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BitMEX Founder Warns: Bitcoin’s Fate Hangs In The Balance Amid ETF Surge

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BitMEX founder Arthur Hayes, in a thought-provoking blog post, explores the potential existential threat confronting Bitcoin. He highlights the increasing popularity of Exchange-Traded Funds (ETFs) managed by traditional finance (TradFi) asset managers. Hayes argues that the triumph of these ETFs might endanger Bitcoin, potentially turning it into a state-controlled financial asset and losing its original essence.

Bitcoin’s Unique Existence

According to Hayes, the recent surge in Bitcoin ETF applications from East Coast US financial giants has made the cryptocurrency more appealing to the political establishment. In a witty remark, he quips, “Never fade the right kind of white boys in Pax Americana,” hinting at the influence of certain players in the financial landscape.

Hayes expresses a primary concern regarding the fundamental disparity between Bitcoin and traditional monetary instruments. Unlike physical assets such as gold or fiat currency, Bitcoin’s value is intricately tied to its movement. He envisions a scenario where major asset managers, like BlackRock, accumulate BTC without utilizing the underlying blockchain, effectively rendering the cryptocurrency dormant.

The first monetary asset to exist solely through movement, Bitcoin faces a unique challenge. After block rewards dwindle to zero, miners will rely solely on transaction fees for income. If the network stagnates and transactions cease, miners cannot sustain the energy costs required to secure the network, resulting in a catastrophic shutdown.

Hayes proposes a scenario where BTC falls into the hands of major asset managers who, due to confusion and laziness, opt for Bitcoin ETF derivatives instead of holding the actual cryptocurrency. BTC becomes a dormant asset in this hypothetical future, leading to the network’s demise. However, Hayes finds beauty in this potential demise, as it opens the door for a new crypto monetary network to emerge.

Hayes presents a binary choice as he urges readers to consider their stance on the ongoing fiat debasement. Either trade ETFs for fiat gains or preserve wealth in energy terms by holding Bitcoin in self-custodied wallets outside the control of the state. In a closing statement, he underscores the importance of securing private keys, emphasizing the need to avoid handing them over to centralized entities.

Related Reading | Shiba Inu Sees Surge In Investments From Key Players Amid Ecosystem Expansion 

Bitcoin Resilience Amid Chaos: Insights from BitMEX Founder

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In a recent article, BitMEX founder Arthur Hayes shared his perspectives on the current state of the cryptocurrency market, the potential impact of war and rising energy prices on Bitcoin, and the Federal Reserve’s actions. Hayes is a well-known figure in the crypto space, and his insights carry weight among industry enthusiasts.

Bitcoin’s Strength Amid Global Turmoil

Hayes believes that despite initial concerns of a Bitcoin sell-off triggered by global conflicts and surging energy costs, Bitcoin is likely to outperform traditional assets like bonds during times of war. In his view, even if there is an initial period of weakness, it’s an opportunity to “buy the dip.” He points out that since the Ukraine/Russia conflict began, the long-term US Treasury bond ETF (TLT) has fallen by 12%, while Bitcoin has surged by 52%.

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However, Hayes highlights a potential consequence of the Federal Reserve’s actions. If the Fed decides to cut interest rates, it could lead to a significant weakening of the US dollar. This, in turn, could exert upward pressure on oil prices, as oil is priced in dollars. Hayes cautions against this move, especially when geopolitical tensions are high, as it could have dire political repercussions, potentially leading to gas prices soaring close to $200 per barrel by the next year’s election.

Hayes also takes a jab at those who downplay inflation by joking that “if you exclude all the things people need to live and earn a living, inflation is non-existent.” He expresses confidence in the robust US economy, which he believes will drown out concerns about rising inflation.

In Hayes’ assessment, he doesn’t foresee a recession in 2024, citing the basic components of GDP growth. He explains that government net spending, powered by running a deficit, contributes to GDP growth. This government spending has a multiplier effect, leading to private-sector activity, job creation, and economic growth.

Given the current economic dynamics, Hayes predicts that the median voter will be satisfied with a strong stock market, a robust economy, and controlled inflation.

Regarding the Federal Reserve’s actions and the impact on the financial system, Hayes cautions against overloading on long-term bonds with a buy-and-hold strategy. He advises against holding illiquid long-term debt, especially if the liquidity situation changes. Instead, he suggests considering short-term debt with leverage as a better option for those limited to traditional financial assets.

