Crypto People: BitMEX cofounders Arthur Hayes' ten-year crypto journey

Original Encryption King Returns, BitMEX co-founder Arthur Hayes Arrested

Original article by Jen Wiecener, New York features

angelilu, Foresight News

It's a story that may sound familiar to you: a brash, college-educated young man who spends a few years as a trader, launches a cryptocurrency trading platform, and quickly becomes a billionaire. He's been on TV, on Twitter, and as the face of an innovative industry called crypto, the kind of rebellious entrepreneur you can't help but follow bitcoin, even if you don't. The young man is known as the king of cryptocurrencies. Then, perhaps out of arrogance, he started making mistakes. Even though he lived abroad, law enforcement in the United States took notice of him. After an indictment was filed, he negotiated the terms of his return to the United States and surrendered to federal authorities to face multiple felony charges.

It's not just the story of Sam Bankman-Fried, it's also the story of Arthur Hayes, who was on the cryptocurrency scene before SBF, has been knocked out of it, and is now ready to return. While the stories are similar, they differ in many other ways in their lives: Bankman-Fried is a white kid from the social elite, while Hayes is a black kid from the Rust Belt; Bankman-Fried looks tired, as if he's been working at a computer for more than 20 hours a day. Hayes is a burly, handsome man. Bankman-Fried has been labeled a success throughout his life, while Hayes has created his fortune almost by will, surprising everyone but himself. When Hayes set up the trading platform known as BitMEX in 2014, no venture capitalists were betting on him and no one could have guessed that he would become history's first trillionaire. He even slept on a friend's couch for a few months when it wasn't working out.

The big difference is that Bankman-Fried (accused) stole billions of dollars from ordinary people around the world, while Hayes was never accused of taking things that didn't belong to him, or lying to his customers, or running a shady business. "He's definitely one of the great guys in cryptocurrency," says Nic Carter, co-founder of blockchain-focused investment firm Castle Island Ventures. "BitMEX has never screwed one of their clients, never been hacked, never lost money." Hayes has become something of a bitcoin martyr. Daniel Bresler, a partner at Seward & Kissel, a law firm that specializes in cryptocurrency and financial crime, said, "He's not your typical bad actor who embezzles money or does something really nefarious."

Hayes, 37, also has opponents. Economist Nouriel Roubini called Hayes the dirtiest player in a dirty business, even taking into account Bankman-Fried (SBF pleaded not guilty). Hayes has made enemies by joking about bribing government officials, posing next to fleets of supercars on the streets of New York and mocking the Securities and Exchange Commission on Twitter. Those actions gave investigators the momentum to pursue him, gathering evidence that Hayes knowingly violated banking laws by failing to prevent money laundering, violated U.S. sanctions by accepting Iranian clients and allowed Americans to transact on BitMEX without meeting various obligations.

Whether one chooses to see Hayes as a white-collar criminal or a scapegoat, his treatment is baffling, and is it a coincidence that the only black entrepreneur at the top of the cryptocurrency game has been crucified for doing something not uncommon among his peers? "The idea that one of the crypto figures they're putting behind bars is black is terrible," said one prominent industry figure who spoke on condition of anonymity.

On April 6, 2021, Hayes landed at an airport in Honolulu, Hawaii, and surrendered to federal agents on the tarmac. After pleading guilty to one count of violating the Bank Secrecy Act, he paid a $10 million fine and began serving six months of house arrest last summer. This is a long period of relative silence for Hayes. He still tweets and blogs about cryptocurrencies from time to time, but he is careful not to further anger the Justice Department and jeopardize the lenient sentence. When his sentence ended in mid-January, he flew out of the United States and eventually landed in Japan, where he skied six days a week and planned his next move.

Interview with Arthur Hayes

"I want to do my part to reach as many people as possible with Bitcoin. We will hopefully disrupt TradFi and give people an alternative." Hayes (who still must pass a two-year probationary period with more scrutiny from the authorities) told me.

