The number of Black-American billionaires in the U.S. can be counted on one hand but despite their minuscule numbers, they often seem to be the target of investigations.
Black billionaires are part of a rare club according to Forbes’ 2021 list of the world’s richest. They include Robert Smith, who made his $6 billion fortune in private equity; media moguls Oprah Winfrey and Tyler Perry; and hip-hop moguls and businessmen Jay Z and Kanye West. Basketball great LeBron James is officially a billionaire, according to Sportico. America’s first Black billionaire, BET founder Robert Johnson, fell off the list in 2017. Johnson became a billionaire in 2001. Bitcoin billionaire Arthur Hayes became a billionaire soon after he co-founded, BitMEX, a cryptocurrency exchange that has traded trillions, in 2014. Hayes is no longer on the Forbes list.
Once an African American seems to reach that financial upper echelon, investigations seem to follow and many in the Black community question the timing.
Consider the most recent investigations involving billionaire Smith and Hayes, whose company BitMEX made $50 million in trading on its first day in 2014 and made more than $1 billion in income in the first year of trading, Financial Insight Zambia Limited reported.
In 2020, federal prosecutors claimed Smith had concealed income and evaded taxes for 15 years by using foreign trusts, corporations, and bank accounts to midlead the Internal Revenue Service.
Smith, 57, avoided prosecution by cooperating in a case against his former associate Robert Brockman, a Houston businessman accused of using Caribbean entities to hide $2 billion in income. Smith also agreed to pay more than $139 million in back taxes, interest, and penalties after a four-year investigation, Bloomberg reported.
Here are five factors on why the U.S. government targeted Black billionaires Robert Smith and Arthur Hayes.
1. Smith pushed reparations
Smith, who in 2020 admitted to evading taxes for years and signed a non-prosecution deal to avoid jail time, had been speaking out publicly for reparations.
“I think that’s going to be a political decision that’s going to have to be made and decided upon,” Smith told Reuters. “But I think corporations have to also think about, well, what is the right thing to do?”
2. Hayes paved the way for small-time investors
BitMEX opened up Wall Street to a new wave of investors. It was “a pioneer in opening crypto to smaller investors,” The New York Times reported.
From the beginning, BitMEX was intended to attract not only professional traders but also retail investors, as Hayes explained in an industry talk in 2016. “There are people who offer similar types of products but are focusing on degenerate gamblers, a.k.a. retail traders in Bitcoin,” he said. “So why don’t we do the same?”
The Seychelles-based firm is a peer-to-peer crypto exchange and derivative trading platform. And because of its inclusive approach, it became one of the world’s biggest cryptocurrency trading exchanges. It claimed to process more than $1.7 billion in daily derivatives transactions.
3. Smith touted the 2 percent solution
In 2020, Smith called on corporate American to benefit the Black community by investing directly over the next 10 years in banking, telecom, technology, education, and healthcare infrastructure.
He urged large corporations to use 2 percent of their annual net income for the next decade to empower minority communities, Forbes reported.
In 2019, Smith paid the student loan debt of 400 graduates of Morehouse College.
4. Hayes brashly ignored establishment
Hayes was going after “new money” and ignoring the establishment.
Many of his crypto supporters feel Hayes is being punished for creating a product that has “baffled lawmakers and regulators.”
5. Billionaires Hayes and Smith are self-made men
Both Black billionaires didn’t inherit family money or rely on others to build their empires.
Smith, whose parents were both school teachers, grew up in a predominantly African American, middle-class neighborhood in Denver, Colorado. He graduated from Cornell University and worked at Goodyear Tire and Rubber Company, Air Products & Chemicals, and Kraft General Foods as a chemical engineer. While at Kraft, he registered two U.S. and two European patents, according to the Chicago Tribune. From 1994 to 2000, he worked for Goldman Sachs in technology investment banking. In 2000, Smith founded Vista Equity Partners.
“Arthur Hayes is a self-made entrepreneur who has been wrongly accused of crimes that he did not commit,” his lawyers said in a statement.
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Like Smith, Hayes was born to middle-class parents. His parents worked for General Motors. As a child he split his time between Detroit and Buffalo, where his mother sent him to the private Nichols School, Vanity Fair reported. Hayes went on to attend the Wharton School of business. Next he headed to Hong Kong to work at Deutsche Bank and Citibank as a market maker for exchange-traded funds. But in 2013 he was let go. Without a job he decided to pursue his passion — cryptocurrency.
Hayes is a former equities trader for Citigroup Inc. in Hong Kong. He founded BitMEX in 2014 with Benjamin Delo, an Oxford-educated computer scientist, and Samuel Reed, a programmer.