The New York Times: Tether co-founder and his shattered crypto dream

Compiled by: Luffy, Foresight News

On sunny days in 2022, cryptocurrency entrepreneur Brock Pierce liked to take friends on a boat trip to Vieques, about 75 miles from his home in Puerto Rico. Pierce wanted to show off to his friends one of his "favorite" properties in his life: a once-glamorous beachfront resort that he bought for more than $15 million.

In its heyday, the resort was a W hotel with a 6,000-square-foot spa, a restaurant run by a Michelin-starred chef and sweeping ocean views. It was the mainstay of Vieques' tourism industry. Then, in 2017, the hotel was hit by Hurricane Maria and was forced to close. Pierce reopened it, using the wealth he made from cryptocurrency to revitalize the hotel and the local economy.

Brock Pierce moved to Puerto Rico in 2017

A former child actor, Pierce excelled at acting. On trips to Vieques, he would anchor his Italian-made yacht at a local port and lead guests along a beach roamed by wild horses to the doors of the shuttered W Hotel.

“It was a big personal gamble for me,” Pierce said, “and it was where my heart was.”

But Pierce’s extravagant performance was an illusion. Like many of the other grand projects he started in Puerto Rico, the hotel is now mired in debt and legal disputes. Pierce lost the W last fall in a dispute with another investor. Now the hotel remains closed, its windows smashed and its floors covered in mold and horse manure. A $17,000 recliner designed by a famous Spanish architect gathers dust in the empty atrium.

Pierce’s dream of reopening the W Hotel in Vieques did not come true

Chairs of various colors are stacked in the shaded lobby of the W Hotel

In 2017, Pierce When he moved to Puerto Rico, he invested in a series of experimental cryptocurrency businesses. With the help of a think tank, he made a surprising promise to revitalize the local economy. Pierce is known for his role in the creation of USDT, one of the world's most popular digital currencies. He led a wave of industry immigrants to Puerto Rico, many of whom began buying land and hyping a project they called Puertopia to transform the U.S. territory into a hub for cryptocurrency investors and technology startups.

"If you're an American and you're in the cryptocurrency industry, you have to go to Puerto Rico at least once," Pierce said in 2019.

Puerto Rico is a cryptocurrency paradise. In 2012, the local government passed legislation to turn the archipelago into a tax haven for wealthy immigrants. Under the law, now known as Act 60, people who move there can apply for a benefit to be exempt from capital gains taxes. The measure is aimed at increasing investment in Puerto Rico's economy, which has been struggling to recover from a two-decade financial crisis.

But Pierce’s vision of a cryptocurrency-driven economic recovery has yet to come to fruition, according to hundreds of pages of court records and interviews with more than two dozen people familiar with his efforts in Puerto Rico. His business partners betrayed him, and some colleagues say he’s running out of money. There’s no clear evidence that Pierce’s arrival has helped the local economy. Instead, Act 60 has become a symbol of a new era of exploitation.

Many locals see Pierce as the latest in a centuries-old pattern of the global elite treating Puerto Rico as their private playground. After the U.S. invasion in the late 19th century, American businessmen seized hundreds of acres of local land to build sugar plantations and then funnel profits back to the U.S. Decades later, the U.S. Navy conducted military exercises on Vieques, including bomb tests that damaged the ecosystem and caused long-term health problems.

As Pierce and other wealthy immigrants have arrived, Puerto Rican residents have seen new cracks, with soaring housing prices, especially in coastal towns, forcing local families out of their homes. On a wall outside the W Hotel, a group of local artists painted a mural showing Pierce in a crimson tunic holding a Bitcoin logo with the caption: “Colonialism.”

Chameleon Instinct

On a recent Friday evening, Pierce, 43, sat down for coffee at the Convent Hotel in Old San Juan, a former Masonic lodge-turned-hotel that serves as an informal base for clandestine Puerto Rican immigrants. He wore a wide-brimmed orange hat and an oversized white T-shirt with the words “Scars Never Broke” printed on it. With an exaggerated gesture, he points out the window, which overlooks a bustling cobblestone avenue called Cristo Street, one of the city’s oldest streets.

“This was one of the first pieces of colonial infrastructure built by the Spanish conquistadors,” he explains. “It was the first road built of brick in the entire Western Hemisphere.”

Now the landscape belongs to Pierce: He bought the convent in 2018 for $4.8 million.

Pierce arrived in Puerto Rico with a quirky resume: The son of a Minnesota home builder and a church official, he was a child actor who had a brief role in the Mighty Ducks movie and starred in a film called First Child with the comedian Sinbad. As an adult, he became an early investor in several prominent cryptocurrency projects, ultimately making a fortune of $700 million to $1 billion.