What's interesting is that the traditional financial industry that Hayes is trying to knock down is the industry that got him started, the industry that taught him the technical know-how to build a cryptocurrency empire. "You want to use your life to do something that you think can really change the world," he says. "I want to be on the side of change. Both from the point of view that I was right and from the point of view that I made some money from it."

Photograph: Mikaela Martin

Just before he left the country (possibly for good), I visited Hayes in his incarcerated apartment, a shiny white three-bedroom on South Beach with a wide balcony overlooking Biscayne Bay and a wraparound deck covered in bougainvillea overlooking the Miami skyline, Below were swarms of sailboats gliding across the water. It's 81 degrees outside, but in Hayes' home, it feels 10 degrees hotter. After living in Southeast Asia for more than a decade, he would rather not use air conditioning at this temperature.

Hayes, who had just finished a yoga class, wasn't sweating. He spent most of his time lifting weights and stretching, and he had tendons and sculpted shoulders that made him look like he was wearing armor. Hayes is allowed to exercise outside a few hours a day. Tennis rackets and swimming goggles were in the corners, and on the counter was a bicycle helmet, next to a haphazard platinum American Express Card. He likes to shop for healthy food and juice at Pura Vida, where fans occasionally recognize him, and generally his house arrest doesn't feel particularly confined. Hayes has an office at nearby WeWork and occasionally gets permission to dine out, allowing him to communicate with Miami's burgeoning cryptocurrency community. In September, Hayes hosted an after-party for a conference in Singapore and remotely bought drinks for people in the room while sitting on South Beach. Over Christmas, the government told Hayes to go home to Hong Kong.

Although his life under house arrest seems good, Hayes can be unusually cautious and gloomy at times. He was afraid he would be kidnapped. "I'm more worried about safety in America because people here have guns," he said. He no longer considers the United States his home, and he even considers the sea-facing pool on the ground floor of the building a waste of space that instead attracts mosquitoes and midges. Before he was placed under house arrest, he lived in Singapore, which he says is less infested.

Hayes brought a few stuffed animals from his collection of more than 100 stuffed animals in Asia to keep him company on South Beach. He buys them to celebrate milestones, names them and lines them up on his bed. At his place in Miami, I counted a chartreuse starfish, a fox, an armadillo, a giraffe, an elephant, an octopus, a snake and an anthropomorphic cabbage. "Sometimes I do travel with a box full of toys," he says.

There may be no one else in the crypto world quite like Arthur Hayes, a company run by Su Zhu and Kyle Davies while Hayes was under house arrest, given the dramatic infighting among the industry's biggest names. Three Arrows Capital and the FTX, led by Bankman-Fried, both fell, and Hayes ended his house arrest at this point. But the demise of Three Arrows Capital and FTX has changed the cryptocurrency landscape, with a climate of mistrust simmering among the surviving players and regulators tightening the screws on the industry. "One by one, the poster children of the crypto industry have been destroyed, and the people who were held up as role models for corporate behavior have been shown to be either bad at business or a total liar, so I think we've almost hit bottom," Hayes said.

Hayes said his return was not intended to fill a void in encryption leadership. "That's not what cryptocurrency is about. It shouldn't be based on a very small number of people running companies." He is returning in a different way, as a commentator and market mover through an influential blog and Twitter account that are must-reads for crypto believers. Hayes has written three articles about the fall of the FTX, including one titled "White Boy" about how SBF used his natural advantages and superior social acumen to fool people into thinking he was a cryptocurrency wizard and the future of the dominant Western financial institution. He continued his denunciation on Twitter with an image of him appearing to bite into a Bankman-Fried cutout, mocking Bankman-Fried's vegetarian habits.

Hayes has good reason to gloat about what happened to SBF. At its peak in 2019, BitMEX was worth billions of dollars and had a dominant market share in crypto derivatives trading, with $1 trillion in transactions. But that same year, Bankman-Fried founded FTX, and his platform and others, which offer spot trading and add-on products, quickly swallowed up Hayes's business. Eventually, FTX, Binance, etc. overtook BitMEX, and Binance is now the undisputed leader. Today, BitMEX barely makes it into the top 10 derivatives trading platforms, according to CoinMarketCap.

