Original author: Thejaswini MA

Original translation: Saoirse, Foresight News

When Arthur Hayes traveled, his suitcase was filled with stuffed animals.

The 40-year-old cryptocurrency billionaire has a collection of more than 100 stuffed animals, each with a name, that he uses to celebrate life's most significant moments. In his Miami apartment, where he served six months of house arrest, visitors can see a display of dolls arranged like a child's bedroom: a chartreuse starfish, a fox, an armadillo, a giraffe, an elephant, an octopus, a snake, and an anthropomorphic cabbage pakchoy.

That might seem odd for a man who built the financial instruments that now dominate cryptocurrency trading, but Hayes has always been unconventional.

In 2013, Bitcoin traders faced a problem that was both absurd and mathematically fascinating.

Every month, their futures contracts expire, forcing them to repeatedly roll over their positions in a costly financial version of the Sisyphus simulator.

Roll over the contract, pay the handling fee, repeat over and over again, and eventually all the funds flow into the pocket of the exchange little by little through transaction costs.

Arthur Hayes, a longtime derivatives trader at Deutsche Bank and Citigroup, had spent his life figuring out how to profit from the market's tenuous hold together by mathematical tape. As he surveyed the predicament before him, an idea that would later prove invaluable took shape:

"What would happen if we set aside the constraints of time?"

This isn’t some philosophical quibble—Hayes isn’t grappling with existential questions like the nature of time.

He was wondering: What if you could design a futures contract that never expires, ending once and for all the cycle of monthly fee extraction that was driving Bitcoin traders around the world into bankruptcy?

That answer made him a cryptocurrency titan, the creator of the financial instrument that now underpins most cryptocurrency trading, only to face federal criminal charges for creating that instrument without first obtaining permission from the relevant authorities.

This is a story about traditional financial logic breaking into the "wild market" - these markets are built by a group of programmers who regard regulation as "suggestions". What kind of sparks will be generated when rigorous financial logic collides with the casual world of code?

Hayes grew up in Detroit in the 1980s. His parents, both working at General Motors, understood that education was the only reliable way to escape the auto industry's boom-and-bust cycles. They moved to Buffalo so he could attend Nichols School, a prep school where wealthy kids learned Latin and poor kids learned to network with the wealthy.

He graduated second in his class, playing tennis there, and after stints at the University of Hong Kong and the Wharton School, he earned a degree in economics and finance in 2008—perfect timing if you like watching the global financial system collapse in real time.

Rather than remain in New York and participate in the post-financial crisis soul-searching about the fate of Wall Street, Hayes relocated to Hong Kong, a move that proved prescient: in Hong Kong, complex derivatives can be traded with few pointed questions about the systemic risks involved.

Learning the “language” of derivatives

As a penniless intern, Hayes turned food delivery into a business, earning hundreds of dollars a week by charging the difference between each colleague's orders. During Wharton recruiting season, he took a recruiter to a Philadelphia nightclub and managed to impress them. His work style became legendary: One "casual Friday," he wore a tight pink polo shirt, acid-wash jeans, and bright yellow sneakers. His department head saw him and exclaimed, "Who's that asshole?" This incident led to the company canceling "casual Fridays."

In 2008, Hayes was hired as an equity derivatives trader at Deutsche Bank's Hong Kong branch. It was there that he dove headfirst into the complex mathematical world of derivatives—financial instruments whose value is derived from the underlying asset.

He specializes in Delta-one trading and ETFs, which is like plumbing in finance—not glamorous but essential. Understanding the connections between the plumbing systems allows for profit.

(Note: Delta-one trading is a financial trading method that tracks the price fluctuations of an underlying asset by trading financial products that have a 1:1 relationship with the price of the underlying asset, such as ETFs and futures.)

After three years of mastering the art of arbitrage from price discrepancies lasting only about 17 seconds, he moved to Citigroup in 2011. But in 2013, tightening bank regulations brought his good fortunes to an abrupt end. Hayes was fired, but this also led him to stumble upon the Bitcoin market at a time when it desperately needed knowledgeable "financial plumbers."

In 2013, Bitcoin exchanges were built entirely by people who knew how to code blockchain protocols—people who could code, but had never heard of margin requirements. Hayes saw this market as one that operated 24/7, with no circuit breakers, no central oversight, and no sophisticated risk management. This was either the future of finance or a contrivance designed to quickly wipe out your money—and in his view, both possibilities were perfectly compatible.

While the infrastructure was rudimentary, the underlying mechanisms fascinated him. This was clearly a market that desperately needed the financial engineering he had learned from traditional finance.

