Arthur Hayes was born to middle-class parents who worked for U.S. automobile giant General Motors. He spent his formative years in both Detroit and Buffalo.
He attended the prestigious Nichols School in America and continued to the Wharton School of business. After graduating, he went to Hong Kong, where he worked at Deutsche Bank and Citibank as a market maker for exchange-traded funds.
Hayes was eventually out of job and decided to create something for himself. In his quest to do so, he found a passion for cryptocurrency, specifically Bitcoin. He started small, with arbitrage. He would buy Bitcoin in one market and sell at a premium price at another, according to Vanity Fair.
Bitcoin trading was flourishing for him until in October 2013 when he noticed that he had challenges accessing the coins he had sent to Mt. Gox, a Tokyo-based Bitcoin exchange that helped patrons convert their holdings into real cash. Mt. Gox declared in early 2014 that it had been hacked and that the hackers stole almost $500 million from its coffers. But Hayes was not affected. He withdrew his money and decided to take it elsewhere. Later he traded his Bitcoin in mainland China after hearing Bitcoin was trading higher there. He recounts crossing the border to China with friends and returning with cash.
It was at this period that it dawned on him to create an online platform where people could really profit off of their Bitcoin by using derivatives as a cryptocurrency. However, he needed to build something that could not be hacked or difficult to hack to assure the skeptical crypto community.
In 2014, Hayes met with Ben Delo, a brainy British mathematician and programmer to turn his vision into reality. They also co-opted a young American coder and tech evangelist named Sam Reed into their fold.
Hayes co-founded Bitcoin Mercantile Exchange (BitMEX) with Delo and Reed. Hayes became the CEO, Ben Delo the COO, and Sam Reed the chief technology officer (CTO). At the time, all they had was their laptops. They would work at a Starbucks station in Hong Kong and at night they’d retreat to Hayes’s apartment.
BitMEX is a peer-to-peer cryptocurrency exchange and derivatives trading website which is headquartered in Seychelles. The business was slow at first, Hayes recalled in an interview. Somedays, they had no traders at all.
Things changed in late 2015 when it started offering customers five times more than other competitors were offering. By 2017, they had to hire some 30 people to cope with the explosion in trading. They moved into a new office and by 2018, it had become a high-stakes marketplace, moving billions every day.
“We are the biggest trading platform in the world, by volume. That’s anyone who trades a crypto product,” Hayes told Vanity Fair. In 2018, BitMEX was declared the world’s largest cryptocurrency exchange. Hayes leased the 45th floor of Cheung Kong Center, the most expensive real estate in Hong Kong and home to Goldman Sachs, Barclays, Bloomberg, and Bank of America, according to Vanity Fair.
BitMEX started recording staggering trading on its platform. In June 2019, it said in a statement that it has set a new daily record, trading $16 billion. Two days later, Hayes claimed the company recorded one trillion dollars in one year.
But while BitMEX was recoding massive trading success, the FBI was investigating several breaches. In October 2020, the FBI indicted Hayes, Delo and Reed for violating and conspiring to violate the Bank Secrecy Act “by willfully failing to establish, implement, and maintain an adequate anti-money-laundering program.”
According to Vanity Fair, each count carries a maximum penalty of five years behind bars. Hayes was in Singapore when he was indicted by U.S. authorities. Bloomberg reported in April that he turned himself in to face U.S. charges that he failed to take steps to prevent BitMEX from being used for money laundering.
He reportedly surrendered to U.S. authorities in Hawaii six months after he was indicted. “Arthur Hayes is a self-made entrepreneur who has been wrongly accused of crimes that he did not commit,” his lawyers said in a statement. “Mr. Hayes voluntarily appeared in court and looks forward to fighting these unwarranted charges.