Crypto trading platforms remain a profitable business, collecting transaction fees from each transaction it processes. "There aren't many times in the history of finance that you can have a trading platform," Hayes says. "They're like printing money." His wealth ranges from hundreds of millions of dollars to a billion dollars, depending on the price, and he's investing in a variety of ways. His family office. Maelstrom  Has made 10 to 20 investments in private companies, including one in a robot sex doll startup. "I really like what these guys are doing," he said.

He is still actively involved in the market. "I'm a trader," he says. "If the market changes, I trade it." Hayes predicts a bull market most of the time between now and 2026, followed by an economic disaster not seen since the 1930s. "I think every central bank is going to fix the price of its government bonds over the next 12 to 18 months, and that's going to lead to the next mega-upswing in all risk assets, and then we're going to have a generational collapse. That's my view." Hayes burst out laughing, as if coming from a loudspeaker at too high a volume.

His market judgment also applies to cryptocurrencies, which are recovering from FTX's negative effects, with bitcoin up about 50% since its bankruptcy. . "We're going to have different cycles," Hayes said. "Sometimes it's going to be cycles where deep value tokens go up, sometimes it's going to be cycles where shit coins go up, any kind of shit coin can go up 50 times, and you don't want to miss those cycles. So yes, I would invest in deep technology and cryptocurrencies that do decentralisation and really realise the vision of Satoshi Nakamoto's white paper, and I would also invest in shit coins because I think I can time the market, buy a narrative and sell when the narrative peaks. We'll see if that actually happens in practice."

Photograph: Mikaela Martin

The past of Arthur Hayes

In August 2004, during his freshman year at the University of Pennsylvania, Hayes started going to the gym every morning at 5:30 with a new friend. As black students in Wharton's undergraduate program, they used dawn practice to envision their future. "Becoming rich was our specific goal," says Justin Anderson, a friend who is now a venture capitalist. For Hayes, who grew up in Buffalo and Detroit, the child of auto workers and whose parents divorced by the time he was 11, becoming rich was a largely unimaginable goal. But one morning one month, while he and Anderson were waiting for an elevator, he felt the presentiment particularly strong. "I remember pressing the button, being silent for a moment, and then saying, 'We're going to be billionaires.'" "I think he sees himself as some kind of financial wizard, more Gordon Gekko than Mark Zuckerberg," Anderson said.

Hayes surprised and inspired some of his black peers by passing the toughest challenge at Penn. "You can't get there as a black person without having confidence in yourself," Anderson says. "He became president of the Black College Student Association at Wharton. In Arthur's world, there's really no barrier, he just does it. Arthur obviously knew he was a black man in a predominantly white environment in Pennsylvania, but he never found it a challenge." Hayes placed in the school's bodybuilding competition,  Mr. Penn, and set the direction of his career in Asian finance.

"People from Buffalo stay in Buffalo, but I don't want to stay in Buffalo," Hayes told me. He didn't want to go to Manhattan like the rest of his class, and he thought he'd get the same results as everyone else. In the summer of his junior year in 2007, he won an internship with Deutsche Bank in Hong Kong. Hayes describes his experience of Hong Kong as "love at first sight," beginning with a taxi ride from the airport, past palm trees and endless shipping containers, and verdant hills overlooking the city's rainbow-colored skyline. "I feel so good about Hong Kong," he said. "I'm looking forward to the stories that can happen in China."

At Deutsche Bank, he worked in equity derivatives sales, where one of his more junior jobs was serving meals to superiors. He later wrote on his blog: "It was all very common, but as an enterprising poor intern, I tried to profit from my role as a food buyer. I charged a fairly high spread on each order, which allowed me to make a few hundred dollars a week. Just in case you thought I was out of place, everyone in the office knew what I was doing and acquiesced, respecting the rules of the game."

Hayes was also a nightclub rat, which helped him land his first full-time job after returning to Philadelphia during his senior year. As he recounts in another blog post, Deutsche Bank sent recruiters to Penn. "During my interview, I expressed my love for partying in Hong Kong," Hayes wrote. "As a test, one of the senior recruiters asked me to recommend some local nightclubs. We ended up getting drunk at the Philadelphia Family Club downtown." After graduation, he formally joined Deutsche Bank as a trader in Hong Kong.

