Arthur Hayes bragged about his success before the federal investigation and was arrested. Now he has returned to an industry full of unknowns and apprehensions.
Even if you're not a Bitcoin enthusiast. This young man is recognized as the king of cryptocurrencies. Then, perhaps out of arrogance, he began to make mistakes. Even though he lived abroad, U.S. law enforcement took notice and issued an indictment. He negotiated conditions for returning to the United States and turned himself in to federal authorities, facing multiple felony charges. Neither he nor the cryptocurrency industry will change any more.
The story may sound familiar: a young man with a traditional education, worked as a trader for a few years, then started a cryptocurrency exchange and quickly became a billionaire. He often appears on TV shows, shines on Twitter, and becomes the face of this "rebellious" industry — even if you're not a Bitcoin enthusiast, you can't help but follow this entrepreneurial rebel. This young man is recognized as the king of cryptocurrencies. However, perhaps because of hubris, he began to make mistakes even though he lived abroad, and U.S. law enforcement would have noticed him and issued an indictment. He negotiated conditions for returning to the United States and turned himself in to federal authorities, facing multiple felony charges. Neither he nor the crypto industry will always be different.
It's not just Sam Bankman-Fried's story. This is also the story of Arthur Hayes, who appeared in the cryptocurrency space before SBF, was knocked out and is now ready to return. This similarity is all the more striking since many other aspects of their lives are different. Bankman-Fried is a white kid from society's elite, while Hayes is a black kid from the Rust Belt. Bankman-Fried is a zhlub who looks like he works 20 hours a day in front of a computer; Hayes, on the other hand, is a well-defined, handsome man. Bankman-Fried has been labeled successful all his life, and Hayes has created his fortune almost by will, surprising everyone but himself. When Hayes created bitcoin exchange BitMEX in 2014, no venture capitalist was interested in his project, and no one predicted that he would become the first trillionaire in history. To save money during a time when the whole strategy seemed to be a failure, he slept on the couch at a friend's house for months.
And one big difference: Bankman-Fried actually (but still accused of) stealing billions of dollars from ordinary people around the world, while Hayes has never been accused of taking anything that doesn't belong to him, or lying to customers, or running an improper business. "He's definitely one of the good guys in the cryptocurrency space," said Nic Carter, co-founder of blockchain-focused investment firm Castle Island Ventures. "BitMEX has never deceived their customers, never been hacked, and never lost money." If anything, Hayes has become a sort of Bitcoin martyr. Daniel Bresle, a partner at Seward & Kissel, a law firm specializing in cryptocurrency and financial crime, said: "He's not the typical bad actor who embezzles, steals or does something really nefarious about it. He failed to follow rules that some believe should not exist at all. ”
Hayes, 37, did face some criticism. Economist Nouriel Roubini called Hayes the dirtiest player in a dirty industry, even considering Bankman-Fried (SBF himself pleaded not guilty). Hayes has made enemies by joking about bribing government officials, taking photos with a group of supercars on the streets of New York and mocking the SEC on Twitter. Investigators had a motive to investigate him. The evidence they gathered showed that Hayes intentionally violated banking laws and failed to prevent money laundering; Accepting Iranians as customers in violation of U.S. sanctions; Most importantly, he allows Americans to trade on BitMEX without fulfilling various obligations.
Whether people choose to see Hayes as a white-collar criminal or a scapegoat, a troubling issue has always hung over him. Is it a coincidence that the only black entrepreneur at the top of the cryptocurrency game was crucified for doing something that wasn't uncommon among his peers? One of the industry's best-known people said: "The rhetoric around 'the people in the crypto space they're going to go to jail are black' is bullshit." He spoke on condition of anonymity when discussing sensitive cases.
On April 6, 2021, Hayes landed at an airport in Honolulu and surrendered to federal agents on the tarmac. He pleaded guilty to violating a charge of banking secrecy law, paid a $10 million fine and began a six-month prison sentence last summer. For Hayes, it was a long period of relative silence. He still posts about cryptocurrencies on Twitter and blogs from time to time, but he is careful not to further anger the Justice Department and jeopardize the rather lenient sentence. When his sentence ended in mid-January, he left the United States and ended up landing in Japan, where he spent six days a week skiing and dreaming about his next move.