Crypto Outlook: Asset Hierarchy

Hayes also delves into the cryptocurrency world, where he sees opportunities for significant returns. He outlines a hierarchy of crypto assets, with Bitcoin and Ethereum at the top as the “reserve assets,” followed by other layer-one blockchains like Solana. Finally, he acknowledges the potential for substantial gains in decentralized applications (dApps) and their respective tokens.

Arthur Hayes offers a comprehensive analysis of the current financial landscape, emphasizing the potential of cryptocurrency in a world marked by economic uncertainty and geopolitical tensions. His insights reflect his belief in the resilience of Bitcoin and other crypto assets during turbulent times, making them appealing investment options.

Related Reading | Bithumb Aims To Lead The Virtual Asset Market With Its First IPO 

Bitcoin Emerges As Vital Hedge In The Face Of Economic Turbulence: Analyst Advises

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In a recent revelation, the former BitMex CEO, Arthur Hayes, renowned for his astute observations on digital currencies, underscores the pivotal role of Bitcoin (BTC) in the ever-evolving global financial landscape. Hayes has emphasized the pressing need for individuals to consider Bitcoin as a secure hedge against the world’s mounting economic challenges.

In his recent X post, Hayes has drawn attention to a significant financial indicator – the negative real interest rates prevailing in the United States. He arrived at this conclusion by meticulously subtracting the 3Q23 nominal GDP growth rate of 6.3% from the one-year Treasury yield of 5.4%, resulting in a real interest rate of -1.1%. This revelation holds substantial implications for the average citizen, as Hayes warns against allowing the government to profit at their expense.

In light of these findings, Hayes offers invaluable investment advice to those concerned about safeguarding and increasing their purchasing power. He suggests that individuals avoid conventional investments and opt for a diversified portfolio, including technology stocks, gold, and, most notably, Bitcoin. According to Hayes, these assets offer a robust shield against the eroding impact of negative real interest rates.

Bitcoin’s Unwavering Path

Arthur Hayes is no stranger to advocating for Bitcoin’s critical role in the contemporary economic landscape. He has previously penned essays on this subject, albeit with an error in his formula for calculating real interest rates. Correctly, the real rate is determined by subtracting inflation from the nominal rate, not GDP.

However, Hayes’s main thrust behind endorsing Bitcoin as a prime investment opportunity remains the issue of inflation. He underscores how fiat currencies worldwide are steadily losing their purchasing power due to extensive quantitative easing and stimulus packages implemented by central banks in response to pandemic-induced financial policies. As global economic uncertainties loom, Hayes’s message reverberates clearly: it is time to embrace Bitcoin as a haven in the face of the looming financial crisis.

Arthur Hayes’s call to invest in Bitcoin has never been more pertinent as the global financial landscape faces turbulent times. Bitcoin’s status as a reliable store of value and hedge against inflation makes it an attractive option for investors looking to protect their wealth in an uncertain world.

Related Reading: |XRP: SBI VC Trade’s Bullish Forecast Sets The Stage For $0.62 Surge

Bitcoin’s Value Tied To AI’s Energy Appetite: Arthur Hayes

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Arthur Hayes, the former CEO of Bitmex and current manager of Maelstrom, a family office, strongly believes that Bitcoin is the ideal currency for artificial intelligence (AI) systems due to its digital nature, anti-censorship features, and limited supply.

In his most recent blog post, Hayes suggests that the decentralized structure of the BTC network and the autonomy it offers to users align with the potential characteristics of future AI economies.

Hayes argues that BTC’s value is closely linked to the cost of electricity, which he refers to as the “food of AI.” This relationship makes Bitcoin a reliable and efficient store of value for AI systems over extended periods. In fact, Hayes goes as far as claiming that Bitcoin represents the closest monetary instrument to pure energy.

Furthermore, Hayes asserts that BTC’s scarcity and resistance to censorship provide AI-based technologies with an advantage over other forms of currency. While the supply of gold and fiat currencies can fluctuate, BTC’s supply is cryptographically limited, offering a predictable financial foundation that cannot be manipulated.

AI Economy’s Impact On Bitcoin’s Value

Hayes highlights the potential collision between the rising interest in BTC and the growing adoption of AI. He suggests that the desire to escape inflation within the fiat system, combined with the aspiration to participate in the next phase of human and computer evolution, could result in a fusion of two separate investment frenzies. This convergence might lead investors to overvalue Bitcoin’s growth, driving its value to excessively high levels.

Based on his predictive model, Hayes forecasts that the AI economy could represent between 5% and 50% of global GDP by 2025 or 2026. Such a scenario could trigger a significant surge in BTC’s value, potentially reaching $760,000 per coin. Hayes considers this period as the prime opportunity for long-term Bitcoin investors as market assumptions shift from “impossible” to “possible.”