Andrew Goodwin, Hayes' roommate at the time, said, "He was always the kind of person who made challenges bigger than life. Even as an intern, he was always pushing the envelope. You should see his yoga pants." One Friday at work, a department head walked by Hayes' desk and said, "Who the fuck is that?" Because he was wearing a tight pink Polo shirt, jeans and bright yellow sneakers. Leisure Friday has been cancelled.

The market crash of 2008 took some of the fun out of the well-paid expat lifestyle, and as the recession set in, Hayes began converting his money into gold. This is both an investment and an insurance policy in case of social unrest. "The boatman only takes gold," a friend remembers Hayes telling him.

Hong Kong is full of expatriate financiers who seek something more exotic than Wall Street and tend to share an ideology that longs for a return to the gold standard, hates capital gains taxes and thinks central banks would be a failure of Western economies. "Hong Kong attracts a lot of hard-core liberals because it has low taxes and little regulation," Hayes' friend puts him in that group.

Access to bitcoin

It's no surprise that Hayes was introduced to bitcoin early on. It happened in the spring of 2013, after he was laid off from a new job at Citigroup. "I always wanted to find the next thing," he says, and his first trade quickly made him thousands of dollars. Hayes remembers feeling like he had experienced the birth of a revolutionary technology like the printing press or the telegraph. For the next year and a half, he slept on friends' couches while experimenting with cryptocurrencies, looking for arbitrage like the ones he'd learned in banking.

One day in 2013, the price of bitcoin on the mainland soared relative to that in Hong Kong because of China's tight controls on the flow of money. Hayes began buying bitcoins at lower prices and then selling them on exchanges in China, withdrawing the profits into a mainland bank account he had opened at a fake address. He then crossed the border by bus from Hong Kong to Shenzhen, withdrew money and returned stuffed in his backpack. During one crossing, Hong Kong authorities detained him, believing he was involved in suspicious bitcoin transactions. Hayes finally managed to convince officials that he was also a victim in the deal, and they let him go.

Talking crypto on CNBC in 2018.  Photo: CNBC/YouTube

Hayes, who has slowly become something of a legend, already stands out in Hong Kong, and not just for his appearance. Goodwin has written that Hayes is an almost mythical hero in cryptocurrency circles. Strangers and friends sometimes refer to Hayes as a "nigger," a Cantonese slur. But Hayes likes to be different. "When you come to Asia you want to stand out, because if you come halfway around the world and you just want to fit in, why did you leave in the first place?" he told me with a laugh.

Hayes appreciates the concept of not having to trust money. "Cryptocurrencies are the only assets that truly belong to you," he says. On the other hand, he reverently calls bitcoin "pure energy in digital form." But unlike many other early believers, he never kept much. "Putting your entire fortune into such an extremely volatile asset where you have no control over the outcome would be very stressful, and I don't have that power. I would rather have a business whose success or failure I am directly responsible for."

Create BitMEX

At the time, startups like Coinbase were opening trading platforms and trying to make digital money available to everyone. Hayes saw an opportunity for a more unique adventure. One of his specialties at Deutsche Bank and Citibank was trading futures contracts. "Derivatives are like breathing in my life," Hayes says. He envisions creating a niche trading platform for established traders who want to bring Wall Street-style operations to Bitcoin. The platform, which does not accept other digital currencies or legal tender, has the look and feel of a Bloomberg terminal. Hayes formed the team with Ben Delo and Sam Reed, both cryptocurrency enthusiasts who know how to code. In 2014, they launched BitMEX, short for Bitcoin Mercantile Exchange -- a nod to the Chicago Mercantile Exchange, the iconic derivatives market. They are incorporated in the Seychelles, which has low disclosure requirements for financial companies, and Hayes serves as chief executive.

