Arthur Hayes and Akshat Vaidya are trying to beat Bitcoin and Ethereum earnings, but it will take time.
Hayes, former CEO of cryptocurrency exchange BitMex, and Vaidya, former head of corporate development at BitMex, founded Maelstrom Capital, where Vaidya is head of investment. In an interview with CoinDesk, Hayes and Vaidya said Maelstrom is currently targeting infrastructure companies.
“We don’t have anything that scales like a consumer, but we’re not at the point where we have enough infrastructure to support it,” Vaidya said.
Maelstrom was founded as a Hayes family office using Hayes’ pool of cryptocurrencies. Since there is no liquidity provider to answer (because this is Mr. Hayes’ money), there is no need to rush capital in to get a management fee so the company can “patience.”
“We really want to identify quality projects,” says Hayes. “We don’t have an external LP, so it’s not a spray-and-play game.”
Infrastructure deals “have a strong technological moat for a large market, and the business is easy to understand: ‘P’ multiplied by the size of the market,” explains Vaidya.
Compound, Aave, and Uniswap were all founded in 2017, but didn’t appear on anyone’s radar until 2019 and didn’t go mainstream until the summer of 2020 when decentralized finance (DeFi) came along. .
“At the time, people were so negative that no one cared about them. [initial coin offerings] And it’s a massive bear market,” Hayes said. “This has led to a surge of projects claiming to be the next Uniswap, Compound or Aave, but many based on something less important. We were happy to put money into these projects knowing we could finish with,” Hayes added.
Hayes said the turning point for the projects he’s currently investing in is the market questioning whether these projects have delivered on their promises, built products, won clients and demonstrated that the technology works. We believe that it will start around 2024.
With that come clone projects and their “me too” investors. This is just as his COVID-19 bull market in 2020-2021 has seen Uniswap, Compound, and Aave clones flooded with capital.
“In this part of the cycle, it’s not just about making money, but also doing the work of identifying which companies are truly valuable during a bear market and which are just knockoffs.” Mr Hayes said.
Some of these work, some “[excrement] Coin” – With crypto tier returns when the market goes from bearish to bullish, Hayes has no hesitation in investing when the time comes.
“I’m not saying always invest in pure quality. [dog excrement] Because we will get the token today,” he said. “And he can throw them away in three months because the stories are there.”
In 2020, the U.S. Department of Justice found Hayes guilty of money laundering on the BitMEX platform by violating the Bank Secrecy Act (BSA) and failing to implement Know Your Customer (KYC) and Anti-Money Laundering (AML) controls. claimed to allow it. In February 2022, Hayes and BitMEX co-founder Ben Delo pleaded guilty.
Guilty plea means the evidence and allegations the government had about Hayes et al. Al. It has never been tested in the hostile environment of a courtroom. BitMEX is not a US company and does not use US dollars.as a legal expert Highlights of the timethe only other instance in which BSA was used by a non-bank financial institution ended in a deferred prosecution agreement.
So, of course, Hayes and Bydia care about a long stretch of US regulators.
“The advantage of investing in infrastructure projects, especially in this cycle, is that many of them are less targeted by regulators than other projects,” Vaidya said.
“There is no one to follow because it is non-custodial,” he said.
All of Maelstrom’s portfolio companies were located outside the United States, except for one that did not have a token model.
Even when projects involve US founders, they are located in friendly jurisdictions like Switzerland, Vidia explains.
“So it’s not a preference per se, but I think it’s just the market itself doing that,” he said.
