A MODERN CRYPTO-TALE
Part 2. BitMEX and trillions
Coo! It’s me, Crypto Owl. As promised, I’m returning with the sequence of “Part 1. The Idea of the fortress.”
I gave you the Origins story of BitMEX founder Arthur Hayes, and how he met his companions Ben Delo and Sam Reed.
In this part, I will tell you about BitMEX’s road to success.
On Today’s Menu:
👨🍳 CHEF’S SPECIAL DISH: How Did Bitmex Become The Biggest Crypto Exchange Platform In The World?
🍩 DESSERT: Crypto News Around the Web
☕️ CUP OF COFFEE → BTC vs ETH. The Flippening Explained
PART TWO: HOW DID THE BITMEX BECOME THE BIGGEST CRYPTO EXCHANGE PLATFORM IN THE WORLD
Let’s go back to the point where everything started - 2014. The year when three friends and newly made colleagues - Arthur Hayes, Ben Delo, and Sam Reed - founded an online crypto exchange platform “Bitcoin Mercantile Exchange”, or, as we know it, BitMEX.
2014 was a mixed year for BitMEX to start its operations. It was bad because, at that time, Bitcoin was still transforming and had a bad-guy appearance (Bitcoin was used among malicious actors, for example, for money laundering), yet it slowly became a potential investment asset, which was a good thing.
For the first year of existence, BitMEX’s business was a flat line. There were days with no trading at all. Zero customers. Fees from trading were expensive, and founders had to pay for it from their own pockets. So, that only made things worse. On top of that, Reed got married and moved to the US, while Hayes and Delo stayed in Honk Kong. At first, it felt like one step closer to failure but turned out into a favor. The team started to work 24/7, thanks to the time zone difference.
In late 2015, the trio decided to implement a new feature: leverages up to 100x. It was five times bigger than BitMEX’s closest competitor. And that changed the game.
BitMEX become a hot thing in the crypto community, thanks to the fascinating idea of making big money while investing small(er). For example, with that 100x leverage, you can invest $10k and, in return, get a nice $1 million dollars. Isn’t that a dream?
New users started to appear every day. BitMEX gained momentum at high-speed; at the same time, Hayes, Delo, and Reed started to build their wealth. Serious wealth (I’ll come back to that later).
Common knowledge suggests that trading with leverage is not recommended, as it is known as a risky investing method. However, Hayes had a different opinion. He once said, “Trading without leverage is like driving a Lamborghini in first gear: you know it’s safer, but that’s not why you bought it.”
What Hayes says between the lines is that users are adults that should be responsible for themselves and their actions. And they have to stand for made decisions even when it fails.
Ok. Back to Bitmex. 2016. Political volatility (election of Donald Trump, Brexit, etc.) increased, making crypto’s trading volume rise as well. BitMEX gained so much popularity that in 2017 it had to change the office space and hire more employees so it could withstand this trading explosion.
By 2018, BitMEX moved billions every day. Hayes then said that BitMEX is the “most liquid exchange[s] in the world, regardless of an asset class.” Back then, BitMEX was as good as NASDAQ, leading to personal success for each founder, as they all became billionaires. Hayes loved to show his wealth, as did Delo, who had a lot of hunger for mainstream acceptance (by the way, he was declared the “U.K.’s youngest self-made billionaire”). Only Sam Reed was left in silence.
In 2019, the company announced its record: $16 billion traded daily. And two days later, Hayes tweeted that in a year, BitMEX traded one trillion dollars. Majestic, no doubt.
However, not everything was that pretty.
BitMEX had a very angry critic - respected economics professor Nouriel Roubini. Professor and Hayes faced each other at the Asia Blockchain Summit. The professor then went straight to the point: “Sh*tty behavior occurs in this particular industry—con men, criminals, scammers, snake oil salesmen, and so on. Next to me is a gentleman who works with degenerate gamblers and retail suckers, nonaccredited investors.” Ouch. Yes, that was about Hayes.
Roubini says that and even more nasty stuff. But why?
Apparently, there were some suspicious and dirty things about BitMEX…
In the following newsletter: shady things come out to the light, including the fall of the empire.
CRYPTO NEWS AROUND THE WEB
CUP OF COFFEE
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Disclaimer: This newsletter is strictly educational. None of this information is intended to be financial advice. Always do your research and act responsibly with your profits.