BitMEX Co-Founder Warns of Altcoin Risks as Cardano Faces Network Crisis

Hayes Sounds Alarm on 'VC Coins'

BitMEX co-founder Arthur Hayes has issued a stark warning to cryptocurrency investors, singling out Monad as a particularly risky investment that could see its value plummet by 99%. Hayes characterized the project as a high-risk "VC coin," reflecting growing concerns about venture capital-backed tokens in the current market cycle ^[1].

Despite his caution on specific altcoins, Hayes maintained a bullish outlook for the broader cryptocurrency market, driven primarily by anticipated monetary expansion. "I think that we are at the end of the beginning of this cycle and the massive amounts of crazy bull market money printing is ahead of us," he said ^[1].

Hayes argued that governments, particularly the United States, are preparing for another wave of liquidity injections ahead of political campaigns and slowing economic growth. He dismissed the widely cited four-year Bitcoin cycle, contending that past market booms were fueled not by halvings but by global credit expansion led by the US and China ^[1].

Privacy Technologies to Lead Next Wave

Looking forward, Hayes predicted that privacy technologies will dominate the next major cryptocurrency narrative, with zero-knowledge systems and privacy coins expected to see renewed interest. He suggested that institutional adoption is likely to consolidate around Ethereum, particularly through stablecoins and tokenized finance ^[1].

The BitMEX co-founder revealed earlier this month that Zcash has become the second-largest holding in his family office Maelstrom, trailing only Bitcoin ^[1]. Hayes called Bitcoin the "last free-market smoke alarm" for the global financial system, noting that it reacts first when liquidity dries up ^[1].

Cardano Network Split Triggers Crisis

While Hayes warned about potential risks in new projects, established blockchain Cardano found itself in the midst of a real crisis. The network experienced a chain split reportedly caused by a single developer who claimed to have "trusted an AI" ^[2].

The incident sparked a heated response from Cardano founder Charles Hoskinson, who escalated the situation to involve federal authorities. The FBI has reportedly initiated an investigation into matters related to Cardano, though the specific reasons for the investigation remain unclear ^[2].

The crisis has deeply divided the Cardano community, with Hoskinson facing harsh criticism over his handling of the situation. The episode drew widespread attention on social media, with observers noting the irony that "even Solana appeared more stable" than the situation ^[2].

Broader Implications for Blockchain Security

The twin developments highlight contrasting risks in the cryptocurrency ecosystem. Hayes's warning underscores concerns about over-hyped, venture capital-backed projects that may not deliver on their promises, while Cardano's technical difficulties demonstrate that even established networks with academic foundations can face serious operational challenges.

The involvement of law enforcement in blockchain governance disputes marks a notable development, potentially setting precedents for how technical failures and community conflicts are addressed in decentralized networks. As the cryptocurrency market matures, investors face an increasingly complex landscape where both speculative risks and operational vulnerabilities demand careful attention.