Arthur Hayes (banker) explained

Arthur Hayes
Birth Place:Detroit, Michigan
Nationality:American
Occupation:Banker, entrepreneur, businessman
Education:
Known For:Co-founding BitMEX

Arthur Hayes (born 1985) is an American entrepreneur, and a co-founder and former CEO of cryptocurrency exchange BitMEX.[1] [2] He graduated from the Wharton School of Business in 2008. Hayes was reported as being the youngest African American crypto billionaire in history. In 2022, Hayes pled guilty to United States Bank Secrecy Act violations and was sentenced to six months of home detention, two years of probation, and a $10 million fine.[3]

Background

Hayes was born in Detroit, Michigan, to middle class parents who worked for General Motors.[4] He attended Nichols School, a private preparatory school in Buffalo, New York, played varsity tennis and was a varsity cross-country runner, and graduated second in his class in 2004.[5] His family relocated to Buffalo after searching for a school that they felt would give him the environment to thrive as a student, and as an athlete. Hayes has created scholarships for students so that they can experience the education that he received at Nichols. His mother Barbara Hayes was quoted as saying "Nichols gave him the setting, the stimulation, and at one point, the scholarship to thrive.”[6] [7]

Hayes has a B.S. in economics and finance from the Wharton School of Business at the University of Pennsylvania, which he earned in 2008.[8] [9] He later lived in Singapore.[10]

Career

Deutsche Bank and Citigroup

Hayes moved to Hong Kong in 2008, to start his investment banking career. He worked for Deutsche Bank, from 2008-11 as an equity derivatives trader, and for Citigroup for two years. He worked as the head ETF market maker for both firms.[11] In 2011, Hayes left Deutsche Bank, and began working as a Delta one trader for Citibank in Hong Kong.[12] In 2013, he was laid off.[5]

BitMEX

He co-founded cryptocurrency exchange BitMEX in 2014 at 28 years of age with Ben Delo and Samuel Reed.[13] [14] It became one of the world's largest virtual currency derivatives exchanges.[15] In 2021, its average daily trading volume was over $2 billion.[16]

In March 2019, Hayes made a $2.24 million charitable contribution to the Jackie Robinson Foundation (JRF) Scholars program, the largest-ever gift donated by an alumnus of its college scholars program.[17] [18] In April 2020 he announced that BitMex's operator was donating $2.5 million to four organizations working to fight the coronavirus pandemic.[19]

Hayes was reported as being the youngest African American crypto billionaire in history.[7]

In July 2019, in a public debate Nouriel Roubini called Hayes a "sleazy coward," and told him to "shut up."[20] Later that month, Roubini wrote: "Crypto shitcoin-land is full of clueless, dumb financially illiterate ignorami who don't even get it when you make fun of them. No wonder, as their heads are clogged into stinking cesspools of 1000s shitcoins ..."[21]

Bank Secrecy Act violation

In October 2020, Hayes and his partners were each indicted by the U.S. Department of Justice.[22] The charges by the DOJ in the case (United States vs Hayes et al) claimed that Hayes and partners did not register the company in the United States, and that they had 'thousands of US based customers'. The CFTC charged that the illegal operations enabled money laundering activity under the Bank Secrecy Act.[23] BitMEX was the first crypto exchange to be charged under the Bank Secrecy Act. The laws require that transactions that are over $10,000 be reported. It is known as Know Your Customer (KYC) information.