Building BitMEX

He teamed up with Ben Delo and Samuel Reed—the former a mathematician capable of building trading engines, the latter a true master of cryptocurrency. In January 2014, the three set out to create BitMEX (Bitcoin Mercantile Exchange), claiming to be "the premier peer-to-peer trading platform" to compete with exchanges whose features were mostly shoddy and barely functional.

The three founders’ skills complement each other perfectly: Hayes understands market structure and derivatives, Delo can build a complex trading engine, and Reed has a thorough understanding of cryptocurrency technology.

BitMEX launched live trading on November 24, 2014, focusing on Bitcoin derivatives. This timing was the culmination of months of meticulous development and stress testing. At the time of launch, the founding team was dispersed globally—Hayes and Delo were in Hong Kong, while Reed participated remotely from his honeymoon in Croatia.

Early products included leveraged Bitcoin contracts and Quanto futures, which allowed traders to express a view on Bitcoin’s price without actually holding the underlying asset. These complex tools required a deep understanding of margin, liquidation mechanisms, and cross-currency hedging—specifically, the Hayes team’s strengths.

(Note: Quanto futures are derivative contracts where the underlying asset is denominated in one currency but settled in another currency at a pre-agreed exchange rate, thereby eliminating the risk of exchange rate fluctuations at settlement.)

But their ambitions go far beyond that.

On May 13, 2016, BitMEX launched an unprecedented innovation: the XBTUSD perpetual contract. This futures-like instrument, but with no expiration date, anchors the contract price to the Bitcoin spot price through a funding mechanism between long and short positions. The contract offers up to 100x leverage and is settled in Bitcoin.

Traditional futures contracts expire monthly, forcing traders into a perverse cycle of "rolling over and paying for contracts." Hayes, drawing on the funding mechanisms of the foreign exchange market, has infused a new logic into Bitcoin futures: contracts don't expire, but rather self-correct through mutual payments between longs and shorts. When the contract price is above the spot price, longs pay shorts; when it's below the spot price, shorts pay longs.

This design eliminated expiration dates, lowered transaction costs, and proved so practical that every cryptocurrency exchange immediately copied it. Today, perpetual swaps account for the majority of global cryptocurrency trading volume. Hayes had essentially "solved" the time problem, at least in the field of derivatives contracts.

@Intelligencer

Explosive growth and regulatory scrutiny

BitMEX's XBTUSD contract has quickly become the world's most liquid Bitcoin derivatives market. Its sophisticated risk management, professional-grade tools, and high leverage have attracted both traditional financial traders and cryptocurrency natives.

By 2018, BitMEX's daily notional trading volume had surpassed $1 billion. The exchange moved into the 45th floor of Hong Kong's Cheung Kong Center, one of the city's most expensive office buildings. In August of that year, when BitMEX's servers went down for planned maintenance, the price of Bitcoin surged 4%, adding $10 billion to the overall cryptocurrency market.

BitMEX nominally bans U.S. customers, but critics say those restrictions are ineffective. Its influence on bitcoin pricing has drawn the attention of academics, regulators, and politicians new to the cryptocurrency market.

In July 2019, economist Nouriel Roubini published a report accusing BitMEX of "systemic illegality," allowing excessive risk-taking, and potentially profiting from customer liquidations. These allegations triggered regulatory investigations and congressional hearings on the structure of the cryptocurrency market.

By the end of 2019, daily trading volume for Bitcoin derivatives reached $5-10 billion, more than ten times the volume of spot trading. BitMEX captured a significant share of this volume, making Hayes and his partners central figures in the global cryptocurrency market.

On October 1, 2020, federal charges finally fell: the CFTC filed a civil complaint, and the Department of Justice (DOJ) released criminal charges alleging that BitMEX operated as an unregistered futures commission merchant (FCM) while serving US clients and disregarded anti-money laundering requirements. Prosecutors alleged that Hayes and his associates deliberately circumvented compliance regulations while reaping hundreds of millions of dollars in profits.

Hayes resigned as CEO that same day. Reed was arrested in Massachusetts, and Hayes and Delo were listed as "at large"—a Justice Department term meaning "we know where you are, we just haven't caught you yet."

During this legal battle, which lasted over two years, Hayes unexpectedly discovered his talent for writing market and monetary policy analysis. His "Crypto Trader Digest" column became essential reading for anyone trying to understand the relationship between macroeconomics, Federal Reserve policy, and cryptocurrency prices. He developed a framework for understanding why central bank decisions would ultimately drive interest in Bitcoin.

In August 2021, BitMEX agreed to pay $100 million to settle civil charges. On February 24, 2022, Hayes pleaded guilty to willful failure to establish an anti-money laundering program. On May 20 of the same year, he was sentenced to six months of home confinement, two years of probation, and a $10 million fine.

