SAN JUAN, P.R. — They call what they are building Puertopia. But then someone told them, apparently in all seriousness, that it translates to “eternal boy playground” in Latin. So they are changing the name: They will call it Sol.
Dozens of entrepreneurs, made newly wealthy by blockchain and cryptocurrencies, are heading en masse to Puerto Rico this winter. They are selling their homes and cars in California and establishing residency on the Caribbean island in hopes of avoiding what they see as onerous state and federal taxes on their growing fortunes, some of which now reach into the billions of dollars.
And these men — because they are almost exclusively men — have a plan for what to do with the wealth: They want to build a crypto utopia, a new city where the money is virtual and the contracts are all public, to show the rest of the world what a crypto future could look like. Blockchain, a digital ledger that forms the basis of virtual currencies, has the potential to reinvent society — and the Puertopians want to prove it.
For more than a year, the entrepreneurs had been searching for the best location. After Hurricane Maria decimated Puerto Rico’s infrastructurein September and the price of cryptocurrencies began to soar, they saw an opportunity and felt a sense of urgency.
So this crypto community flocked here to create its paradise. Now the investors are spending their days hunting for property where they could have their own airports and docks. They are taking over hotels and a museum in the capital’s historic section, called Old San Juan. They say they are close to getting the local government to allow them to have the first cryptocurrency bank.
“What’s happened here is a perfect storm,” said Halsey Minor, the founder of the news site CNET, who is moving his new blockchain company — called Videocoin — from the Cayman Islands to Puerto Rico this winter. Referring to Hurricane Maria and the investment interest that has followed, he added, “While it was really bad for the people of Puerto Rico, in the long term it’s a godsend if people look past that.”
Puerto Rico offers an unparalleled tax incentive: no federal personal income taxes, no capital gains tax and favorable business taxes — all without having to renounce your American citizenship. For now, the local government seems receptive toward the crypto utopians; the governor will speak at their blockchain summit conference, called Puerto Crypto, in March.
The territory’s go-to blockchain tax lawyer is Giovanni Mendez, 30. He expected the tax expatriates to disappear after Hurricane Maria, but the population has instead boomed.
“It’s increased monumentally,” said Mr. Mendez, who has about two dozen crypto clients. “And they all came together.”
The movement is alarming an earlier generation of Puerto Rico tax expats like the hedge fund manager Robb Rill, who runs a social group for those taking advantage of the tax incentives.
“They call me up saying they’re going to buy 250,000 acres so they can incorporate their own city, literally start a city in Puerto Rico to have their own crypto world,” said Mr. Rill, who moved to the island in 2013. “I can’t engage in that.”
The newcomers are still debating the exact shape that Puertopia should take. Some think they need to make a city; others think it’s enough to move into Old San Juan. Puertopians said, however, that they hoped to move very fast.
“You’ve never seen an industry catalyze a place like you’re going to see here,” Mr. Minor said.
Until the Puertopians find land, they have descended on the Monastery, a 20,000-square-foot hotel they rented as their base and that was largely unscathed by the hurricane.
Matt Clemenson and Stephen Morris were drinking beer on the Monastery’s roof one recent evening. Mr. Clemenson had an easygoing affect and wore two-tone aviators; Mr. Morris, a loquacious British man, was in cargo shorts and lace-up steel-toed combat boots, with a smartphone on a necklace. They wanted to make two things clear: They chose Puerto Rico because of the hurricane, and they come in peace.
“It’s only when everything’s been swept away that you can make a case for rebuilding from the ground up,” Mr. Morris, 53, said.
“We’re benevolent capitalists, building a benevolent economy,” said Mr. Clemenson, 34, a co-founder of Lottery.com, which is using the blockchain in lotteries. “Puerto Rico has been this hidden gem, this enchanted island that’s been consistently overlooked and mistreated. Maybe 500 years later we can make it right.”