An aerial view of San Juan, Puerto Rico. Pierce led a group of investors to Puerto Rico who are committed to turning the U.S. territory into a hub for cryptocurrency investors and tech startups

After the passage of Act 60, tourists from the United States became a prominent feature of restaurants and nightclubs across Puerto Rico. Pierce is a regular at Burning Man and one of the most recognizable visitors. He is often seen walking the streets of Old San Juan: short and energetic, he wears a T-shirt and leather vest, with a necklace around his neck.

Pierce bought two houses in a gated community in Dorado, a place where wealthy people live, and lived there with his partner, entrepreneur Crystal Rose, and his mother, Lynette Calabro. Pierce mingled with local politicians and threw lavish parties where guests sometimes took drugs such as cocaine and ketamine, according to two people who attended the party.

For a while, Pierce succeeded in attracting some locals with his openness and curiosity. Like a skilled actor, he had a chameleon-like instinct to adjust his behavior to the preferences of his audience. "If the other person is serious, he will act serious," said Hugo de la Uz, a local maritime expert who helped manage Pierce's yacht, "but if it's crazy, he will act crazy."

Pierce showed interest in nearly all world religions and had a hippie spirit. Once, while traveling with some fellow Act 60 immigrants, he snuggled up to a kapok tree, a species revered by some Puerto Ricans. “I felt a connection to him because he had a spiritual depth,” said Carli Muñoz, a Puerto Rican pianist who dated Pierce in San Juan.

Kapok Park is a tourist attraction and protected area on Vieques, with Puerto Rico’s oldest kapok tree at its center

But the goodwill ended there. “I’ve made up my mind that I’m not going to do business with him anymore,” Muñoz said.

Since moving to Puerto Rico, Muñoz has bought at least 14 properties, real estate records show. Some of them, like the convent, are already functioning businesses. But Muñoz also announced plans to turn much of his portfolio into new projects, including an art gallery and a community center. None of those projects have come to fruition. A hospital he bought late last year in Humacao is struggling, and the gallery was recently put up for sale.In 2019, Pierce took over a three-story building in Old San Juan that once housed a children’s museum. For a while, he told local media he used it “as a place to meet with friends and discuss ideas.” Today, the building sits empty, paint peeling from its walls.

The abandoned space inside the former Children’s Museum in Old San Juan, which Pierce said he bought “as a place to gather and discuss great ideas.”

“It’s so sad,” said Puerto Rican businessman Robert Cimino, who owned the building for 19 years before selling it to Pierce for $2 million. “I wanted to sell it to someone who could maintain it.”

Time and again, Pierce turned to local Puerto Ricans to help him with development projects, but many of those collaborators later said they were exploited and not paid the money they were supposed to. Meanwhile, he’s been locked in a court battle with another Act 60 immigrant, Joseph Lipsey III, who seized control of the W Hotel last year, claiming Pierce defaulted on a loan.

Pierce denies defrauding anyone. But at least three lawsuits are pending against him in local courts.Over coffee at the monastery, he admitted that his poor judgment and naivety had derailed his plans in Puerto Rico. “I trusted people,” he said, “and that’s one of the things that got me in trouble.”

Booing at beauty pageants

Pierce likes to cast himself as a geopolitical mover. In 2020, he ran for president of the United States as an independent candidate and received nearly 50,000 votes. He boasted about “having appointments” in El Salvador and Panama, and one evening in June, his assistant announced that Pierce would join a Zoom call with the president of Palau, a small archipelago in the western Pacific.

“I’ve spent a lot of time with almost every religious leader in the world,” Pierce said at the monastery, “and with many of the leaders of the world’s nation states.”

But Pierce’s main focus is Puerto Rico, where he has become a leading spokesman for Act 60. After moving, he told Rolling Stone that he would rebuild the economy “with the money we saved from the IRS in a Robin Hood way.” The publicity has helped make Puerto Rico a popular destination for cryptocurrency enthusiasts: About 2,600 people currently receive tax breaks under Act 60, according to government data.

As soon as Pierce arrived, locals showed their opposition. Someone wrote in red paint on the wall of the Children’s Museum: “Foreigners go home.”But behind the scenes, Vieques was expanding his real estate empire. He hired Gonzalo Gracia, a prominent local hotel developer, to help him find buildings in Puerto Rico that could be restored and transformed into tourist attractions.

Pierce helped organize the 2021 Miss World pageant in San Juan. When he was introduced as one of the judges, the crowd booed

Soon, Pierce's business progress began to deteriorate, and he frequently got into legal trouble with local partners. In 2021, he helped organize the Miss World pageant at a concert venue in San Juan. By then, Pierce was already considered an opportunistic politician in Puerto Rico: When he was introduced as one of the judges, the crowd booed him. Later, he sued Stephanie del Valle, a Puerto Rican pageant executive and former Miss World, claiming she owed him $1.2 million. Ms. Del Valle fought back against her suit, accusing Mr. Pierce of defamation and seeking $31 million in damages. (The dispute is pending in local court. Mr. Pierce said he was “committed to a fair resolution of this matter.”)

