- Arthur Hayes and Akshat Vaidya are taking a slow and steady approach to investing in the cryptocurrency space with their new venture, Maelstrom
- The pair are also paying close attention to regulatory risks and hedging against them by choosing projects located outside the US or domiciled in friendly jurisdictions such as Switzerland
- In a change from the conventional “spray-and-pray” strategy, Maelstrom is looking for quality opportunities that are yet to receive widespread recognition
Arthur Hayes and Akshat Vaidya, the former CEO of BitMEX and former head of corporate development, respectively, have launched their new venture Maelstrom with a slow and steady approach to investing in cryptocurrency.
As opposed to other crypto-focused funds, the pair focus on infrastructure companies due to their solid technological moats and potential for long-term returns. Furthermore, this approach means that the company can avoid the pressure of outside liquidity providers.
Rather than engaging in a “spray-and-pray” approach, Hayes and Vaidya are setting their sights on genuinely valuable projects that have yet to receive widespread recognition. They anticipate that by 2024 when market sentiment starts to shift toward bull mode, these projects will begin to stand out from the crowd and become more attractive investments.
The pair are also hedging against potential regulatory risks by choosing infrastructure projects headquartered outside the US or domiciled in friendly jurisdictions such as Switzerland; they highlight that EtherFi, a decentralized and non-custodial liquid staking platform which successfully closed a $5 million Series A round recently, is unlikely be hit with any Wells Notices since it is non-custodial.
As of writing, Maelstrom is adopting an intelligent patient strategy when investing in cryptocurrency opportunities, preferring quality projects over quick profits to reap long-term rewards from bear markets when the market shifts into a bull phase.
BitMEX and the Violation of the BSA
On February 2022, co-founders of crypto spot and derivatives trading platform BitMEX, Arthur Hayes and Benjamin Delo, pleaded guilty to violating the US Bank Secrecy Act (BSA) in federal court. The charges were brought forward by the Department of Justice (DOJ) and the Commodity Futures Trading Commission (CFTC), who accused the company of operating with poor anti-money laundering (AML) protocols.
Previously, in October 2020, the government alleged that BitMEX was attempting to evade US AML regulations by establishing offshore operations but still allowing local customers to use its service. Additionally, the CFTC charged them for enabling US customers to trade crypto derivatives products without registering as a derivatives platform with the federal regulator and accepting customers from Iran, a sanctioned jurisdiction.
Both Hayes and Delo pleaded guilty to one count of violating the BSA, which carries a maximum sentence of five years in prison. However, a federal judge will eventually determine their sentences later on. Hayes has stepped down as CEO since then and issued an apology upon his plea; Delo also released a statement regretting the lack of adequate customer identification programs on the platform and voluntarily appearing in the US for his hearing.