Other Puertopians arrived on the roof as a pack, just back from a full-day property-hunting bus tour. From the middle, Brock Pierce, 37, the leader of the Puertopia movement, emerged wearing drop crotch capri pants, a black vest that almost hit his knees and a large black felt hat. He and others had arrived on the island in early December.
“Compassion, respect, financial transparency,” Mr. Pierce said when asked what was guiding them here.
Mr. Pierce, the director of the Bitcoin Foundation, is a major figure in the crypto boom. He co-founded a blockchain-for-business start-up, Block.One, which has sold around $200 million of a custom virtual currency, EOS, in a so-called initial coin offering. The value of all the outstanding EOS tokens is around $6.5 billion.
A former child actor, Mr. Pierce got into digital money early as a professional gamer, mining and trading gold in the video game World of Warcraft, an effort funded partly by Stephen K. Bannon, the former Trump adviser. Mr. Pierce is a controversial figure — he has previously been sued for fraud, among other matters.
Downstairs, in the Monastery penthouse, a dozen or so other expats were hanging out. The water was out that night, so the toilets and faucets were dry. Mr. Minor lounged on an alcove chaise.
“The U.S. doesn’t want us. It’s trying to choke off this economy,” Mr. Minor said, referring to the difficulties that crypto investors have with American banks. “There needs to be a place where people are free to invent.”
Mr. Pierce paced the room with his hands in fists. A few times a day, he played a video for the group on his phone and a portable speaker: Charlie Chaplin’s 1940 “The Great Dictator,” in which Chaplin parodies Hitler rallying his forces. He finds inspiration in lines like “More than machinery, we need humanity.”
“I’m worried people are going to misinterpret our actions,” Mr. Pierce said. “That we’re just coming to Puerto Rico to dodge taxes.”
He said he was aiming to create a charitable token called ONE with $1 billion of his own money. “If you take the MY out of money, you’re left with ONE,” Mr. Pierce said.
“He’s tuned in to a higher calling,” said Kai Nygard, scion of the Canadian clothing company Nygard and a crypto investor. “He’s beyond money.”
The force of Mr. Pierce’s personality and his spiritual presence are important to the group, whose members are otherwise largely agnostic. Mr. Pierce regularly performs rituals. Earlier that day while scoping out property, they had stopped at a historic Ceiba tree, known as the Tree of Life.
“Brock nestled into the bosom of it and was there for 10 minutes,” Mr. Nygard said.
Mr. Pierce walked around the tree and said prayers for Puertopia, holding a rusted wrench he had picked up in the territory. He kissed an old man’s feet. He blessed a crystal in the water, as they all watched. He played the Chaplin speech to everyone and to the tree, Mr. Nygard said.
That wrench is now in the penthouse, heavy and greasy.
Later on, at a dinner in a nearby restaurant, the group ordered platters of octopus arms, fried cheese, ceviche and rum cocktails. They began debating whether to buy Puerto Rico’s Roosevelt Roads Naval Station, which measures 9,000 acres and has two deepwater ports and an adjacent airport. The only hitch: It’s a Superfund cleanup site.
Mr. Pierce had fallen asleep by then, his hat tilted down and arms crossed. He gets two hours of sleep many nights, often on a firm grounding mat to stay in contact with the earth’s electric energy. Josh Boles, a tall, athletic man who is another crypto expat, picked him up, and the group headed back to the Monastery.
They walked past a big pink building in an old town square, the start of their vision for Puertopia’s downtown. Once a children’s museum, they plan on making it a crypto clubhouse and outreach center that will have the mission “to bring together Puerto Ricans with Puertopians.”
Workdays are casual in Puertopia. One morning, Bryan Larkin, 39, and Reeve Collins, 42, were working at another old hotel, the Condado Vanderbilt, where they had their laptops on a pool bar with frozen piña coladas on tap.
“We’re going to make this crypto land,” Mr. Larkin said.
Mr. Larkin has mined about $2 billion in Bitcoin and is the chief technology officer of Blockchain Industries, a publicly traded company based in Puerto Rico.