Mr. Del Valle was one of the first Puerto Ricans to clash with Mr. Pierce, accusing him of deceiving and manipulating them. During the pageant’s run, Mr. Pierce bought an 80 percent stake in the W Hotels. The deal was one of his largest investments in Puerto Rico and paved the way for him to seek more than $30 million in tax credits from the local government.

Mr. Gracia assisted with the purchase. He met with local officials in Vieques on Mr. Pierce’s behalf and found an architect to plan the hotel’s reopening, court records show.

But the partnership was short-lived: Gracia claimed in a 2022 lawsuit that once the deal was done, Pierce cut him out of the project and refused to pay him his $790,000 commission.

A similar situation unfolded on another project on Vieques. In 2021, Pierce asked a local naval engineer to help him open a hotel-and-museum on a ship anchored off the island’s northern coast. The engineer, who requested anonymity to avoid commercial repercussions, arranged meetings with local administrators and discussed the project with the mayor, but Pierce abruptly abandoned the plan. In an interview, he said Pierce still owed him $17,000 for the work. (Pierce says he has no such debt.)

Last year, there were signs that Pierce was stretched thin. He had asked De la Uz to repair the Aurora, the yacht he used to ferry friends to and from the West Coast. Most of the guests were “Americans that he tried to convince to give him money,” De la Uz recalled, “and he portrayed himself as the savior of Puerto Rico.”

In a 2023 lawsuit, De la Uz claimed that he and Pierce, who co-owned the yacht, had defaulted on repairs. As guests partied on the deck, the yacht was taking on water and slowly sinking into the Caribbean Sea, De la Uz said.

Pierce declined to comment on the allegations, saying, “We are actively working through these issues in court to reach a fair resolution.”

“I didn’t do any due diligence”

When Pierce went out on the Aurora, he sometimes brought a newcomer to the Act 60 community — Lipsey, a 62-year-old logistics tycoon. For a while, Pierce knew Lipsey only by his nickname, Jopepi. Pierce found him socially awkward but likable. “This is a very kind person, I believe,” Pierce said.

Pierce knew only the general circumstances of Lipsey’s arrival in Puerto Rico. In 2017, Lipsey made a fortune from disaster relief efforts after Hurricane Maria, through contracts with the U.S. government. But two years later, a legal scandal exposed his high-society life in Aspen, Colorado. A wild New Year’s party at Lipsey’s home sparked a police investigation, and he and his wife eventually pleaded guilty to serving alcohol to minors and were sentenced to a year of probation.

The Lipseys sold their house in Aspen and eventually moved to Puerto Rico, settling near Pierce. Soon, the two families became close. Lipsey’s wife became friends with Pierce’s mother. After Ms. Calabro died of a heart attack in 2022, Mr. Lipsey said he had promised her that he would always be there for her family, Mr. Pierce recalled.

Pierce and Lipsey worked together on various business projects, but the most significant deal involved the W Hotels. Last October, Lipsey agreed to lend Pierce $10 million, $4 million of which was used to buy the remaining 20% ​​of the hotel and $6 million to invest in the bankrupt hospital chain. The terms were risky for Pierce: He had to close the hotel deal within two weeks. As collateral, he had to put up his entire stake in the W Hotels. Pierce said he was uncomfortable with the demands but agreed anyway. "I didn't do any due diligence," he recalled.

A month after the agreement was signed, Lipsey accused Pierce of violating the agreement and seizing control of the hotel. Lipsey later claimed in legal documents that instead of using the borrowed funds as planned, Pierce spent the money on private jets and a 72-hour birthday party that spanned San Juan, Miami, and Los Angeles.

As the dispute escalated, Pierce asked Lipsey to meet at the Hacienda Tamarindo, a small hotel in Vieques that Pierce had purchased for $3.2 million. Lipsey later told Puerto Rican police that the meeting amounted to a kidnapping. Pierce demanded his phone and then locked the door while an armed guard patrolled.

In 2021, Pierce purchased the boutique Hacienda Tamarindo for $3.2 million

In court, Pierce denied embezzling borrowed money or kidnapping Lipsey. But one of his advisers, Cassandra Wesselman, who recently moved to Puerto Rico, said he was not in the best of frame of mind when the W dispute began. Ms. Wesselman said she was the one who suggested bringing armed guards to the Tamarindo estate to protect Mr. Pierce from a couple who were staying in another room. The couple, she explained, belonged to a cult.

A month after the contentious meeting, Mr. Pierce sued Mr. Lipsey in an attempt to regain control of the W, accusing him of fraud and theft.