Hayes stepped down from BitMex in October 2020. Alexander Hoptner replaced Hayes as CEO of BitMEX.[14] [7] [24]

In April 2021, Hayes surrendered to United States authorities in Hawaii, and was released on bail.[22] According to an article published in the Financial Insight Zambia Limited, on February 9, 2021, in their opinion Hayes' crime was that he refused to allow the CFTC to obtain the account information on Bitmex's customers.[7] United States citizens used Virtual Private Network (VPN accounts) to set up BitMex accounts. Because the BitMEX platform was not registered in the U.S. or the Canadian province of Quebec their citizens were prohibited from using the platform. Citizens were able to mask their locations by using VPN networks.[25] [26] An article published in the Wall Street Journal on August 10, 2021, said that a settlement had been reached between BitMEX and the CFTC. BitMEX agreed to pay a $100 million fine to resolve the issue, without admitting or denying the charges.[27] [28]

On February 24, 2022, Hayes, along with co-founders Benjamin Delo and Samuel Reed, and Gregory Dwyer pleaded guilty to "willfully failing to establish, implement, and maintain an anti-money laundering (“AML”) program at BitMEX." Because Hayes was a first-time offender with a lengthy track record of charitable work, the Probation Department recommended a sentence of two years probation without any incarceration.[22] Hayes was sentenced to six months of home confinement with two years probation; he also agreed to pay a $10 million dollar fine representing his pecuniary gain from the offense.[28]