"We have the bitcoin virus, and I want to do my part to infect as many people as possible," he told me. "We will hopefully destroy the TradFi system," he added. (He must also pass a two-year probationary period without further scrutiny by the authorities). "Not to destroy. is another option for people. ”
The old-school financial industry got him off the ground, and its technical knowledge allowed him to create a cryptocurrency empire, but it's funny that Hayes cares so much about beating the industry. "You want to spend your life doing something that you think can really change the world," he said. "Hopefully I can be on the side of change, both from a 'yes, I'm right' or 'yes, I made some money out of that too' perspective."
Just before he left the United States, and probably forever, I visited Hayes in the apartment where he was being punished: a shiny white three-bedroom apartment he owned in South Beach. It has a wide balcony overlooking Biscayne Bay and a terrace that surrounds bougainvillea; Directly ahead is the Miami skyline, and below are hordes of sailboats gliding on the water. The outside temperature is 81 degrees Fahrenheit, but in Hayes' home, it feels even hotter. Even after living in Southeast Asia for more than a decade, he is still reluctant to use air conditioning.
Hayes, who had just finished stretching her hips in a Yin yoga class, did not sweat. He spends most of his time doing weightlifting and stretching, his chest is very broad, and the structure and sculpturality of his shoulders are very strong, giving the illusion of wearing armor. Hayes was allowed to exercise outdoors for several hours a day. Tennis rackets and goggles are placed in different corners; A bicycle helmet sits on the counter next to an American Express Platinum card. He loves to buy healthy food and juices at the Pura Vida café, and fans sometimes recognize him, giving the impression that he is not particularly restricted in home confinement. Hayes has an office at nearby WeWork and is occasionally allowed to eat out, allowing him to connect with Miami's burgeoning cryptocurrency community. In September, Hayes hosted a post-conference party in Singapore, remotely inviting the people in his room to drink while sitting on South Beach. Over Christmas, the government asked Hayes to return to his home in Hong Kong.
Given how rosy his restricted life may seem, Hayes can be surprisingly cautious and mean at times. He feared he would be kidnapped. "I'm more worried about security in the U.S. because people here have guns," he said. A reflecting pool on the ground floor of his building that extends toward the ocean, he calls it a "waste of space" because there are too many mosquitoes and midges to enjoy. He said with admiration that he lived there until he was confined - "they killed the bugs." "He no longer considers America his home.
Hayes picked several stuffed animals from his collection of more than a hundred stuffed animals in Asia. To accompany his life in South Beach, he bought them to celebrate milestones, named them, and lined them up in his bed. At his accommodation in Miami, I counted a yellow-green starfish, a fox, an armadillo, a giraffe, an elephant, an octopus, a snake, and an anthropomorphic cabbage. "Sometimes I do travel with a whole box of toys. ”
No one in the cryptocurrency space is quite like Arthur Hayes, especially since the industry's biggest figures are constantly engaged in dramatic infighting. During Hayes' house arrest, Three Arrows Capital, run by Su Zhu and Kyle Davies, and FTX, led by Bankman-Fried, collapsed. He has surpassed them, but their collapse changed the cryptocurrency landscape forever. Distrust among many of the surviving players is worsening, and regulators are emboldened to restrain them. "We've destroyed every typical representation of cryptocurrency," Hayes said. "Everyone who is hailed as a role model in the company's industry has proven to be either not good at business or a complete liar. So I think we've almost hit bottom. "
Hayes swears he's not trying to fill the leadership gap. "That's not what cryptocurrencies are all about," he said. It should not be based on a small group of people who run the company. But he's stepping into a power vacuum in another way, becoming a must-read for crypto believers as a commentator and market mover, through an influential blog and Twitter account. Hayes wrote three articles about the collapse of FTX, including one titled White Boy, which was about "how SBF used his innate strengths and super-social intelligence to fool everyone into thinking he was a crypto prodigy and the future of Western-dominated financial institutions." He continued his denunciation on Twitter. "When I needed to consume a certain amount of vegetables every day, I took a bite of this little soy boy. Help me stay awake," tweeted an old photo of him who appeared to be biting into a Bankman-Fried paper cut. "When I ate SBF, I was disappointed. I didn't get all the macros because he was a fake vegetarian. This guy is 100% fugazi".