Mr. Collins, an internet veteran, had raised more than $20 million from an initial coin offering for BlockV, his app store for the blockchain, whose outstanding tokens are worth about $125 million. He had also co-founded Tether, which backs cryptocurrency tied to the value of a dollar and whose outstanding tokens are worth about $2.1 billion, though the company has generated enormous controversy in the virtual currency world.
“So, no. No, I don’t want to pay taxes,” Mr. Collins said. “This is the first time in human history anyone other than kings or governments or gods can create their own money.”
“When Brock said, ‘We’re moving to Puerto Rico for the taxes and to create this new town,’ I said, ‘I’m in,’” Mr. Collins said. “Sight unseen.”
They soon went back to work, checking out Coinmarketcap.com, a site that shows the price of cryptocurrencies.
“Our market cap’s gone up $100 million in a week,” Mr. Collins said.
“Congrats, man,” Mr. Larkin said.
All across San Juan, many locals are trying to figure out what to do with the crypto arrivals.
Some are open to the new wave as a welcome infusion of investment and ideas.
“We’re open for crypto business,” said Erika Medina-Vecchini, the chief business development officer for the Department of Economic Development and Commerce, in an interview at her office. She said her office was starting an ad campaign aimed at the new crypto expat boom, with the tagline “Paradise Performs.”
Others worry about the island’s being used for an experiment and talk about “crypto colonialism.” At a house party in San Juan, Richard Lopez, 32, who runs a pizza restaurant, Estella, in the town of Arecibo, said: “I think it’s great. Lure them in with taxes, and they’ll spend money.”
Andria Satz, 33, who grew up in Old San Juan and works for the Conservation Trust of Puerto Rico, disagreed.
“We’re the tax playground for the rich,” she said. “We’re the test case for anyone who wants to experiment. Outsiders get tax exemptions, and locals can’t get permits.”
Mr. Lopez said the territory needed something to jump-start the economy. “We have to find a new way,” he said.
“Sure then, Bitcoin, why not,” Ms. Satz said, throwing up her hands.
Mr. Lopez said he and a childhood friend, Rafael Perez, 31, were trying to set up a Bitcoin mine in their hometown. But electricity has been inconsistent, and mining even a single Bitcoin takes a lot of power, he said.
Puertopia: The new crypto-utopia for billionaires
CRYPTOCURRENCY made them mega rich virtually overnight. Now, they’re moving to an island to build their ultimate playground.
news.com.au FEBRUARY 10, 20181:18AM
THEY have become super-rich virtually overnight thanks to cryptocurrencies. And now, dozens of entrepreneurs are preparing to move to Puerto Rico to build their version of crypto-utopia, a new “city” that will be their ultimate playground.
After spending more than a year searching for the perfect spot, the businesspeople are selling their homes and cars in California and heading for Old San Juan. The top attraction of the Caribbean island is the ability to avoid paying taxes on their burgeoning fortunes.
There are no federal personal income taxes, no capital gains tax and decent business taxes for Americans in Puerto Rico. It essentially operates its own parallel tax system and is the perfect haven to continue to grow their riches, The New York Timesreports.
As a bonus, it’s also pretty stunning, with picture perfect beaches and a colourful culture.
More than 3.7 million people call the island home, which shares common defence, stock market, currency and citizenship with the US. Unfortunately it has been plagued with economic issues for years and is currently a staggering $91 billion in debt.
The group first saw the opportunity to move in after Hurricane Maria hit last September, leaving widespread destruction in its wake and creating the option of “rebirthing” the region.
Convinced that blockchain — the technology that underpins the notorious bitcoin — could reinvent society, they hope to create a new city where all the money will be virtual.
At first they planned to call it “Puertopia”, but after hearing that means “eternal boy playground” in Latin they may change the name to Sol.
The group is headed by Brock Pierce, the director of the Bitcoin Foundation, and co-founder of the start-up block.one, who has around $US6.5 billion ($A8.2 billion) worth of the virtual currency EOS.