While uncertainties surround the future of AI and Bitcoin, Hayes expresses his intention to embrace the narrative hype surrounding these technologies and capitalize on it.

In May, Hayes had already anticipated a volatile year for Bitcoin in 2023, followed by a robust rally starting in 2024.

BitMEX Co-founder Arthur Hayes Dodges the Prison Bullet

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Arthur Hayes, co-founder of Bitmex, will not go to prison for breaking the US Bank Secrecy Act. Instead, the former CEO of Bitmex cryptocurrency exchange was sentenced to “six months of house arrest and two years of probation.” Hayes has also agreed to pay a $10 million penalty.

The creator and former CEO of bitcoin derivatives exchange Bitmex has been punished for breaching the Bank Secrecy Act, according to the US Department of Justice (BSA). In February, Hayes admitted to breaking the Bank Secrecy Act.

“Hayes, 36, of Miami, Florida, was sentenced to six months of home detention and two years of probation. Hayes also agreed to pay a fine of $10 million dollars representing his pecuniary gain from the offense.”

Department Of Justice

BitMEX CEO Arthur Hayes admits to his doings

Hayes “willfully disobeyed US law that compels businesses to do their share to assist prevent crime and corruption” while establishing a cryptocurrency trading platform “that profited him millions of dollars,” according to US Attorney Damian Williams.

“He purposefully failed to implement and maintain even basic anti-money laundering rules, allowing Bitmex to operate as a platform in the shadows of the financial markets,” Williams continued.

Benjamin Dalo and Sam Reed, two other Bitmex co-founders, also pled guilty and are expected to be sentenced soon.

The two other co-founders, like Hayes, have been sentenced to pay a civil monetary penalty of $10 million apiece.

Lawyers for the 37-year-old American entrepreneur filed a motion for probation with no home detention or community confinement after reaching a plea agreement that would result in a jail term of six to twelve months under federal guidelines.

The authorities claimed that BitMEX had become a “money-laundering platform” due to their incapacity to provide know-your-customer (KYC) and anti-money laundering (AML) services.

Following the lawsuit, the co-founders resigned from the company, and BitMEX agreed to pay a $100 million settlement to the US Commodity Futures Trading Commission (CFTC) and the Financial Crimes Enforcement Network (FCEN) (FinCEN).

For failing to adopt an anti-money laundering strategy at the exchange, Arthur Hayes, former CTO Samuel Reed, and co-founder Benjamin Delo were fined $10 million.

Arthur Hayes, Ex-BitMEX CEO, Asks for Freedom

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In preparation for his sentencing, later this month, former BitMEX co-founder and CEO Arthur Hayes is requesting no jail time and permission to live abroad.

After striking a plea agreement that would result in a jail term of six to twelve months under federal guidelines, lawyers for the 37-year-old American entrepreneur submitted a motion for probation with no home detention or community confinement, according to Bloomberg.

The authorities argued that their inability to implement the know-your-customer (KYC) and AML services had in effect rendered BitMEX “a money-laundering platform.”

Following the litigation, the co-founders resigned from their positions in the firm, and BitMEX agreed to pay the US Commodity Futures Trading Commission (CFTC) and the Financial Crimes Enforcement Network $100 million in settlement (FinCEN).

Arthur Hayes was fined $10 million, along with former CTO Samuel Reed and BitMEX co-founder Benjamin Delo, for failing to implement an anti-money laundering policy at the exchange.

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Arthur Hayes, Ex-BitMEX CEO, Asks for Freedom 3

Arthur Hayes’s mother showers support

Arthur Hayes got support from his mother and followers in the form of a 65-page proposal with “photographs and letters,” which his attorneys handed to the judge.

“This historic case has already had an incredible and well-publicized impact on Mr. Hayes’s personal life and the BitMEX business that he co-founded,” stated the motion.

“The chances and advantages of operating in the United States are countless, but they carry with them the need for those firms to do their part to help drive out crime and corruption.”

Prosecutor Damian Williams said after the co-founders’ guilty plea in February

“Arthur Hayes and Benjamin Delo built a company with the express purpose of evading those obligations; they willfully failed to implement and maintain even basic anti-money laundering policies.” They made it possible for BitMEX to operate as a platform outside of the financial markets.”

“The guilty pleas announced today demonstrate the Office’s ongoing commitment to investigating and prosecuting money laundering in the cryptocurrency sector.”

Hayes made some wild forecasts in March regarding gold and bitcoin (BTC). He talked about the future of banking in an article titled “Energy Cancelled,” predicting that gold will hit $10,000 and bitcoin will reach $1 million.

