BitMEX Shuts Down: How Arthur Hayes Saved Perpetual Contracts, and the Founder Was Predicted Prison Time
The closure of BitMEX sparked a wave of nostalgia among crypto industry veterans. Over 11 years of operation, the exchange did not lose a single satoshi due to hacks and gave the market a product that all competitors copied. But behind the dry facts lie amazing stories — from a perpetual contract that was nearly deleted to a founder who was expelled from school three times.
How the perpetual contract was nearly 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 near the spot price by a funding rate — periodic payments between buyers and sellers. However, in the very first month, the product nearly died. The market was functioning so poorly that one of the founders wanted to simply delete the development. Arthur Hayes saved the situation.
It was he who talked his colleague out of deleting it and over the weekend fixed the funding rate mechanism — the very tool that keeps the perpetual contract price close to the spot price. The market still feels the result of that argument today: any perpetual contract on every crypto exchange exists thanks to Hayes' decision. The instrument itself 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 predicted to make millions and go to 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, 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, 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, then infrastructure that everyone else copies. Another discussion participant summed up the thought at the industry level: in his observation, wild stories and long-lasting technologies in cryptocurrencies are often created by the same people.
Tuition fees paid live
The contrast between joy and pain was also felt in the company's daily life. The team rented the 45th floor of one of Hong Kong's most expensive towers, next to Goldman Sachs. At the same time, their own users were "burning out" on 100x leverage. Many did this in their pajamas at four in the morning, which became a symbol of the era. It is this experience that veterans recall most often. One trader called BitMEX a place that taught an entire generation about risk management, charging "tuition fees live."
Many shared their stories of losses. One user recalled staring at 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 a stop-loss nor a closing order worked, leading 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.
Expert opinion: BitMEX will forever remain in history as the cradle of modern crypto trading. Without Arthur Hayes' decisions and the uncompromising approach of his co-founders, the derivatives market would look completely different today. The lessons this exchange taught — both financial and human — became the foundation for an entire generation of market participants.