Mr Pierce, 37, a former child actor and professional gamer, landed in Puerto Rico in December and insists the group has grand intentions.
“I’m worried people are going to misinterpret our actions,” Mr Pierce said. “That we’re just coming to Puerto Rico to dodge taxes.”
Instead, he highlights his bid to create a charitable token called ONE with $US1.2 billion ($A1.5 billion) of his own money.
The New York Times shared details of how Mr Pierce, who often sleeps just two hours at night, has a very spiritual presence and was spotted kissing an old man’s feet, hugging a tree for 10 minutes and blessing a crystal.
Together those hatching the plan will take over hotels and even a museum and have been discussing whether to buy the Roosevelt Roads Naval Station, which has an adjacent airport. It’s an exciting time for the group. It’s like they have more money than they know what to do with.
“We’re going to make this crypto land,” Bryan Larkin, 39, chief technology officer of Blockchain Industries, who has poured about $US2.5 billion ($A3.17 billion) into bitcoin, said.
Reeve Collins, 42, has raised over $US20 million ($A25 million) from his app store for the blockchain, BlockV, also jumped at the chance to join in. The co-founder of Tether, which backs cryptocurrency, he has tokens worth about $US2.6 billion ($A3.3 billion).
“When Brock said, ‘We’re moving to Puerto Rico for the taxes and to create this new town,’ I said, ‘I’m in,’” Mr Collins said. “Sight unseen.
“ … No, I don’t want to pay taxes. This is the first time in human history anyone other than kings or governments or gods can create their own money.”
Another businessman to make the move to Puerto Rico is Halsey Minor, the founder of CNET and owner of a new blockchain company called Videocoin.
“While it (the hurricane) was really bad for the people of Puerto Rico, in the long term it’s a godsend if people look past that. You’ve never seen an industry catalyse a place like you’re going to see here,”
So far, the local government is on board, with the governor set to speak at the blockchain summit conference called Puerto Crypto next month.
However, the move is concerning to some including hedge fund manager Robb Rill, based in Puerto Rico and who runs a social group for those taking advantage of the tax incentives.
“They call me up saying they’re going to buy 250,000 acres so they can incorporate their own city, literally start a city in Puerto Rico to have their own crypto world,” said Mr Rill. “I can’t engage in that.”
The Mysterious Crypto Billionaires Taking Over Puerto Rico
Five months after Hurricane Maria, Puerto Rico is still struggling to rebound. As an unincorporated territory of the United States, the small island was sidelined when it came to restoration efforts. The U.S. Army Corps of Engineers estimates that over 10 percent of the island’s residents are still without power, though Carmen Yulin Cruz, Mayor of San Juan puts that number closer to 30 percent.
Electricity isn’t the only concern for Puerto Ricans. Over 400,000 residents are still using blue tarps as roofs on their homes as they wait for federal assistance.
Cruz noted: “The U.S. government response has been inadequate, has been inefficient, and has been inappropriate.”
But this tragedy has turned into opportunity for some…
A growing group of self-proclaimed “Puertopians” are flocking to Puerto Rico to set up a crypto-paradise. Because of its unincorporated status, the island has acted as a tax haven – and playground – for the super-rich for decades, and the new generation of crypto-millionaires is proving to be no exception.
The goal is to build an entirely new city with cryptocurrencies and blockchain tech as the foundation. The group has even been scouting the island for prospects, searching for a location where they will be able to build an airport and docks.
In the meantime, however, the Puertopians are occupying Old San Juan, eating at nice restaurants and living in upscale hotels in the heart of the colonial section of the city.
Upon closer inspection, this mysterious group and its high-profile leader are at the heart of one of the most bizarre movements in the modern era.
“Sol” and its Creator
The project, originally nicknamed “Puertopia,” had to change its name to “Sol” after it was pointed out that the Latin translation of its original name was “boy paradise” – the relevance of which will become clear as this story unfolds. “Sol” is headed by Brock Pierce, an extremely controversial, wealthy, and eccentric individual with a more-than-murky past.
