Crypto’s Virgil Through the Market Hellscape

Here’s something that might make you laugh: Arthur Hayes’ Wikipedia page still categorizes him as a “banker.” Indeed, the founder of the BitMEX crypto exchange and derivative trading platform did get his start on the equities side of Deutsche Bank and Citigroup. But that’s like calling a butterfly a caterpillar or a chicken an egg.

Since Hayes’ days as a banker he’s lived a thousand lives. He founded the first bitcoin derivatives exchange in 2014, invented the perpetual swap, became crypto’s first African American billionaire, lost vast portions of his wealth and made it back in at least two crypto crashes, allegedly “ran the stops” on his users (his users said, without much evidence), traveled the world speaking on crypto’s conference circuit, once joked on stage about bribing a Seychelles financial regulator “with a coconut,” was said to have run the stops some more, was accused of facilitating money laundering by U.S. federal regulators, was sued by investors, was sued by customers, may have been in Singapore, surrendered to authorities in Hawaii, was put under house arrest and has now – somehow, inexplicably – rebuilt his reputation as a crypto sage by writing multi-thousand-word blog posts.

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Arthur Hayes has been many things to crypto over the years: a builder, a showman and a criminal. This year, as the industry collapsed around users, he’s been a wise commentator able to bring people through complex topics in the markets and business in a series of blog posts. He’s like Virgil leading pilgrims through the layers of Hell as each new month brings a fresh calamity.

In this sense, Hayes is also living proof of something in crypto called the “redemption arc,” where former villains become heroes. For better or worse, crypto has embraced more than its fair share of convicted felons and fraudsters. Not everyone will welcome back FTX’s Sam Bankman-Fried or Three Arrows Capital co-founders Kyle Davies and Su Zhu (who at least appear to be avoiding regulators, a bit like how Hayes was perceived at first). But even convicted fraudsters can earn a seat at the table if they know how to make money.

Hayes, for instance, was invited to deliver the farewell keynote at CoinDesk’s inaugural I.D.E.A.S. conference. He had pleaded guilty along with BitMEX co-founders Benjamin Delo and Samuel Reed to violating the Bank Secrecy Act in February and is still under two years’ probation. Despite the conditions, Hayes said crypto is still generating new visions and isn’t done innovating, even if it takes time to build back from the bear market.

He didn’t say a word about the banking system.

CORRECTION (12/5/22 – 20:00 UTC): An earlier version of this article incorrectly stated Arthur Hayes spent time in prison, claimed to have bribed a regulator with a coconut and refused to engage with criminal investigators. Context has been added in the second and fourth paragraphs.