BitMEX incorporated in the Seychelles, a move that allowed the start-up to move fast and minimize its tax exposure while Western governments struggled to even understand—much less create a way to govern—the newfangled financial instruments and market that BitMEX was building. In a 2015 investor presentation, Hayes made the point that “Bitcoin derivatives are completely unregulated worldwide…. Regulators are still trying to tackle the exchanging of fiat and Bitcoin.”
That might have been magical thinking. “There were no rules in the beginning, and [governments] weren’t interested in articulating the rules,” Chu remembered. “You would go to [them] and ask for guidance and get nothing. ‘Is this illegal?’ No answer.” It was only after the fact, he said, that cryptic strictures emerged to police crypto—usually in response to some infraction that had not been previously articulated by regulators. But where Chu saw chaos, Hayes saw opportunity.
For nearly a year after its launch, BitMEX’s business was flat. “Some days we had no trades,” Hayes remembered. “No one bought or sold.” The fees from trading on the platform barely covered the server bill, which Reed paid with his credit card. While Hayes and Delo stayed in Hong Kong, Reed got married and moved back to the States, settling in Milwaukee, where he operated out of coworking space. The time zone difference, however, worked in their favor: Reed and Delo, in signature start-up fashion, took turns being “on call,” addressing customer support issues 24/7.
The company’s fortunes changed when, in late 2015, it started offering customers 100x—five times as much leverage as its closest competitor. Political volatility the following year, with Brexit and the election of Donald Trump, increased crypto’s trading volume. Come 2017, BitMEX had to bring on 30 employees to cope with the explosion in trading. The firm moved into new office space, which it would soon outgrow.
By 2018, BitMEX had become a high-stakes bazaar, moving billions every day. During one of our meetings, Hayes commented, “We are the biggest trading platform in the world, by volume. That’s anyone who trades a crypto product.” BitMEX, he said, was one of the “most liquid exchange[s] in the world, regardless of asset class.” By that measure it was in the same league as the NASDAQ as well as the New York, London, and Tokyo stock exchanges. Within four short years Hayes’s scrappy casino had become, in gambling terms, the house. (Since the indictment was unsealed in October, BitMEX has taken a huge hit; its market share and trading volume have dropped precipitously.)
SHARKS AND LAMBOS
In May 2018, on the opening day of Consensus—the crypto world’s equivalent of the Consumer Electronics Show—Hayes pulled up to the Hilton in midtown Manhattan in an orange Lamborghini and tweeted: “Did you see my ride today at #Consensus2018 ?”
A close friend insisted he was simply lampooning the thousands of attendees gathered inside the hotel—investors who talked a big game about cashing in on crypto, but who had really only succeeded in burning through millions in venture capital on harebrained schemes and ICOs (initial coin offerings). Still, looking back, the Lambo gambit might well have been the moment, more than any other, when Hayes painted a bull’s-eye on his back.
True, the firm’s partners had differing approaches to their images and their booming business. Hayes, who didn’t mind ruffling feathers, reveled in the role of financial renegade. Sam Reed kept an extremely low profile, a secret billionaire (on paper) walking the streets of Milwaukee. Ben Delo, however, seemed to hunger for mainstream acceptance. When BitMEX was declared the world’s largest cryptocurrency exchange in 2018, a string of British newspapers dubbed him “the U.K.’s youngest self-made billionaire.” That October he donated £5 million to Oxford’s Worcester College and a few months later signed the Giving Pledge, designed by Bill and Melinda Gates and Warren Buffett as “an open invitation for billionaires…to publicly commit to giving the majority of their wealth to philanthropy.” In a letter explaining his decision, he wrote, “As a schoolboy in Britain aged 16, I was asked to list my ambitions for the future. I answered concisely: ‘Computer programmer. Internet entrepreneur. Millionaire.’ I have been incredibly fortunate to exceed those goals, and I’m grateful to be in a position to sign this pledge.”
Two years ago BitMEX 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. Hayes, Delo, and Reed were literally moving in on the establishment. But ever eager to make a statement, BitMEX kitted out its office with an accessory none of those stodgy legacy companies had: a large aquarium inhabited, appropriately enough, by live sharks.
THE TANGLE IN TAIPEI
By the summer of 2019, the amount of money moving through BitMEX was staggering. On June 27, the company announced it had set a new daily record, trading $16 billion. Two days later Hayes tweeted: “One Trillion Dollars traded in a year; the stats don’t lie. BitMEX ain’t nothing to fucking [sic] with. @Nouriel I’ll see you on Wednesday.”
The man he was tweeting at was Nouriel Roubini, a respected NYU economics professor—and BitMEX’s fiercest critic. Dubbed Dr. Doom, Roubini sat on President Clinton’s Council of Economic Advisers and served at the Treasury Department, the International Monetary Fund, and the World Bank. In other words, he was about as establishment as Hayes was contrarian. On July 3, the pair faced off onstage at the Asia Blockchain Summit in what was publicized as “the Tangle in Taipei,” taking their seats as the theme from Rocky blared overhead.