Pierce is a polarizing figure in the crypto-space. As director of the Bitcoin Foundation, he has argued for the vast benefits of crypto-philanthropy, even suggesting that he would be giving away $1-billion of his personal funds to charity, but his unsavory rap sheet leaves a lot of questions that need answering.
Pierce, a former child actor, joined the world of digital business at 18 as the executive vice-president of the Digital Entertainment Network, which later came under fire over a massive child sex scandal that was featured in “An Open Secret,” directed by Amy Berg.
The scandal first came to light in 2000, when employees and child actors alleged that Pierce and his partners, Chad Shackley and Marc Collins-Rector, were running a child abuse ring with several A-List actors, many of whom were tied financially to the network. It was alleged that this group would throw parties where minors would be given drugs, alcohol, and even forced to engage in intercourse at gunpoint.
Following the claims, Pierce and his counterparts resigned from the Digital Entertainment Network and fled to Spain. It was later revealed that Pierce settled out of court with accuser Michael Egan, for a sum of $21,600USD.
While in Spain, Pierce formed IGE (Internet Gaming Entertainment), which acts as a broker-of-sorts for various in-game currencies, including Blizzard favorites World of Warcraft and Diablo 3. After several profitable years, and a noteworthy $60-million investment from Goldman Sachs, the company fell into a slump. In January 2007, the company was losing a reported $500,000 per month, and Pierce was ultimately replaced as CEO by none other than President Trump’s Ex-Right-Hand-Man, Steve Bannon.
Following several years of serial capitalism and philanthropic work, including donations to the Clinton Foundation, Pierce jumped into bitcoin headlines, founding the VC giant Blockchain Capital with Bart Stephens and Bradford Stephens in 2013. (Pierce has since been removed from the company’s webpage)
His early-adopter status, numerous connections, and tremendous wealth then propelled him to the position of Chairman of the Board of the Bitcoin Foundation a year later, resulting in the resignation of 10 key members, including Andreas Antonopoulis, who cited lack of transparency for his decision.
Back to Puerto Rico
With an understanding of the characters behind this latest initiative in Puerto Rico, we can now focus on what the apparent aims of these ‘Puertopians’ are.
Brock Pierce claims he is keen to “be a part of helping the Puerto Rican people”, believing that after the hurricane they will be able to “start over from scratch” and create a new utopia.
Hasley Minor, founder of CNET and fellow Puertopian went one step further when he called the hurricane a “perfect storm”, noting that “While it was really bad for the people of Puerto Rico, in the long term it’s a godsend if people look past that.”
The intentions, at first glance, may seem genuine, but the story itself, and the people involved, tell a very different story. So far, it seems less money has actually been spent on rebuilding the island than it has on avoiding taxes and sipping rum.
Another participant in this mysterious group, and Pierce’s partner at Tether, Reeve Collins, made no secret of his anti-tax position, explaining: “No, I don’t want to pay taxes,” as “This is the first time in human history anyone other than kings or governments or gods can create their own money.”
So, with tech majors and crypto-millionaires descending on Old San Juan, what are Puerto Ricans thinking?
Andria Satz, Old San Juan resident and employee of the Conservation Trust of Puerto Rico explains an ongoing trend on the island:
“We’re the tax playground for the rich. We’re the test case for anyone who wants to experiment. Outsiders get tax exemptions, and locals can’t get permits.”
And that’s exactly what has happened for years. Puerto Ricans have been excluded from participating in the gold rush while the mega-rich have exploited the island, its resources, and its people.
It’s clear there is a stark contrast between the lavish lifestyles enjoyed by crypto-expats and the ongoing struggles of the citizens of Puerto Rico. And it raises an important question: is this just another case of the super-rich participating in disaster capitalism, re-colonizing a territory which has fallen victim to the same scheme from the ultra-rich time and time again? Or is this pseudo dream-team of tech heroes really going to save the day this time?
My money is definitely not on the latter, but I hope they prove me wrong.