check if the provider is taking security measures proportional to the amount of funds secured? If they have a million users and don’t use cold storage, that hot wallet is a million times more valuable for hackers to attack. A million times more effort will be taken by hackers to infiltrate their security systems.
But we also ask:
Is the product still supported by the still existing provider?If the answer is "no", we mark it as "Not functioning anymore".
Discontinued products or worse, products of providers that are not active anymore, are problematic, especially if they were not formerly reproducible and well audited to be self-custodial following open standards. If the provider hasn’t answered inquiries for a year but their server is still running or similar circumstances might get this verdict, too.
Help spread awareness for build reproducibility
Please help us spread the word discussing the risks of centralized custodians with BitMEX via their Twitter!
Do your own research!
Try out searching for "lost bitcoins", "stole my money" or "scammers" together with the wallet's name, even if you think the wallet is generally trustworthy. For all the bigger wallets you will find accusations. Make sure you understand why they were made and if you are comfortable with the provider's reaction.
The Analysis ¶
Update 2022-02-02: This app is not in store anymore.
Self-described as the “world’s largest cryptocurrency derivatives trading platform”, it is one of the more popular exchanges. It was founded in 2014, by Arthur Hayes who is currently under charges for violating the Bank Secrecy Act and for trying to avoid the implementation of money-laundering controls on his platform.
The platform allows for 100x leverage.
BitMex Security features a comprehensive outline for the platforms measures:
BitMEX runs a first-of-its-kind multisignature deposit and withdrawal scheme. All BitMEX addresses are multisignature and all storage is kept offline.
As expected of custodial, centralized and regulatory compliant exchanges, they also utilize cold storage. Furthermore, they assert that:
No private keys are kept on any cloud server and deep cold storage is used for the bulk of funds.
Since the problems faced by its founders, BitMEX has since then been compliant with regulatory authorities. More information about BitMEX Compliance.
By most indications including security mechanisms, regulatory compliances and its self-identification as a regulated platform, we stand by our verdict that this is a custodial and thus not verifiable app.
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