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. BET founder Robert Johnson, the first Black U.S. billionaire, became one in 2001 and fell off the list in 2017.

Bitcoin billionaire Arthur Hayes became a billionaire soon after he co-founded, BitMEX in 2014 — a cryptocurrency exchange that has traded trillions. Hayes is no longer on the Forbes list.

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 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?”

Once an African American seems to reach that financial upper echelon and become a billionaire, 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 its first year of trading, Financial Insight Zambia Limited reported. It became one of the world’s biggest cryptocurrency trading exchanges. It claimed to process more than $1.7 billion in daily derivatives transactions.

Here are five factors on why the U.S. government targeted Black billionaires Robert Smith and Arthur Hayes.

1. Smith’s tax evasion

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. The CEO of Vista Equity Partner admitted he made false filings with the IRS several times. He recently agreed to pay more than $139 million in back taxes, interest and penalties after a four-year investigation, Bloomberg reported.

2. Hayes accused of money-laundering

Hayes is accused by U.S. officials of failure to uphold anti-money-laundering laws and violating the Banking Secrecy Act, Yahoo reported. He faces up to 10 years in prison.

According to an indictment filed in Manhattan federal court, Hayes and his two co-founders Samuel Reed and Benjamin Delo along with Gregory Dwyer, BitMEX’s first employee and later head of business development, did not implement a legally required anti-money laundering program, Reuters reported.

3. Smith’s suspicious dealings

A deal Smith made 20 years ago with his mentor, Texas billionaire Robert Brockman, has come back to haunt him. Authorities claim Smith played a role in what federal prosecutors allege was the biggest tax evasion scheme in U.S. history by helping Brockman hide $2 billion from tax authorities in an offshore scheme, The Washington Post reported.

Smith is now avoiding charges by cooperating with investigators in their case against Brockman.

4. Hayes’ Seychelles haven

According to prosecutors, BitMEX was incorporated in Seychelles because of its seemingly less stringent regulations, and where Hayes once bragged it would “cost less to bribe authorities than in the United States,” Reuters reported.

In the process, prosecutors said BitMEX became a “vehicle” for money laundering and sanctions violations, including laundering proceeds of a cryptocurrency hack and that customers from Iran traded on its platform.

Listen to GHOGH with Jamarlin Martin | Episode 74: Jamarlin Martin Jamarlin returns for a new season of the GHOGH podcast to discuss Bitcoin, bubbles, and Biden. He talks about the risk factors for Bitcoin as an investment asset including origin risk, speculative market structure, regulatory, and environment. Are broader financial markets in a massive speculative bubble?

5. Smith’s hidden money and large purchases

In 2005, Smith and his then-wife, Suzanne McFayden, purchased a $2.5 million home in California’s Sonoma County with untaxed income from a Caribbean bank account, according to court filings

“A few years later they bought two ski properties and a commercial one in Megeve, France, with Smith directing that they be paid for with 13 million euros ($16 million) of untaxed funds from a Swiss bank account,” Bloomberg reported.

When Smith filed a Report of Foreign Bank and Financial Accounts for 2005 he didn’t disclose his financial interest in accounts in the British Virgin Islands and Switzerland. He also failed to do so in 2011 and in 2012.

Smith also used $13 million in untaxed funds to make improvements to a residence in Colorado and fund “charitable activities at the property,” the Justice Department said in a news release announcing its deal with Smith, The Washington Post reported.