For the first 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 two co-founders with another idea, saying, "Hong Kong is the place of choice for used electronics. What if their website changed to trade used iphones?" Delo and Reed turned him down. Ultimately, they decided to lure customers to BitMEX by allowing them to take on more risk. Much of the money in derivatives comes from the use of leverage -- borrowing money to make bigger bets, multiplying gains but also widening losses. Hayes, Delo and Reed raised BitMEX's leverage limit to 50 times, more than double that of their competitors, and then they raised it to 100 times. That makes BitMEX the boldest cryptocurrency trading platform, or rather the most reckless. "We became profitable very quickly," Delo says, "and super-high leverage became so central to the BitMEX brand that the company's parent company changed its name to the 10 0x Group."

The founders also decided to push their platform more aggressively toward amateurs. Earlier Hayes said in a talk about BitMEX: "There are some people who offer similar products but they focus on degenerate gamblers, the retail traders of bitcoin, so why don't we do the same thing? The problem is that retail investors aren't used to trading derivatives. They leave messages for Hayes complaining that their contracts are suddenly gone (because they've expired) and clients often call the founders scammers."

Delo had a new idea that would become BitMEX's signature innovation. What if it made a futures contract that never expired?   In May 2016, BitMEX launched so-called perpetual contracts -- a 24/7, constantly updated derivative that will simplify betting on the future price of bitcoin. Darius Sit, founder of Singapore-based cryptocurrency trading firm QCP Capital, said: "This has proved revolutionary for liquidity in the cryptocurrency market. More liquidity as a trading platform means more profits for BitMEX. Hayes makes money as long as people keep trading whether the price of bitcoin goes up or down."

A month or so after the perpetual contract debuted, he ran into colleagues holding newspapers at a dim sum shop in Hong Kong. The UK has voted for Brexit and the markets are in an uproar. "We're going to be rich!" "He howled.

After becoming famous

By 2017, BitMEX was making so much money that Hayes and his co-founders turned down an investment offer from a venture fund that valued the company at $600 million and retained nearly all of their equity, despite the trio's efforts to raise money when BitMEX was born. The following year the bitcoin bear market came, but it only made it easier for people to hand over more frequently on their platform. That summer, BitMEX's peak daily trading volume reached $8 billion, and Hayes, Delo and Reed received a $4 million cut -- an absurdly high amount of revenue.

Their 45th-floor office in Hong Kong's financial district is filled with casual Spaces for billiards, poker and mahjong, a huge bar and a Lamborghini-branded sound system. Two stone temple lions were installed at the entrance to the office. Even more shocking is a tank with three blacktip reef sharks, which costs more than $100,000 a year to maintain and, according to Delo, is so heavy it requires additional support posts to reinforce the structure.

Some of this excess is being pushed by others, according to Hayes, who isn't in the office much. He said of the shark, "I came back from a vacation somewhere and saw this and I was like, okay, whatever." He was the social president of the fraternity at the University of Pennsylvania, where he encouraged fraternity culture by sponsoring parties and stunts such as eating contests. "He shows up with a wad of cash and a bunch of Big Macs and says who wants to try it?" said Reed. "To the outside world, Hayes acts as an ambassador -- representing BitMEX and the rebellious spirit of cryptocurrencies in general." "There was always a joke that he wanted to be a trader, but he was going to be an amazing salesperson," Goodwin said.

In May 2018, Hayes traveled to New York for the Consensus cryptocurrency conference and stole the show before he even got inside. BitMEX parked three Lamborghinis outside its downtown venue. Hayes called it "a guerrilla-style marketing ploy" and acknowledged that it might seem "a little vulgar." The supercars were rented from a man who wouldn't even let BitMEX staff drive them, and they got about $1,000 in tickets. Reed  "Looking back, I wish we hadn't done the Lamborghini thing, because nobody got the joke."

But this behavior is in keeping with Hayes' personality, reeks of heroism and shows that he is not taking orders from anyone. A myth began to circulate that Hayes always made money, even when no one else did. A meme also began to circulate, though it was fabricated, a screen shot of Hayes allegedly instructing a staff member to "get rid of the rest of you, I need a new Ferrari."

