Arthur Hayes: A Figure of Inspiration and Debate

Arthur Hayes sparks both admiration and controversy. Let's delve into his biography to gain a deeper understanding of this intriguing persona.

Early Days and Financial Foray

Born in 1985 in Buffalo, New York, Arthur Hayes hailed from a middle-class backdrop. His academic journey took him to the Wharton School of Business, where his prowess in tennis and running landed him a scholarship.

As he advanced his economics studies at the University of Pennsylvania, the allure of finance beckoned. An internship at Deutsche Bank in Hong Kong was his entry point. Impressed by his capabilities, the bank welcomed him aboard as a derivatives trader after his graduation.

Hayes' trajectory in the banking realm saw him making waves at Citibank in a parallel trading role. Yet, the intriguing world of cryptocurrencies began to capture his attention.

Crypto Chronicles and Bold Moves

Arthur's crypto initiation came in 2013 when he ventured into Bitcoin via the famed Mt.Gox exchange. This interest led him to the ICBIT platform, dabbling in futures contracts trading.

During this period, strict capital controls gripped mainland China, a restriction absent in Hong Kong. This presented arbitrage windows with Bitcoin, which Hayes astutely navigated. Though his maneuvers eventually drew the scrutiny of customs, his savvy allowed him to sidestep any consequences.

Arthur Hayes Source: X (Twitter)

The Inception and Evolution of BitMEX

In 2014, the world of cryptocurrency was still in its infancy, yet certain contenders were already jostling for dominance. Arthur Hayes saw an opportunity and, in collaboration with programmers Ben Delo and Samuel Reed, co-founded the cryptocurrency derivatives exchange, BitMEX.

To stand out and attract users, the BitMEX team allowed traders to use significant leverage, initially up to 50x, which they later increased to 100x. This distinctive feature sets BitMEX apart from its rivals.

However, it soon became evident that many traders on the platform, lacking experience with derivatives, were baffled when their positions disappeared due to contract expiration. This led to a wave of grievances against the founders.

In response to this challenge, Ben Delo came up with a solution. By 2016, the exchange introduced perpetual contracts, which have since become a highly sought-after product among crypto traders.

Announcing the Introduction of Perpetual Contracts on BitMEX Source: blog.bitmex.com

Triumph and Tribulation

Guided by Hayes, BitMEX rapidly expanded, capturing a significant portion of the market. The platform's diverse tools and the allure of high leverage drew seasoned traders, and at its height, BitMEX was handling daily transactions worth billions.

But BitMEX's meteoric rise was not without its share of controversies. The platform often became a focal point of discussions about potential market manipulation by influential traders. Moreover, while the high leverage offered by the exchange appealed to many, it also amplified the financial risks they faced.

Regulatory watchdogs, particularly in the US, consistently raised eyebrows over BitMEX's alleged non-adherence to financial regulations. Matters came to a head in 2020 when both the US Department of Justice and the Commodity Futures Trading Commission (CFTC) brought charges against BitMEX and its executives, including Arthur Hayes, accusing them of running an unregistered trading platform and flouting anti-money laundering guidelines. 

Hayes' Legal Troubles and Today

Following the allegations, Hayes stepped down from his role as the CEO of BitMEX and sought refuge outside the US, hoping to evade prosecution. However, in 2021, he finally surrendered upon landing in Hawaii with a private jet. While initially maintaining his innocence upon legal counsel's advice, he later pleaded guilty in February 2022.

Hayes was ordered to pay a fine of $10 million, was placed under house arrest for six months, and given two years of probation. During this period, he resided in his three-bedroom Miami home, where he authored essays on finance and, naturally, cryptocurrencies.

He continues this endeavor today, primarily residing in his favored Asia. Concise summaries of his intriguing and sometimes contentious essays can be found on our website (simply search for Arthur Hayes).

Cover from one of Arthur Hayes' essays Source: cryptohayes.substack.com

A Vibrant and Controversial Persona

Arthur Hayes has always been known to be flamboyant and unafraid to challenge norms. This trait was evident even during his tenure at Deutsche Bank. On a designated “casual Friday,” where employees were expected to sport business attire, Hayes chose to wear a particularly flashy outfit. This act of defiance led to the department abandoning the “casual Friday” tradition.

By 2018, with his reputation already well-established, Hayes drew attention once again by carelessly parking a rented Lamborghini, right outside the venue for the Consensus Conference in New York. Without any hint of remorse, Hayes shared photos from the scene on the social network X (previously known as Twitter).

Arthur Hayes at the 2018 Consensus Conference Source: X (Twitter)

Hayes' role in shaping the crypto derivatives trading landscape is undeniable. Yet, his combative demeanor and regulatory oversights have rendered him a contentious figure in the industry. Hayes continues to forge ahead, focusing on endeavors in Asia, with his journey underscoring the perils and potentials intrinsic to the burgeoning crypto domain.