Former BitMEX Exec Arthur Hayes Released On $10M Bond After Surrender

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Arthur Hayes, the former chief executive officer of the cryptocurrency exchange BitMEX, was reportedly released on a $10 million bond pending court proceedings in New York. According to an exclusive report by Bloomberg, Hayes had turned himself in Hawaii on 6th April.

Nearly xix months prior to the surrender, the federal prosecutors had levied charges against him along with three other BitMEX executives. All four of the top officials of the cryptocurrency exchange were previously accused of conspiring to evade US laws requiring the implementation of money-laundering controls.

Hayes’ lawyers claimed the former BitMEX CEO to be “self-made entrepreneur who has been wrongly accused of crimes”. They also described him as “Singaporean resident” and stated,

“Mr. Hayes voluntarily appeared in court and looks forward to fighting these unwarranted charges.”

The Commodity Futures Trading Commission [CFTC] first began investigating BitMEX in 2019. According to the prosecutors, instead of working with the US agency, the crypto exchange was allegedly involved in circumventing compliance programs and chose to base the company in Seychelles in a bid to escape regulatory scrutiny.

Along with Hayes, Ben Delo and Samuel Reed were each charged with one count of violating the Bank Secrecy Act and one count of conspiring to violate the act. Delo, who happens to be one of the co-founders of BitMEX was released on a $20 million bond after surrendering to the US prosecutors.

The company’s former CTO, Reed, on the other hand, was arrested in Massachusetts on the very same day the charges were disclosed in last October.

BitMEX’s fourth fugitive exec, Gregory Dwyer, had earlier had declined to surrender. On this regard, the lawyers had stated,

“We have been in touch with the government on Mr. Dwyer’s behalf and have informed them of his whereabouts. They are also aware that he has every intention to defend himself in court against these meritless charges and is eager to do so.”

BitMEX Exec Delo Released On $20M Bond After Surrendering To US prosecutors

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Cryptocurrency trading and derivatives exchange BitMEX has been treading the troubled waters for the past several months and hence has been laying low. In the recent development, one of its co-founders, Ben Delo has been now released on a bail bond of $20 million after pleading not guilty to all charges.

The Co-owner of the platform had surrendered to US prosecutors on the 15th of March for the criminal charges brought against him for violation of the country’s Banking Secrecy Act by the US Department of Justice and the Commodity Futures Trading Commission [CFTC]. According to Bloomberg, Delo was reportedly arraigned remotely before Magistrate Judge Sarah L. Cave during a proceeding on the same day.

The terms of the bail bond will allow the Oxford-educated computer scientist to return to UK after being subjected to a travel ban to the country.

Rachel Miller, a spokesperson for BitMEX’s exec, was quoted saying

“The charges against Ben are unfounded and represent unwarranted overreach by the U.S. authorities, Ben intends to defend himself against the charges and clear his name in court.”

Apart from Delo, there are two other co-founders, who help build BitMEX, and are facing similar charges from the US authorities.

Where Are BitMEX’s Other Three Execs?

Just days after BitMEX was charged for allegedly flouting banking laws while serving customers of the country, its CTO, Samuel Reed was arrested by the authorities in Massachusetts before releasing on a bail bond. Also, the former CEO of the derivatives platform, Arthur Hayes, was, still at large and currently residing in Singapore.

While he is expected to stay there, however, it was reported that he would appear for proceedings in Hawaii, US should the trial go to court.

This news comes a week after BitMEX’s fugitive executives Arthur Hayes and Ben Delo were reported to be negotiating a surrender with the country’s authorities. The US attorney Jessica Greenwood had previously revealed that Delo had intended to surrender in New York by the end of the month.

This was according to transcripts obtained from a court teleconference back in February in which the attorney had also revealed that Greg Dwyer, BitMEX’s fourth exec and Head of Business Development, Greg Dwyer had declined to surrender. Extradition proceedings were initiated following this to bring him back from Bermuda.

BitMEX Switches Up Leadership Following CFTC Allegations; CTO Samuel Reed Released

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Just last week, prominent cryptocurrency exchange, BitMEX made its way under the spotlight following a series of charges from the government of the United States. After publicly denying the accusations, the exchange recently released a blog post highlighting the change in leadership at the firm.

Defendants Step Down From Their Respective Roles

The parent company of BitMEX, 100x Group with the consent of the founders, has reportedly decided to change the management of the cryptocurrency exchange. The allegation made by the Commodities Futures Trading Commission [CFTC] highlighted Ben Delo, Arthur Hayes, and Samuel Reed, the owners of the exchange as the primary accused. The Department of Justice also charged the trio for disrupting the Bank Secrecy Act.

