Few have been as outspoken against bitcoin and cryptocurrencies as Nouriel Roubini, a professor of economics at the New York University Stern School of Business and known as "Dr Doom" for his pessimistic outlook, who has recently stepped up his feud with Seychelles-registered bitcoin and crypto exchange BitMEX, suggesting it, and other major bitcoin exchanges, are involved in "systematic illegality."
"BitMEX insiders revealed to me that this exchange is also used daily for money laundering on a massive scale by terrorists and other criminals from Russia, Iran, and elsewhere," Roubini wrote in a blog post. "The exchange does nothing to stop this, as it profits from these transactions."
Roubini, who clashed with the chief executive of BitMEX, Arthur Hayes, at the Asia Blockchain Summit earlier this month, has previously branded bitcoin "overhyped" and a "cesspool."
"Some of the biggest crypto players may be openly involved in systematic illegality," Roubini wrote, adding: "BitMEX [is] an unregulated trillion-dollar exchange of crypto derivatives that is domiciled in the Seychelles but active globally ... involves peddling to 'degenerate gamblers' (meaning clueless retail investors) crypto derivatives with 100-to-one leverage."
So-called margin trading, where traders can borrow against their deposits on an exchange, has been on the rise this year and may be having an effect on the bitcoin price as investors have a larger pot of funds to speculate with.
Earlier this month, Malta-based Binance, the world's largest bitcoin and cryptocurrency exchange by volume, allowed traders to borrow up to three times their deposit, while Hong Kong-based Bitfinex is allowing loans of 100 times deposits.
“Crypto bears are poised to pounce, after several high-profile U.S. government officials took aim at bitcoin and Facebook's Libra this week," said Simon Peters, analyst at brokerage eToro. "The bitcoin pullback, which started over the weekend, is in full force now. Selling pressure has intensified, with prices having now broken below the psychological $10,000 mark. Other cryptos are also falling fast succumbing to the regulatory uncertainty."
Roubini also claimed bitcoin and cryptocurrency price manipulation is "rampant across all the crypto exchanges, owing to pump-and-dump schemes, wash trading, spoofing, front running, and other forms of manipulation," pointing to a study from Bitwise Asset Management from March this year that found as much as 95% of all bitcoin transactions are fake.
Hayes hit back at Roubini's latest attack, rejecting "any allegations of criminality, manipulation or unfair treatment of our customers, who are at the center of everything we do."
"BitMEX provides safe, fast, professional and liquid ways for those who see the potential of crypto and to trade and hedge cryptocurrency risk,“ Hayes told Bloomberg, a financial newswire. "We continue to monitor all legal and regulatory developments around the world and will comply with all applicable laws and regulations."