Hayes has good reason to gloat. At its peak in 2019, BitMEX had a market capitalization of billions of dollars and an absolute market share in cryptocurrency derivatives trading, with a market capitalization of $1 trillion. But in the same year that Bankman-Fried founded FTX, his platform and others, which offer spot trading and other products, quickly cannibalized Hayes' business. Ultimately, FTX dominated BitMEX in an order of magnitude. The same goes for Binance, which is now the undisputed leader. Today, BitMEX barely ranks among the top ten derivatives exchanges, according to CoinMarketCap.
It's still a lucrative business, taking only a fraction of every transaction it processes. "In financial history, you haven't had many opportunities to own an exchange," Hayes said. "They're basically just printing machines." His fortune fluctuates from hundreds of millions of dollars to around $1 billion, depending on the price, and he is investing in various ways. His family office, Maelstrom, has made 10 to 20 investments in private companies, including a "meaningful" stake in a robotic sex doll startup. "I really like what these people are doing," he said. ”
He is also actively participating in the market. "I'm a trader," he said. "If it moves, I'll trade it." Hayes predicts a bull market for most of now and 2026, followed by an economic catastrophe not seen since the 1930s. "I think every central bank will fix the price of its government bonds for the next 12 to 18 months," he said. "And that's going to lead to the next super upcycle for all risk assets, and then we're going to experience a generational collapse." That's my point of view.
His sense of opportunity also applies to cryptocurrencies, as it is recovering from the remnants of FTX. Since the company's chaotic bankruptcy, Bitcoin has risen by about 50%. "There's always a season for different types of things," Hayes said. "Sometimes there's a season of deep value, and then there's a season of Dogecoin, where any piece of Dogecoin can go up 50x. You want to be involved in all parts of the cycle. So, yes, I'm going to invest in deep technologies and cryptocurrencies that are being decentralized and really realize the vision of Satoshi Nakamoto's white paper. I would also invest in full Dogecoin. Because I think I can seize the market moment, buy a narrative, and sell when the narrative peaks. We will see if this really happens in practice".
In August 2004, when Hayes began his freshman year at the University of Pennsylvania, he would go to the gym with a new friend every morning at 5:30 a.m. As black students in Wharton's undergraduate business program, they use the Dawn course to imagine their future. "Getting rich is our specific goal," said friend Justin Anderson, who is now a venture capitalist. Hayes grew up in Buffalo and Detroit to parents who were auto industry workers and divorced when he was 11, so for him it remains largely a matter of imagination. One morning that month, as he and Anderson waited for the elevator, they felt particularly ambitious. "I remember pressing that button, and then there was a moment of silence, and then suddenly there was a premonition that we're going to be billionaires,'" Anderson said. I think he considered himself some kind of financial wizard — a financier, more like Gordon Gekko than Mark Zuckerberg. ”
Hayes weathered the toughest challenges at the University of Pennsylvania, and the way he coped with them surprised some of his black peers but also inspired them. "As a black professional, you can't get to that level if you're not confident in yourself, but he's on another level." Anderson later became president of the Wharton Black Collegiate Student Association, Anderson said. In Arthur's world, there are no real obstacles. You just do it. Arthur clearly knew he was a black man in a predominantly white environment, but he never saw it as a challenge. Hayes took place in the school's bodybuilding competition, Mr. Penn, and set his direction in Asia's financial industry.
"The people in Buffalo are staying in Buffalo, but I don't want to stay in Buffalo," Hayes told me. The routine move to Manhattan feels like a cliché or a strategic mistake: "Why do what everyone else in the class is doing?" That way I'll just get the same results as everyone else. The summer after graduating from his junior year in 2007, he got an internship at Deutsche Bank in Hong Kong. Hayes described his arrival as love at first sight, starting with a taxi ride out of the airport, past palm trees and endless stretches of shipping containers and verdant mountains overlooking the city's iridescent skyline. "I can't resist the charm of Hong Kong," he said, "and I want to be part of the Chinese story." ”
At Deutsche Bank, he worked in equity derivatives sales, where one of his lower tasks was delivering meals to superiors. He later wrote on his blog: "These are normal, as an enterprising, penniless intern who strives to profit from my role as a food steward, and I charge a high spread on every order and can make a few hundred dollars a week. In order to avoid others thinking that my behavior was out of order, everyone in the department knew what I was doing and acquiesced to my approach. Games respect games. ”
Hayes was also a regular at the club, which helped him land his first full-time job when he returned to Philadelphia for his senior year. As he recounted in another blog post, Deutsche Bank sent recruiters to Penn. Hayes wrote: "During the interview, I expressed my love for Hong Kong parties. As a test, a veteran recruiter asked him to recommend some local nightlife spots. Hayes replied. "Fast forward, we were all drunk at the Philadelphia Family Club downtown. REKT”。 After graduation, he returned to Hong Kong to work as a trader in a bank.