The comments appeared to support a widely held (and unsubstantiated) belief at the time that Mr Hayes was manipulating the market and trading with clients. He didn't shy away from cars. In late 2018, he put a bumper sticker on an ambulance donated by BitMEX to Seychelles. His other car is a Lamborghini. He also bought a yellow Ferrari Portofino. Fans see the car as a sports car for people who don't really understand cars, and some in Hayes' inner circle have dubbed it the "girly Ferrari". Hayes hated driving it, too. "I'm not a car person," he said. "I hit two cars in the parking lot."

As a global tycoon, Hayes has taken his antics global. Although BitMEX cannot legally do business in the US, he held a robe-themed charity event at Cipriani Wall Street in New York, featuring food stalls, lobsters and a performance by Rick Ross. Another time Hayes flew one of his favorite DJS, Christian Smith, from Europe to a club in Asia because he wanted to dance to the music he loved.

Hayes is extremely secretive about some parts of his life. Many of his closest colleagues did not know he had an intellectually disabled brother until the relationship was mentioned in court. Hayes dodged several topics during our interview, on the condition that I not name his wife, whom he married in 2018. A colleague said, "We like to joke that there's an Arthur Hayes, and there's an @CryptoHayes [his Twitter handle], and they're different people." "Arthur was a front man, a showman, a P. T. Barnum," Delo said.

Debate with Roubini (left) in Taipei in 2019. Photograph: BitMEX/YouTube

Hayes experienced something of a circus in the summer of 2019, when he took the stage at what was dubbed "Taipei's Tangle" -- with Roubini, a well-known economist and vocal critic of cryptocurrencies. Have an argument. Roubini  He was wearing a suit, while Hayes was wearing skinny jeans with holes at the knees. In less than ten minutes, he explained it himself. When asked by the host why BitMEX is based in the Seychelles, Hayes said the company doesn't need to "bend my head to be regulated by the U.S. government," he continued, "I really don't want to be at the bottom with my brother all day long. So I get out of that situation. What's the only difference between the U.S. and Seychelles regulators? How much does it cost on this island? A coconut."

Hayes insisted he was joking, and Roubini was shocked by the remark. "I mean, they're all liars, but at least they pretend not to be liars, and he told me, this guy he said, he can do whatever he wants. It's a statement that admits he's a liar. I have never seen anything like it, even in this place, they are all criminals."

Hayes asserted that he was operating outside the jurisdiction of the United States, and that virtually any entity interacting with the U.S. financial system would be subject to U.S. law. Hayes might as well have simply asked regulators to target him. In a way, BitMEX is doing just that. Shortly after the Roubini confrontation, someone on the trading platform responded to a request for information about the company's operations with a meme of Hayes's smiling face and the words "Register in Seychelles, bro, come find me."

BitMEX was investigated and Hayes arrested

When news of the federal investigation broke, customers were said to have pulled $500 million from the platform at the time. The Justice Department indicted Hayes, Delo, Reed  in October 2020. And their first employee. Gregory Dwyer. There is nothing regulators in Washington, DC, hate more than being embarrassed. "The reason they were charged was because what they did was blatant," says a former official at the Commodity Futures Trading Commission. The commission also charged Hayes, Delo and Reed. (BitMEX settled with the CFTC for $100m, but it was later reduced.) "The Justice Department has strong evidence that Arthur Hayes communicated directly with customers in Iran. Arthur Hayes drives Lamborghinis in New York, demonstrating that they knew what the law was, that they willfully ignored the law, and that they aggressively engaged in illegal conduct."

Hayes resigned as CEO, and a few months later, he chartered a private jet and flew to Hawaii, where he was arrested while wearing a T-shirt. Bailiffs boarded the plane, fingerprinted him and examined his cheek. Two FBI agents wearing body armor then handcuffed Hayes and took him to the courthouse, where he did not enter a plea. After ten days in quarantine, he was flown back to Singapore, where he has been spending the rest of the coronavirus outbreak. Reed, a JavaScript programmer from Wisconsin, had an even worse experience at his home in a suburb south of Boston with his 3-month-old baby, his wife and his in-laws. At 6 a.m., a dozen FBI agents and police officers knocked on the door with guns drawn, then handcuffed him to a chair in the living room. Reed was taken to a federal building downtown and left alone for about 10 hours in a dank basement cell, shackled at the ankles.

