How the Bad Boy of Crypto Introduced Leverage Trading

Hello everyone, hope you’re all doing well. When I added Smoking Chicken Fish ($SCF) to the portfolio, some people found it funny and surprising because it’s a pretty unusual coin. I’m not going to say much about the coin itself—I discovered it through Arthur Hayes, who has been actively promoting it.

So today we will know the rise and fall story of Arthur Hayes and how leverage trading started in the Crypto world.

Childhood

Arthur Hayes, born in Detroit in 1985, grew up in a normal, middle-class family. His parents worked at General Motors, which meant a stable but hardly luxurious life. Arthur’s ambition, however, was anything but ordinary. Sent to a private school in Buffalo, New York, he showed early signs of greatness, excelling in both academics and sports. He joined the tennis team, ran cross-country, and earned scholarships to cover his education. This guy wasn’t going to stay in Buffalo forever.

In 2004, he got into the University of Pennsylvania, and that’s where his ambition really took off. While most students studied hard for Wall Street jobs, Arthur’s mind was already on another level. He didn’t just want a job—he wanted to make a fortune, to become someone bigger than life.

The Hong Kong Decision: Arthur Takes the Road Less Traveled

Most of his classmates dreamed of New York’s financial district, but Arthur wanted more adventure. In his junior year, he got an internship at Deutsche Bank in Hong Kong, setting his sights on Asia instead of Wall Street. When he graduated, Deutsche Bank offered him a full-time position in Hong Kong, and Arthur accepted, saying goodbye to the typical path.

Hong Kong was a perfect fit for him. Even as a fresh graduate, Arthur quickly stood out. Known for his bold personality and love of showing off, he once turned up to work in bright yellow sneakers and a tight pink polo on “Casual Friday.” It made such an impression that the bank actually canceled Casual Friday for everyone.

Arthur and Bitcoin: A Match Made in Risk Heaven

In 2013, Arthur discovered Bitcoin, a new digital currency that was as wild as he was. His first trade was risky but rewarding: he bought Bitcoin on one exchange and sold it at a premium on another, making a quick 200% profit. For Arthur, this was a goldmine. Not only did he love the thrill of crypto, but he also loved the idea of making huge returns fast.

Then, he noticed something peculiar: Bitcoin was more expensive on the mainland than in Hong Kong. So, Arthur started buying Bitcoin in Hong Kong and selling it in China for a higher price. He would cross the border into Shenzhen, withdraw cash, and bring it back to Hong Kong. But this little scheme didn’t last long; the border officials caught on and detained him for “suspicious” transactions. Arthur talked his way out, claiming he was a “victim” in all this. He escaped, but it was a sign of things to come.

The Birth of BitMEX: A Gamble in Every Sense

In 2014, Arthur Hayes decided he wanted to create a platform where people could trade crypto like Wall Street pros but with way more risk. He brought on two partners, Ben Delo and Sam Reed, and together they launched BitMEX—the Bitcoin Mercantile Exchange. BitMEX was all about high-risk, high-reward trading. To spice things up, they offered leverage of up to 50x, and later on, they went all the way to 100x, meaning traders could borrow 100 times the amount they had. This wasn’t for the faint-hearted; it was a paradise for risk-takers and gamblers.

On its very first day, BitMEX saw a trading volume of $50 million. The business was rocky at first, and at one point, Arthur even considered quitting. But instead of giving up, he doubled down on the leverage, turning BitMEX into a place for hardcore traders.

The Dark Side of BitMEX: Perpetual Swaps and High-Stakes Gambling

Arthur and his team weren’t just about making money; they wanted to make waves. To stand out, they invented a product called the “perpetual swap.” It was a type of contract that didn’t expire, allowing people to trade whenever they wanted without worrying about expiration dates. Perpetual swaps became a huge hit, and other exchanges like Binance and OKEx quickly copied the idea. BitMEX, however, stayed the king of high-leverage trading.

Arthur and his team knew they were attracting all kinds of characters, from regular traders to shady dealers. But Arthur wasn’t concerned; in fact, he seemed to enjoy the chaos. He once even said in an interview that they “welcomed everyone” and didn’t mind who traded on their platform. BitMEX became infamous for wild, volatile trades, and Arthur himself loved the image of being a “crypto bad boy.”

Flashy Cars, Crazy Parties, and the Height of Arrogance

By 2018, BitMEX was making money hand over fist. In fact, Arthur rejected a $600 million buyout offer, claiming the company was worth far more. BitMEX was a cash cow, raking in millions every day. With all this wealth, Arthur went all-out. At a crypto conference in New York, he arrived in style, with three Lamborghinis parked right outside. It was a flashy move meant to show off BitMEX’s success, but here’s the twist—the cars were rented, and he ended up paying fines for parking violations. Still, Arthur brushed it off, calling it “guerrilla marketing.”

He was on top of the world, enjoying his fame and fortune, and he didn’t mind rubbing it in people’s faces. A meme circulated at the time with a quote supposedly from Arthur: “Stop loss for all the dumb money; I want to buy a Ferrari.” It captured the arrogance he had become known for.

BitMEX’s Troubles Begin: Leaks, Hacks, and the Law Closing In

In 2019, things started going downhill. BitMEX accidentally leaked thousands of user email addresses, which was just the beginning. Soon after, hackers got hold of their Twitter account, posting messages like “Take your BTC and run” and “Hacked.” The situation got out of control, and BitMEX was starting to look less like a reputable exchange and more like a circus.

That same year, the U.S. Commodity Futures Trading Commission (CFTC) began investigating BitMEX. They were suspicious that BitMEX was serving U.S. customers without the proper licenses. This was a big no-no, and Arthur’s bold statements didn’t help. When asked why BitMEX was based in Seychelles instead of the U.S., Arthur famously replied, “I didn’t want to take an a**-f***ing from the U.S. government.” That kind of attitude made him popular with his fans but painted a target on his back for regulators.

The Crash of BitMEX: Lawsuits, Scandals, and the End of an Era

Things quickly spiraled out of control. A lawsuit accused Arthur and his team of money laundering, fraud, and operating without a license in the U.S. BitMEX also got hit by the “312 incident” when the server went down at a critical trading time, leaving users unable to access their funds. This only fueled suspicions of manipulation.

Arthur’s confidence turned to panic. In October 2020, as the CFTC and Department of Justice filed charges, Arthur resigned as CEO. The writing was on the wall: BitMEX’s reign was coming to an end. Customers withdrew 45,000 BTC in just 48 hours, and the company lost over $400 million as users rushed to pull out their funds.

The Final Chapter: Arthur’s Arrest and Surrender

In April 2021, Arthur finally surrendered in Honolulu after months on the run. He had been staying in Singapore, far from U.S. soil, and knew he had to answer to the charges. He paid a $10 million bail, but it was clear his wild days were over. In 2022, he and his co-founders pleaded guilty to violating the Bank Secrecy Act, agreeing to pay a hefty fine. Arthur was sentenced to six months of house arrest, a far cry from the flashy life he once led.

The Quiet Life: From Rebel to Recluse

Now, Arthur spends his days in a luxurious apartment in Miami under house arrest. He claims he’ll never return to the U.S. and complains about everything from the time zone to the food. He’s a man with plenty of regrets, and although he’s rich, his influence has faded. In the world of crypto, he went from a hero to a cautionary tale, a reminder of what happens when ambition turns into arrogance.