BitMEX Shuts Down: How Hayes Saved Perpetual Contracts, and the Founder Was Predicted Prison Time
The closure of BitMEX has sparked nostalgia among crypto industry veterans. Over 11 years of operation, the platform did not lose a single satoshi due to hacks and gave the market a product that all competitors copied. However, behind the dry facts lie amazing stories — from a nearly deleted perpetual contract to a founder who was expelled from school three times.
How the Perp Was Almost Deleted in Its First Month
In May 2016, three developers created a perpetual swap — a futures contract with no expiration date. A position can be held indefinitely, and the contract price is kept in line with the spot price by the funding rate: periodic payments between buyers and sellers. But in the very first month, the product nearly died. The market was working so poorly that one of the founders wanted to simply delete the development. The situation was saved by Arthur Hayes.
It was he who talked his colleague out of deleting it and, over a weekend, fixed the funding rate — the mechanism that keeps the perpetual contract price aligned with the spot price. The market still feels the outcome of that argument today. According to the creators, every perpetual contract on every crypto exchange today exists thanks to Hayes's decision.
This instrument became the most traded product in the crypto industry. It is used by thousands of traders and hundreds of platforms, even though it was invented on BitMEX.
The Prodigy Destined for Millions and Prison
A separate story involves one of the platform's co-founders, Ben Delo. According to Rand Group, as a child, he was expelled from three elementary schools. At Oxford, his classmates predicted two potential futures for him. They recognized him as the most likely candidate to become a millionaire and the second most likely to end up behind bars.
In the end, as experts note, both predictions came true. Delo indeed amassed a fortune but also faced legal troubles.
One commenter compared the company's journey to the early history of Stripe: first chaos, and only then — the infrastructure that everyone else copies. Another discussion participant summed up the thought at the industry level. In his observation, wild stories and durable technologies in cryptocurrencies are often created by the same people.
Tuition Fees in Real Time
The contrast between joy and pain was also felt in the company's daily life. According to Rand Group representatives, the team rented the 45th floor of one of Hong Kong's most expensive towers, right next to Goldman Sachs. At the same time, their own users were "burning out" on 100x leverage. Many did so in their pajamas at four in the morning, which became a symbol of the era. It is this experience that veterans most often recall.
One trader called BitMEX a place that taught an entire generation about risk management, charging "tuition fees in real time." Many shared their stories of losses. One user recalled watching a zero balance at three in the morning in 2018, while another claimed that from December 2017 to March 2018, he lost almost his entire portfolio of 30 BTC.
According to the latter, during extreme volatility on the exchange, neither the stop-loss nor the close order worked, which led to his liquidation. This claim cannot be verified, but the emotion — "the most expensive lesson in life that made me a better trader" — was shared by many in the comments.
Cryptalist Comment: BitMEX will forever remain in history as the birthplace of perpetual contracts — an instrument that changed the structure of crypto trading. However, this story is a vivid reminder that innovations in our industry are often born from chaos and go hand in hand with enormous risks that not everyone can survive.