Hayes tested the limits of the city's conservative financial culture. "He's always been the kind of legendary guy who always pushed the envelope, even as an intern," said Andrew Goodwin, his roommate at the time. "You should look at his yoga pants." While working on a plain Friday at work, a department head walked past Hayes' desk and said, "Who the hell is that?" He wore a pink skinny polo shirt, pickled jeans and bright yellow sneakers. So, casual Fridays were canceled.
The 2008 market crash took much of the joy out of the lifestyle of a high-paying expat, and with the recession onset, Hayes began converting his money into gold. This is both an investment and an insurance strategy in case of social unrest. "The boatman only takes gold coins," a friend remembers Hayes telling him.
Hong Kong is full of expatriate financiers seeking something more exotic than Wall Street and tending to share an ideology — a desire for a return to the gold standard, denouncing capital gains taxes and believing that central banks will be the destroyer of Western economies. "Hong Kong attracts a lot of staunch liberals because of its low tax rates and less regulation," said Mr. Hayes, a friend of whom he fits into that group. "Socialists stay in New York."
It's no surprise that Hayes was exposed to Bitcoin relatively early. The pivotal moment came in the spring of 2013, when Hayes landed a new job at Citigroup and was subsequently laid off. His first trade soon netted him a few thousand dollars. Hayes remembers the feeling of experiencing the birth of a revolutionary technology on the scale of printing or telegraphy. For the next year and a half, he slept on a friend's couch while experimenting with cryptocurrency operations, looking for the kind of arbitrage he learned in banking.
One day in 2013, due to China's tight control over the flow of funds, the price of bitcoin in the mainland soared relative to the price of Hong Kong. Hayes began buying bitcoin at a lower price and then selling it on exchanges in China, withdrawing profits to a mainland bank account he opened with a fake address. He then crossed the border from Hong Kong to Shenzhen, took out the money, stuffed it in his backpack and returned to Hong Kong. During a transit, Hong Kong authorities detained him as part of an investigation into suspicious bitcoin transactions. Hayes managed to convince officials that he was also a victim of the deal, and they let him go.
Talk about cryptocurrencies on CNBC in 2018. Photo: CNBC/YouTube
Alegend was built around Hayes, who has already stood out in Hong Kong, not just because of what he wears. "You are most likely familiar with the almost mythical heroic stories circulating in cryptocurrency circles," Goodwin once wrote. Strangers and friends sometimes call Hayes hak gwai, a Cantonese derogatory term meaning "." But Hayes enjoys being different. "When you come to Asia, what a lot of people don't understand is that you actually really want to stand out. If you've come to a region that spans half the world, but you just want to fit in, then why would you leave? He told me with a smile.
Hayes appreciates the concept of trustless money. "Cryptocurrencies are the only assets that really belong to you," he said; On the other hand, he religiously refers to Bitcoin as "pure energy in digital form." But what sets him apart from many other early days is that he never hoards much. "Putting your entire net worth in this highly volatile asset and you can't control the outcome puts a lot of pressure on you, and I don't think I have that strength," he said. "I'd rather have a business where I can be directly responsible for its successes and failures."
At the time, startups like Coinbase were opening exchanges to try to make digital currencies accessible to everyone. Hayes sees a more unique investment opportunity. One of his specialties at Deutsche Bank and Citibank is trading futures contracts. Hayes said: "I make a living from derivatives. He envisioned a niche exchange for seasoned traders who wanted to bring Wall Street-style operations to Bitcoin. This platform does not accept other digital currencies or fiat currencies; It looks and feels like a Bloomberg terminal. Hayes has teamed up with Ben Delo and Sam Reed, both cryptocurrency enthusiasts who know how to code. In 2014, they founded BitMEX, short for Bitcoin Mercantile Exchange, a tribute to the iconic derivatives market Chicago Mercantile Exchange. They were incorporated in Seychelles, which does not have high disclosure requirements for financial companies, with Hayes serving as CEO.