During the litigation, Hayes emerged as one of the most insightful commentators in the crypto space. His analysis of Federal Reserve policy and Bitcoin price dynamics reshaped traders and institutions' understanding of cryptocurrencies as macro assets. His proposed "NakaDollar" concept was highly forward-thinking: creating synthetic dollars by combining long Bitcoin positions with short perpetual swaps, providing exposure to the US dollar without the need for traditional banks.

Hayes also bluntly emphasized the value of Bitcoin as a hedge against currency devaluation: "In the field of money transfer, we are moving from an analog society to a digital society, which will bring huge disruption. I see an opportunity to build a company with Bitcoin and cryptocurrencies that can benefit from this disruptive change."

On March 27, 2025, US President Trump pardoned Hayes and the BitMEX co-founders, closing this legal chapter. Hayes had already embarked on a new career outside of BitMEX, serving as Chief Investment Officer of the family office fund Maelstrom, focusing on venture capital, liquidity trading strategies, and cryptocurrency infrastructure.

The fund supports the development of Bitcoin by providing developers with grants ranging from $50,000 to $150,000. As explained on Maelstrom's official website: "Bitcoin is a cornerstone asset in the cryptocurrency field. Unlike other projects, it has never financed technology development by issuing tokens." This reflects Hayes' emphasis on sustainable financial support for open source development.

Recent market trends

Hayes' current investment strategy reflects his broader perspective. In August 2025, he made headlines for purchasing over $15 million in cryptocurrency over five days, focusing on Ethereum and DeFi tokens rather than Bitcoin. This investment included 1,750 ETH (worth $7.43 million) and significant holdings of HYPE, ENA, and LDO tokens. This allocation stems from his belief that certain altcoins will benefit from the current market environment, characterized by institutional interest in Ethereum, growing stablecoin adoption, and the revenue generation of various protocols that fill market gaps.

Hayes is also one of the most outspoken supporters of Ethena (ENA). This synthetic dollar protocol is based on the derivatives concept he pioneered at BitMEX. In August 2025, he purchased 3.1 million ENA tokens (worth $2.48 million), becoming one of the project's largest individual holders. He sees Ethena as an evolution of the "Satoshi Dollar" concept: using derivatives to create an asset pegged to the US dollar without relying on the traditional banking system. This investment represents his bet on a new generation of projects that are redefining how synthetic assets work using perpetual swaps and funding mechanisms.

Earlier that month, he sold $8.32 million worth of Ethereum at nearly $3,500 due to macroeconomic concerns. But when Ethereum rebounded above $4,150, he bought back all his holdings, admitting on social media: "I had to buy it all back. I swear, no more profit taking."

@CryptoHayes

The core of Hayes's current macroeconomic argument is his belief that the Federal Reserve will inevitably start printing money. He points to structural issues such as housing market pressures, demographic shifts, and capital outflows as forcing policymakers to inject approximately $9 trillion into the financial system. "Without printing money, the system will collapse." He particularly emphasizes the debt burdens of institutions like Fannie Mae and Freddie Mac.

If this scenario materializes, Hayes predicts Bitcoin could reach $250,000 by the end of the year, prompting investors to seek alternatives to devalued fiat currencies. Based on his assessment that the current monetary system is unsustainable and Bitcoin is the most viable alternative store of value, he believes Bitcoin has the potential to reach $1 million in the long term by 2028.

Perpetual swaps fundamentally changed cryptocurrency trading, removing much of the friction from the early derivatives markets. By 2025, even mainstream platforms like Robinhood and Coinbase were launching their own perpetual swaps, while new exchanges like Hyperliquid were building entire businesses around Hayes's original innovation.

The regulatory framework spawned by the BitMEX case has also shaped industry standards: a comprehensive anti-money laundering program, customer verification, and regulatory registration have become prerequisites for any exchange serving the global market.

At 40, Hayes holds a unique position in the crypto ecosystem. He experienced traditional finance before the advent of Bitcoin, built the infrastructure that defined how crypto transactions are conducted, and weathered both explosive success and severe legal consequences.

His story proves that sustainable success in the crypto space requires understanding the balance between technology and regulation, innovation and compliance. The success of perpetual swaps stems not only from their technological ingenuity but also from solving practical problems for traders. At least until regulatory frameworks catch up to the pace of innovation.

“When we built all this, we didn’t need to ask anyone for permission. In what other industry could three ordinary people build an exchange with a daily trading volume of billions of dollars?” Hayes couldn’t help but sigh, looking back on the experience of building BitMEX.

This statement captures both the opportunity and the responsibility of building financial infrastructure in a rapidly evolving regulatory environment.

Today, Hayes continues to analyze the market and make bets based on macroeconomic judgment. His influence extends beyond individual trades or investments. Through his writing, investments, and ongoing involvement in the crypto market, he remains one of the most insightful voices in an industry often overshadowed by hype.