In February 2022, Hayes changed his plea to guilty, most likely because of the threat of prison. Federal prosecutors in the Southern District of New York told the court that BitMEX was a "vehicle for money laundering and criminal activity" and conducted more than $200 million in suspicious transactions; It did not report any of the transactions to the government as required. In one case, Hayes unfrozen the account of a suspected hacker, allowing them to withdraw potentially stolen bitcoins, the government said. Prosecutors wrote that because the company did not ask traders to provide identifying details, "it is possible that the criminal conduct that existed on BitMEX would never have been discovered."

Prosecutors asked the court to impose a "significant custodial sentence" in addition to the six months to a year recommended by sentencing guidelines, and Hayes struck a contrite tone as he told the court: "While I have much to be proud of in terms of my accomplishments at BitMEX, I deeply regret my involvement in this criminal activity." Hayes' lawyers presented testimony from friends, family dentists and former Goldman Sachs partner and hedge fund manager Mike Novogratz, who is now a partner at Galaxy Investment. Mike Novogratz wrote, "No one should forget that Arthur is a young, successful black man, and this country and industry needs more of them."   In May, a judge upheld the lower end of sentencing guidelines, allowing Arthur to avoid jail altogether.

How Hayes felt after his arrest

When I asked him why he was ready to tell his story, Hayes said, "Even when the blow happens, keep going." When I tried to get him to talk about his regrets, he refused: "If you sat here and lived in the past all day, you'd be miserable. And I mean, I'm still here. I'm not going anywhere."

"There are obviously a lot of restrictions on what I can say," Hayes added. To prevent him from further goading the administration, Hayes has hired a number of expensive legal and public relations consultants, including one who monitors all our conversations via Zoom and interrupts whenever my questions approach "dangerous" territory. And finally, what about a low point in Hayes's life? "Probably the most unpleasant thing is sitting in management meetings dealing with other people's problems," he says. "When I sometimes come into the office, I leave the door open, but I don't want to do that." Temperamentally, he is better suited to be a writer than a CEO.

Hayes says when he leaves the United States, he may never return. "I have little intention of ever coming back to the United States," he said. Although he made only a few complaints about jet lag and American food, there was a sense that he despised his country on a deeper cultural level.

He spent the last six weeks in Hokkaido. He prefers to ski alone, in his neon-colored gear, enjoying the peace of a solitary gondola. "I don't know if I have an overarching vision for the future," he said one morning, "but to survive and not lose people's Bitcoins." Hayes insists he doesn't like the FTX crash and the shadow it casts over all cryptocurrencies. "I don't want that to happen," he said. "It's not an ideal situation for us." He was also careful to say that FTX overtook BitMEX because of Bankman-Fried's alleged fraud. "We let someone come into our house and take the money we were supposed to make, like Sam was a black man hiding behind, and that's why they beat us -- that's not the case. We beat ourselves."

Reed  More explicitly bullish on the possibility of BitMEX regaining some market share. "Let's call it a comeback," he said. Hayes publicly stepped down from the company during his legal battle and says he is now just a board member with no plans to regain the CEO job (he still controls BitMEX behind the scenes, according to people familiar with his movements). "When they pleaded guilty, Arthur acted very domineering, and it was clear that he just wanted BitMEX back -- back to the way it was before," one of the people said.

For now, though, BitMEX is still in decline. It has already made two rounds of layoffs in the past year. The CEO appointed to replace Hayes was fired in October and is now suing the company in Singapore for wrongful termination. The current CEO is CFO Stephan Lutz.

There are also some new stories about BitMEX: There are no more sharks in the office. While Hayes was working on his case, the sharks also came out of their cage -- a rectangular tank in which they were not allowed to swim in circles. They were in a bad state, bumping and fighting each other and leaving bite marks on their meat, according to a source close to the investigation. Eventually, one shark kills the other, and one shark dies of natural causes. When I interviewed Hayes, he didn't even know they were gone.

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