At first, for more than six months, almost no one traded on BitMEX. By the spring of 2015, Hayes was ready to give up. He sent an email to his co-founder with one important point: Hong Kong is the go-to place for second-hand electronics; What happens if their website changes to trading second-hand iPhones? Delo and Reed rejected him. Ultimately, they decided to entice customers to use BitMEX by allowing them to take more risk. Large sums of money in derivatives trading come from the use of leverage – borrowed funds to be staked larger, multiplying winnings but also magnifying losses. Hayes, Delo and Reed increased BitMEX's leverage limit to 50x, more than double that of its competitors. Then they raised it to 100 times. This makes BitMEX the place where the boldest traders of cryptocurrencies, or rather the most reckless traders, need them. Delo said: "We started making a profit very quickly. Ultra-high leverage became the core of BitMEX's brand, so much so that the company's parent company changed its name to 100x Group.
The two founders also decided to market their platform more aggressively to hobbyists. As Hayes once said in a presentation on BitMEX, "There are people who offer similar types of products but focus on fallen gamblers, aka retail traders of Bitcoin, so why don't we do the same?" "The problem is that retail traders are not used to trading derivatives; They would leave a message to Hayes complaining that their contract "suddenly disappeared!" (They have expired.) Customers often call these founders scammers.
It was then that Delo had an insight that would become BitMEX's signature innovation: What if a futures contract that never expired was created? In May 2016, BitMEX launched the so-called perpetual swap, a round-the-clock, constantly updated derivative that simplifies staking against the future price of Bitcoin. Darius Sit, founder of Singapore-based cryptocurrency exchange QCP Capital, said: "This has proven to be revolutionary for liquidity in the cryptocurrency market. "As an exchange, more liquidity means more profit. It doesn't matter if the price of Bitcoin goes up or down, as long as people continue to trade, Hayes can make money.
About a month after the perpetual swap was introduced, Hayes met with colleagues at a dim sum restaurant in Hong Kong, waving a newspaper: Brexit and a market outcry. "We're going to get rich, bastard!" He growled.
The infamous debate with Roubini (left) in Taipei in 2019. Photo: BitMEX/YouTube
By 2017, BitMEX's revenue was so high that Hayes and his co-founders turned down an investment offer from a venture fund that valued the company at $600 million. When BitMEX was born, the trio struggled to raise money, so they still retained almost all of their stake. The following year there was a bear market for Bitcoin, but that only got people to trade more on their platform. One day that summer, BitMEX processed an $8 billion deal, from which Hayes, Delo and Reed took a $4 million cut — a ridiculous deal. They rented office space on the 45th floor of Hong Kong's financial district, equipped with space for billiards, poker and mahjong, as well as a spacious bar and a Lamborghini-branded sound system. Two stone temple lions were set at the entrance to the office. The real topic was a fish tank with three blacktip reef sharks. It costs more than $100,000 a year to maintain, according to Delo, and it's so heavy that it needs to reinforce the building with additional pillars.
Hayes doesn't spend much time in the office, and according to him, some of this excesses are driven by others. Speaking about sharks, he said: "I came back from a vacation somewhere and saw this in the plan and I said, 'OK, whatever'. "But he was the social president of the Faculty of Pennsylvania fraternity, and when he came to work in person, he encouraged fraternity culture, sponsored parties and stunts, such as eating contests." He'd show up with a stack of cash and a bunch of Big Macs and say, 'Who wants to do this?' Reed said. For the outside world, Hayes takes on the role of ambassador – representing the rebellious spirit of BitMEX and cryptocurrencies as a whole. "There's always a joke: He wants to be a trader, but he's going to be an amazing salesperson," Goodwin said.
