Arthur Hayes stands as one of the most influential and controversial figures in the history of cryptocurrency. As the co-founder of BitMEX, he revolutionized digital asset trading with the invention of the perpetual swap, a financial instrument that now dominates crypto derivatives markets. His journey—from a Wall Street trader to a billionaire crypto entrepreneur, and eventually to a defendant in a high-profile U.S. court case—offers a compelling narrative of innovation, audacity, and the complex interplay between disruptive technology and regulatory frameworks.
Early Life and Formative Years
Arthur Hayes was born in 1985 and raised in a middle-class family in Detroit. His parents, both employees at General Motors, prioritized education and enrolled him in a private school in Buffalo, New York. Even during his school years, Hayes displayed a competitive spirit and athletic talent, participating in tennis and cross-country running. He earned an athletic scholarship that later supported his studies at the University of Pennsylvania’s Wharton School.
At university, Hayes’s ambition began to take shape. He woke up at 5:30 a.m. daily to work out at the gym, using those early hours to brainstorm and dream about his future. Friends recall that he saw himself as a "financial wizard," more in the mold of Gordon Gekko than a tech innovator like Mark Zuckerberg. This vision would soon drive his career choices.
Breaking Away from Convention
After graduating in 2008, Hayes faced a common crossroad: follow his peers to Wall Street or forge a different path. He chose the latter. In the summer of 2007, he secured an internship at Deutsche Bank in Hong Kong—a move that would change his life.
Hayes quickly adapted to the dynamic environment of Hong Kong. As an intern, he was tasked with buying lunch for senior staff, but he found an opportunity even in this mundane duty: he charged a "handling fee" for each meal, earning hundreds of dollars per week. His boldness and charm also helped him land a full-time job. During a recruitment event, he bonded with interviewers over nightlife, and the evening ended with everyone drinks at a Philadelphia bar. Hayes was offered a position as a trader at Deutsche Bank’s Hong Kong office.
His rebellious streak was evident early on. When the bank allowed casual dress on Fridays, Hayes showed up in a pink polo shirt, faded jeans, and bright yellow sneakers. After a senior executive questioned his attire, the department ended its casual Friday policy. Hayes seemed to thrive at the edge of propriety.
Discovering Bitcoin and Spotting an Opportunity
In 2013, Hayes was working at Citigroup when he was laid off. Around that time, he discovered Bitcoin. His first trade involved buying spot Bitcoin on Mt. Gox, depositing it on ICBIT (an early crypto derivatives platform), and selling a futures contract at a premium. The trade netted a 200% return—thousands of dollars in profit—and hooked him on crypto trading.
He soon identified an arbitrage opportunity: Bitcoin prices in mainland China were higher than in Hong Kong due to capital controls. Hayes began buying Bitcoin in Hong Kong and selling it in China, then withdrawing profits in cash through a fabricated bank account. He would cross the border into Shenzhen with a backpack full of cash. After being detained and questioned by border officials, he claimed to be a victim of Bitcoin scams and was released. The experience underscored both the opportunity and the risks in the nascent crypto market.
Founding BitMEX and Embracing High Risk
After the collapse of Mt. Gox, Hayes saw a gap in the market. Existing exchanges focused on spot trading or basic futures, but none catered to professional traders familiar with Wall Street-style derivatives. He envisioned a platform that functioned like a Bloomberg terminal for crypto, offering sophisticated products with high leverage.
In 2014, Hayes partnered with developers Ben Delo and Sam Reed to establish BitMEX (Bitcoin Mercantile Exchange). The company was registered in Seychelles, a jurisdiction chosen for its favorable regulatory environment. On its first day, BitMEX recorded $50 million in trading volume.
Initial growth was slow, and by early 2015, Hayes considered quitting and switching to reselling used iPhones. Instead, the team decided to differentiate by offering extremely high leverage. They increased their leverage limit to 50x, then 100x—far beyond what competitors offered. This attracted risk-tolerant traders and turned BitMEX profitable. The high-leverage model became central to its brand, and the parent company was renamed 100x Group.
Inventing the Perpetual Swap
BitMEX’s most significant innovation came from addressing a common user complaint: futures contracts expired, causing confusion and losses for inexperienced traders. Ben Delo proposed a solution: a futures contract with no expiry date.