Notes and References

  1. The Rise and Fall of Bitcoin Billionaire Arthur Hayes. February 4, 2021 . Vanity Fair . August 6, 2021 . August 4, 2021 . https://web.archive.org/web/20210804020749/https://www.vanityfair.com/news/2021/02/the-rise-and-fall-of-bitcoin-billionaire-arthur-hayes . live.
  2. Web site: Arthur Hayes Biography | Booking Info for Speaking Engagements . allamericanspeakers.com . August 6, 2021 . July 29, 2021 . https://web.archive.org/web/20210729001852/https://www.allamericanspeakers.com/celebritytalentbios/Arthur+Hayes/420424. live.
  3. Web site: Founder And CEO Of Off-Shore Cryptocurrency Derivatives Platform Sentenced For Violating The Bank Secrecy Act . U.S. Attorney’s Office Southern District of New York . 20 May 2020 . 17 December 2022.
  4. The Rise and Fall of Bitcoin Billionaire Arthur Hayes. February 4, 2021. Vanity Fair.
  5. https://www.moneylaunderingnews.com/wp-content/uploads/sites/12/2022/05/Hayes-Sentencing-Memo.pdf Letter in US v. Hayes
  6. Web site: Notable Alumni – Nichols School. nicholsschool.org. August 6, 2021. August 1, 2021. https://web.archive.org/web/20210801030659/https://www.nicholsschool.org/alumni/notable-alumni. live.
  7. Web site: The Story of Arthur Hayes, the Worlds Youngest Black Billionaire and the focus of a DOJ Attack. Lombe. Chibesakunda. February 9, 2021. Financial Insights. August 6, 2021. August 1, 2021. https://web.archive.org/web/20210801032134/http://fizambia.com/the-story-of-arthur-hayes-the-worlds-youngest-black-billionaire-and-the-focus-of-a-doj-attack/. live.
  8. Web site: Class act / An outstanding young Western New Yorker. The Buffalo News. August 6, 2021. August 4, 2021. https://web.archive.org/web/20210804191721/https://buffalonews.com/news/class-act-an-outstanding-young-western-new-yorker/article_e6262ee5-190c-5bfd-a5c6-71c7dbde27a7.html. live.
  9. Web site: Arthur Hayes Bio. generalassemb.ly.
  10. News: Crypto Nomads: Surfing the World for Risk and Profit. Eric. Lipton. Ephrat. Livni. The New York Times . July 23, 2021. NYTimes.com.
  11. Web site: Arthur Hayes . Jackie Robinson Foundation . September 14, 2021 . September 14, 2021 . https://web.archive.org/web/20210914113423/https://jackierobinson.org/people/arthur-hayes/ . live.
  12. Web site: Arthur Hayes. August 6, 2021. August 5, 2021. https://web.archive.org/web/20210805021403/https://techtycoons.com/arthur-hayes/. live.
  13. News: Former BitMEX CEO Sentenced to House Arrest on Anti-Money-Laundering Charges. Richard. Vanderford. Wall Street Journal . May 20, 2022. www.wsj.com.
  14. Web site: The U.S. Government vs. Black Crypto Billionaire Arthur Hayes: 7 Things To Know. July 9, 2021. Moguldom. August 6, 2021. July 30, 2021. https://web.archive.org/web/20210730152450/https://moguldom.com/362806/the-u-s-government-vs-black-crypto-billionaire-arthur-hayes-7-things-to-know/. live.
  15. News: BitMEX cryptocurrency exchange agrees to pay $100 mln to settle U.S. charges. Chris. Prentice. Reuters . August 10, 2021. www.reuters.com.
  16. Book: The Palgrave Handbook of Technological Finance . 9783030651176 . September 9, 2021 . Springer .
  17. Web site: BitMEX CEO Arthur Hayes Donates $2.24M To The Jackie Robinson Foundation. Jackie Robinson Foundation. September 14, 2021. September 14, 2021. https://web.archive.org/web/20210914113424/https://jackierobinson.org/blog/bitmex-ceo-arthur-hayes-donates-2-24m-to-the-jackie-robinson-foundation/. live.
  18. Web site: BitMEX CEO Arthur Hayes Donates $2.24M To The Jackie Robinson Foundation. Jackie Robinson Foundation.
  19. Web site: BitMEX operator is donating $2.5M to coronavirus relief efforts. news.yahoo.com.
  20. Ben Brown (July 3, 2019). "Nouriel Roubini Rages at ‘Sleazy Coward’ Crypto CEO After Vicious Debate," Yahoo.
  21. Web site: Roubini Ratchets Up Rhetoric, Accuses BitMEX of Profiting from Terrorism. yahoo.
  22. Web site: Former BitMEX CEO Arthur Hayes Sentenced to 2 Years Probation. finance.yahoo.com.
  23. Web site: Archived copy . August 6, 2021 . October 5, 2021 . https://web.archive.org/web/20211005084220/https://www.justice.gov/usao-sdny/press-release/file/1323316/download . live .
  24. Web site: Founders And Executives Of Off-Shore Cryptocurrency Derivatives Exchange Charged With Violation Of The Bank Secrecy Act. October 1, 2020. justice.gov. August 6, 2021. August 12, 2021. https://web.archive.org/web/20210812093736/https://www.justice.gov/usao-sdny/pr/founders-and-executives-shore-cryptocurrency-derivatives-exchange-charged-violation. live.
  25. Web site: r/BitMEX – US citizen used fake info + VPN to trade on BitMEX, now 2FA doesn't work and I can't access account PLEASE HELP. reddit. August 24, 2018. August 6, 2021. August 5, 2021. https://web.archive.org/web/20210805104746/https://www.reddit.com/r/BitMEX/comments/99yo3u/us_citizen_used_fake_info_vpn_to_trade_on_bitmex/. live.
  26. Web site: VPN for BitMEX – How to use BitMEX in USA [2021 Updated] 2021]. July 19, 2021. August 6, 2021. August 5, 2021. https://web.archive.org/web/20210805031948/http://vpnprivacy.services/news/vpn-for-bitmex-and-bitfinex/. live.
  27. News: BitMEX to Pay $100 Million to Resolve Regulator's Lawsuit Over Crypto Derivatives Trading. Dave. Michaels. Wall Street Journal. August 10, 2021. www.wsj.com. August 12, 2021. August 12, 2021. https://web.archive.org/web/20210812162253/https://www.wsj.com/articles/bitmex-to-pay-100-million-to-resolve-regulators-lawsuit-over-crypto-derivatives-trading-11628624960. live.
  28. Web site: Founder And CEO Of Off-Shore Cryptocurrency Derivatives Platform Sentenced For Violating The Bank Secrecy Act. May 20, 2022. justice.gov.

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