In May 2018, Hayes traveled to New York for the Consensus crypto conference and even made the splash before he even entered: BitMEX parked three Lamborghini outside the downtown venue. Hayes called it a "guerrilla marketing tactic" and admitted it might seem "a little clumsy." The supercars were rented from a man who wouldn't even let BitMEX crews drive them, and they received parking tickets for about $1,000. "Looking back now, I wish we hadn't done it because nobody understood the joke," Reed said. ”
But this gimmick fits Hayes' character and exudes a swaggering air that makes it clear that he does not listen to anyone's commands. A saying began to circulate: Arthur always made money, even if no one else made money. A meme also began to circulate, albeit as a fabrication: a screenshot of the alleged Hayes instructing a staff member to "drive the rest of the people away." I need a new Ferrari. It cites a common (if unproven) view at the time that Hayes manipulated the market to trade on customers. He didn't completely stop the car legend from happening. At the end of 2018, he put a sticker on the bumper of an ambulance donated to the Seychelles by BitMEX: "My other car is a Lamborghini. He also bought a yellow Ferrari Portofino. Motorhead believes that this model is a sports car designed for people who don't actually care about cars; Some in Hayes' inner circle jokingly dubbed it the "sissy Ferrari." Hayes hates driving it. "I'm not a qualified car driver," he said. "I crashed two cars in the parking lot."
As a global tycoon, Hayes has taken his antics around the world. Although BitMEX couldn't legally operate in the U.S., he returned to New York to host a robe-themed charity event on Cipriani Wall Street, including chateaubriand, lobster, and a show by Rick Ross. Another time, Hayes flew his favorite DJ Christian Smith from Europe to a club in Asia because he wanted to dance to his favorite music.
Hayes is very focused on certain privacy in life. Many of his closest colleagues didn't know he had an intellectually disabled brother until the relationship was brought up in court. Hayes sidestepped several topics in our interview, but one of his strict conditions was that I couldn't name his wife, who married in 2018. "We like to joke that there is an Arthur Hayes and a @CryptoHayes of his Twitter account, they are different people," one colleague said. "Arthur is a spokesperson, a performer, a P. Arthur. T. Barnum," Delo said.
The circus performance caught Hayes' attention in the summer of 2019 when he took to the stage known as "Taipei's Tangles" — debating Roubini, a well-known economist and critic of cryptocurrencies. Roubini wore a suit, while Hayes wore skinny jeans with holes at the knees. In less than ten minutes, he was self-destructing. When asked by the moderator why BitMEX is based in the Seychelles, Hayes said the company does not need to "bow to the U.S. government just because it's regulated." He continued: "I really don't want to sit on the bottom bunk with Bubba all day. So I got out of this situation. "What's the only difference between regulators in the U.S. and Seychelles?" "It's just that it's more expensive to bribe them." "How much will it cost on this island chain?" "The price of a coconut".
Hayes insisted he was joking; Roubini is still in shock. "I mean, they're all liars, but at least they're pretending not to be liars," he told me. "He said, 'I can do whatever I want.'" "This somewhat admits that he is a liar. I've never seen anything like it, not even in this place full of criminals. ”
Hayes appears to be asserting that he is conducting business outside U.S. jurisdiction, when in fact any entity that interacts with the U.S. financial system is subject to U.S. law, which amounts to requiring regulators to target him. In a way, BitMEX does just that. Shortly after the Roubini conflict, the owner responded to the complaint with Hayes' meme and the text "Register in the Seychelles," an investor lawsuit alleged: Come to me, brother. ”
When news of the federal investigation broke, customers reportedly withdrew $500 million from the platform. The Justice Department indicted Hayes, Delo, Reed and their first employee, Gregory Dwyer, in October 2020. "The most annoying thing for regulators in Washington, D.C., is being embarrassed. They were accused because what they did was blatant," said a former official at the Commodity Futures Trading Commission. The commission also filed charges against Hayes, Delo and Reed. (BitMEX settled with the CFTC for $100 million, but later it will be reduced) "You let Arthur Hayes run the Lamborghinis in New York. The Justice Department has strong evidence that Arthur Hayes contacted clients in Iran directly. So there is a lot of hard evidence that they know what the law is, they deliberately ignore the law, and they actively engage in illegal acts. ”
Hayes resigned as CEO, and a few months later, he chartered a private jet to fly to Hawaii and was arrested wearing a casual T-shirt. Law enforcement officers boarded the plane and fingerprinted him and wiped his cheeks. Two FBI agents wearing bulletproof vests then handcuffed Hayes and took him to a courthouse, where he pleaded not guilty. After ten days of quarantine, he flew back to Singapore, where he has spent the pandemic ever since. The experience could have been worse. Reed was a JavaScript programmer from Wisconsin when he was at home in the southern suburbs of Boston with his three-month-old children, his wife, and his parents-in-law. At 6 a.m., a dozen FBI agents and police officers knocked on the door with a gun and handcuffed him to a chair in the living room. Reed was taken to a federal building downtown, where he was left alone for about ten hours in a damp basement cell, ankles cuffed together.