Soon after the charges were made public, BitMEX went on to share a blog post denying the allegations. However, almost a week later, the exchange decided to switch up the leadership roles in the firm. Arthur Hayes who was previously the CEO of the platform was replaced by Vivien Khoo who was serving as the chief operating officer at the 100x Group. However, Khoo’s latest upgradation is on an interim basis.

Samuel Reed was also dethroned from his role as the CTO of the exchange. The post further revealed that Ben Delo was restrained from holding any executive positions in the 100x Group. The Chairman of the 100x Group shared his stance on the latest switch in the management. He said,

“These changes to our executive leadership mean we can focus on our core business of offering superior trading opportunities for all our clients through the BitMEX platform, whilst maintaining the highest standards of corporate governance.”

While Wong suggested that the platform’s senior leadership team was well in place to continue running the operations, the firm revealed that the senior leaders and the technology team would carry out the daily management of the platform as usual.

Furthermore, Greg Dwyer had reportedly taken a leave of absence as the Head of Business Development.

BitMEX CTO Finds His Way Out Of Jail

After being arrested for violating the Banking Secrecy Act as well as illegally running the cryptocurrency exchange, Samuel Reed was arrested with the other two owners. Reed was the first to go behind bars while the others part of the case were still being questioned. However, his $5 million appearance bond was approved by the United States District Court on 3 October 2020.  A virtual court hearing had taken place on 1 October 2020 between Reed and the Court.

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With the passports of both Reed as well as his wife being seized, he would have to appear before the court if he was to be convicted. While the maximum sentence for the allegations made against the trio is up to five years, Reed would have to surrender and serve a sentence if the allegations were proven by the prosecutors.

BitMEX Incurs Acute Loss Despite Denying CFTC And DOJ Charges

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Prominent cryptocurrency exchange, BitMEX recently fell under the purview of the Commodities Futures Trading Commission [CFTC] of the United States. The financial regulator reportedly charged the owners of BitMEX for illegally running the crypto derivatives platform.

BitMEX Strikes Back

BitMEX has been one of the notable exchanges in the crypto industry. However, the latest news could pose as a huge setback for the exchange. In a recent release, the CFTC alleged that BitMEX was an unregistered platform and had violated several regulations put forth by the CFTC including the embodiment of anti-money laundering procedures. Along with CFTC, the owners of BitMEX, Ben Delo, Arthur Hayes as well as Samuel Reed were also charged by the Department of Justice for violating the Bank Secrecy Act.

The announcement pointed out that the aforementioned trio was carrying out illegal leveraging services, futures, options, swaps on digital assets like Bitcoin [BTC], Ether [ETH], and other prominent cryptocurrencies since November 2014. The financial regulator further revealed that the exchange had garnered more than $1 billion worth of fees since 2014.

Soon after the CFTC charged the exchange with the case, BitMEX shared a press release to assure its users that it wasn’t in troubled waters. BitMEX went on to denounce the CFTC’s charges and suggested that the platform would continue to defend the accusations. The exchange affirmed that the latest news wouldn’t have an impact on the operations of the exchange. However, an off-cycle withdrawal would be processed at 8:00 UTC as well as 13:00 UTC on 2 October 2020.

The announcement further read,

“We strongly disagree with the U.S. government’s heavy-handed decision to bring these charges, and intend to defend the allegations vigorously. From our early days as a start-up, we have always sought to comply with applicable U.S. laws, as those laws were understood at the time and based on available guidance.”

BitMEX Faces Acute Losses

Despite its attempts to eliminate commotion in the crypto community, BitMEX failed to retain its users. Several online analytics platforms highlighted how the exchange was subject to huge losses since the CFTC and DOJ charges. Glassnode Studio reported that a total of 40,000 BTC was withdrawn from the exchange. The platform shared the same on Twitter,

While Bitcoin has been trading for $10,532.50, the aforementioned number of Bitcoins withdrawn from the exchange amounted up to a whopping $420 million. BitMEX went on to break several other records in terms of outflows. Glassnode also highlighted that a total of $243 million in BTC was withdrawn within a course of just one hour, making it the largest to date.

Additionally, the XBTUSD open interest had also taken a hit on the exchange. Prominent data analytics platform, Skew pointed out that the open interest was down by 20% since the news of the charges surfaced the internet.

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CFTC’s latest allegations have already begun taking a toll on the cryptocurrency exchange. The prolongation of this withdrawal spree could further cause a tremendous loss for BitMEX.