The team developed the perpetual swap (perp), a novel instrument that used a funding mechanism to tether its price to the spot market. It offered the benefits of leverage without the hassle of rolling over contracts. In May 2016, BitMEX launched XBTUSD, the first perpetual swap contract.
The product gradually gained traction, and by 2018, other major exchanges like Bybit and OKEx had launched their own perps. Binance and FTX followed in 2019. Today, perpetual swaps account for over 90% of the crypto derivatives market, which sees quarterly volumes exceeding $660 billion.
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A Lifestyle of Audacity and Controversy
As BitMEX grew, so did Hayes’s wealth and notoriety. In 2018, he attended a crypto conference in New York with three rented Lamborghinis parked illegally outside the venue. The stunt resulted in $1,000 in fines, but Hayes dismissed it as "guerrilla marketing."
His boastful attitude was further displayed when BitMEX donated an ambulance to Seychelles. A photo of Hayes beside the vehicle featured a sticker that read: "My other car is a Lamborghini."
In 2019, Hayes debated economist Nouriel Roubini in Taipei. Wearing ripped jeans, Hayes mocked U.S. regulation, stating that complying would mean "bowing down and taking an ass-fucking." When asked about the difference between U.S. and Seychelles regulators, he replied: "It’s more expensive to bribe in the U.S." For Seychelles, he joked, "a coconut" would suffice.
Legal Challenges and Downfall
Hayes’s defiance drew scrutiny. In July 2019, the U.S. Commodity Futures Trading Commission (CFTC) began investigating BitMEX for serving U.S. customers without registration. The exchange saw $73 million in Bitcoin outflows in a single day.
Over the next year, BitMEX faced a lawsuit alleging racketeering and money laundering, and it suffered security breaches, including a leak of user emails and a hacked Twitter account.
In October 2020, the U.S. Department of Justice charged Hayes and his co-founders with violating the Bank Secrecy Act by failing to implement anti-money laundering (AML) protocols. The indictment stated that BitMEX had facilitated over $200 million in suspicious transactions.
Hayes resigned as CEO, and BitMEX appointed a new leadership team. In April 2021, he surrendered in Honolulu and was released on $10 million bail. After months of legal battles, Hayes pleaded guilty in February 2022. He was sentenced to six months of home detention, two years of probation, and a $10 million fine.
Life After BitMEX
Hayes served his detention in a luxury Miami apartment, where he was allowed to leave for exercise and work. He expressed disdain for the U.S., citing concerns about safety, food, and culture. He now resides primarily in Asia, focusing on writing and investing.
Despite his fall from grace, Hayes’s impact endures. The perpetual swap remains a cornerstone of crypto trading, and his story serves as a cautionary tale about the tensions between innovation and regulation.
Frequently Asked Questions
What is a perpetual swap?
A perpetual swap is a type of futures contract with no expiry date. It uses a funding mechanism to anchor its price to the underlying spot asset, allowing traders to hold leveraged positions indefinitely without rolling contracts.
Why was Arthur Hayes charged by U.S. authorities?
Hayes and BitMEX were charged for violating the Bank Secrecy Act by failing to implement AML and know-your-customer (KYC) procedures while serving U.S. customers. The exchange was not registered with U.S. regulators.
What is Arthur Hayes doing now?
After his legal settlement, Hayes has focused on writing and investing in crypto projects. He resides mostly in Asia and remains an influential voice in the industry.
How did BitMEX change crypto trading?
BitMEX introduced high-leverage trading and pioneered the perpetual swap, which revolutionized crypto derivatives and became the market standard.
Did BitMEX handle customer funds properly?
Unlike some other exchanges, BitMEX was never accused of misusing customer funds. The charges against it centered solely on regulatory compliance failures.
Is BitMEX still operating?
Yes, BitMEX continues to operate under new management and has implemented full KYC and AML procedures to comply with regulations.
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Arthur Hayes’s legacy is a mixed one: he pushed the boundaries of financial innovation but learned the hard way that even the most disruptive technologies must navigate the complexities of global regulation. His story underscores the transformative potential of crypto—and the perils of ignoring the rules.