In February 2022, it is likely that the threat of prison convinced Hayes to confess guilt. Federal prosecutors for the Southern District of New York told the court that BitMEX was a "tool for money laundering and engaging in criminal activity" for conducting more than $200 million in suspicious transactions; It did not report a single transaction to the government as required. In one case, Hayes unfroze the account of a hacking suspect, allowing them to withdraw bitcoin that might have been stolen, the government said. Because the company did not ask traders for identification details, prosecutors wrote, "people will never know the full scope of criminal conduct on BitMEX." ”
The prosecutor asked the court to "impose a significant custodial penalty" on top of the guidance recommended by the guidelines of six months to one year. Hayes told the court in a remorseful tone: "While I am very proud of BitMEX's achievements, I deeply regret my involvement in this criminal activity. Hayes' lawyers filed testimony from friends, family dentists and Mike Novogratz, a former Goldman Sachs partner and hedge fund manager who is now the head of Galaxy Investment Partners. "No one should forget that Arthur was a young, successful black man, and the country and industry needed more," Novogratz wrote. In May, the judge upheld the lower limit of sentencing guidelines and avoided jail time altogether.
Damn things happen. When I asked Hayes why he was ready to tell his story, Hayes said. Whenever I asked him to elaborate on his regrets, he would refuse: "If you sit here and dwell on the past all day, you're going to be miserable." And I mean, I'm still here. I'm not going anywhere. ”
He added: "It's clear that I have a lot of restrictions on what I can say." To prevent further anger at the government, Hayes hired a slew of expensive legal and PR consultants, one of whom monitored all of our conversations via Zoom, interjecting whenever my question came close to "dangerous" territory. Finally, after asking Hayes to talk about the low point in his life – there must have been a low point in the years he fought the government and lost his freedom, right? - He provided some information. "Perhaps the most unpleasant thing is sitting in a management meeting dealing with other people's problems," he said. "When I walk into the office, sometimes I leave the door open — like, oh damn it, I shouldn't have done this." In terms of character, he said, he was better suited to be a writer than a CEO.
Hayes knew that when he left the United States, he might never return. "I hardly plan to go back to the United States," he said. I'm leaving. He listed superficial complaints — jet lag, American food, etc. But it is clear that he has begun to despise his homeland on a deeper cultural level.
He has spent the past six weeks in Hokkaido. He prefers to ski alone, wear neon-colored gear and enjoy the tranquility of a lonely gondola. "I don't know if I have a general vision for the future," he said one morning. "It's like Survival. Don't lose people's bitcoins. Hayes insists that he doesn't like the FTX crash and the shadow it has placed on all cryptocurrencies. I don't want that to happen," he said. "It's not an ideal situation for us." He was also cautious that FTX surpassed BitMEX because Bankman-Fried was suspected of fraud. "We let someone into our house and take the money we should have earned," he said. "Hiding behind, like, 'Sam is a shady guy; That's why they beat us" - this is not so. It was we who defeated ourselves. ”
Reed is more explicitly bullish on the possibility that BitMEX could regain some market share. "Let's call it a comeback, yes," he said. Hayes publicly exited the company during the legal proceedings and said he is now only a board member and has no plans to return to the CEO position. (In some jurisdictions, he may not even be allowed to do so.) Behind the scenes, he remains in control, according to people familiar with the matter. "When they pleaded guilty, Arthur became very bossy," one of the people said. "It's clear that he's just trying to get BitMEX back — and as it used to be."
However, BitMEX is still on a downward trajectory. The company made two rounds of layoffs last year. The CEO who succeeded Hayes was fired in October last year and is currently suing the company in Singapore for wrongful dismissal; The current CEO is Chief Financial Officer Stephan Lutz.
There is a sign that BitMEX has entered a new era. There are no more sharks in the office. As Hayes worked on his case, the sharks also got out of their cages — a rectangular tank that didn't allow them to swim in circles. According to one person who saw them, they were in terrible shape, bumping and fighting each other, leaving bite marks on the flesh. Eventually, one shark killed another, and another shark died a natural death. BitMEX executives donated the survivor. When I spoke to Hayes, he didn't even know they had left.
This article was written by Jen Wieczner
Compiler: Lotte Pai Xu Xiaobai