A judge denied Mr. Pierce’s request for an injunction that would have restored his ownership of the W while the case proceeded. Mr. Pierce and Mr. Lipsey have stayed in touch to discuss a possible settlement. But their friendship is over.

Mr. Lipsey did not speak publicly about the dispute until July, when he discussed it for two hours with a New York Times reporter via WhatsApp. With a cigarette dangling from his lips, Lipsey toured his Tennessee house, where he lives part of the year, in a virtual world, turning on his camera to show off his unusual art collection. On one wall hung a canvas with two splotches of red paint. It was the work of his son’s girlfriend, Lipsey explained.

Lipsey called Pierce “not a good person” and a bad businessman. “Everything he did moving to Puerto Rico, everything he promised, he didn’t do.”

He said the same thing to Pierce’s face. In one heated exchange, Lipsey said, he called Pierce “a real letdown for your mom.”

Carefree confidence

On a June morning, Pierce strolled through Old San Juan, winding his way along narrow sidewalks, pointing out his favorite spots along the way. Despite the heat, he wore all black, as he does every day, so he doesn’t have to worry about time-consuming outfit choices. “Mark Zuckerberg and Steve Jobs, these people wear the same thing every day,” Mr. Pierce explained.

He stopped outside Carly’s, an upscale jazz bar owned by Mr. Muñoz, a Puerto Rican pianist. Mr. Muñoz, Mr. Pierce said, had written a song just for him and Ms. Rose. He laughed at the thought. “It’s called ‘Superhero,’ ” Mr. Pierce said. (The song’s actual title is “Super Power.”)

Even through all his setbacks, Mr. Pierce remained confident that he could be a force for progress in Puerto Rico. But his confidence masked a persistent turmoil in his business affairs. The conflict between Mr. Pierce and Mr. Lipsey has caused intense speculation among his friends. Robert Anderson, a cryptocurrency enthusiast living in Puerto Rico who is friendly with Mr. Lipsey, said they acted “like kids.”

Mr. Pierce seemed to be running out of money, his friends and colleagues said. Lipsey’s lawyers argued in court that Pierce lacked the “money or resources” to develop the W hotel. This summer, a representative of the Puerto Rican basketball team, the Mets de Guaynabo, emailed Pierce to complain that he had failed to pay more than $25,000 in sponsorship fees owed to the team, according to documents reviewed by The New York Times.

Pierce, dressed all in black and wearing a black hat, sat on a stool in a white room

Pierce also expressed concerns about his personal safety in Puerto Rico. According to two people close to Pierce, he privately discussed plans to build an ammunition depot on Vieques. He said the arsenal would offer a measure of protection if locals rose up against him.

In a 17-page statement, Pierce denied that he had proposed the arsenal and said he was still wealthy, refuting claims that he was financially strapped. He said the Mets de Guaynabo complaint was a "misunderstanding" that stemmed from a misunderstanding of the terms of the sponsorship, and that he had now agreed to pay for it.

However, just as The New York Times was finishing its story, a publicist for Pierce mistakenly sent a message to a group chat that included The New York Times reporter and Ms. Wesselman, Pierce's adviser: "We haven't been paid yet." "I guess you don't have the money to pay us, otherwise you would have paid us a long time ago." Wesselman laughed off the message, calling the publicist "a total tease to us." After learning that a reporter had seen the text, the publicist said Pierce "always paid on time."

Pierce defended his work in Puerto Rico. He said he had made charitable donations, including a six-figure gift to support Covid relief efforts in the region. “Transformative projects take time,” Pierce said, “and while some initiatives have faced challenges, others have been significant successes.”

Among his many accomplishments, Pierce mentioned a hospital in the city of Humacao that he is buying in late 2023 — an investment he pitched to Lipsey. He said he worked with Josué Vázquez Delgado, a Puerto Rican radiologist, to pull the hospital out of bankruptcy and keep more than 90% of its staff.

But in an interview, a doctor at the hospital, who asked not to be named, said Pierce owed him tens of thousands of dollars in wages. The hospital had been late paying vendors, the doctor said, and some surgeons were running out of equipment. (Pierce said his team had addressed those issues and “significantly improved the hospital’s operations.”)

Last month, Pierce tried to put a visual on his success in Puerto Rico as he walked through San Juan. He led two New York Times reporters to a building he bought in 2019, which was simply furnished with a prominent TV screen. It housed, he claimed, the world’s first NFT art gallery. “You might not expect Puerto Rico to be the first place in the world to pioneer in technology,” he said. The images on display included a fluorescent dinosaur perched in a forest of giant cacti, which Pierce said his 5-year-old daughter designed using an artificial intelligence tool.

What he didn’t mention was that a luxury real estate company had posted a notice to sell the building and held an open house. Confronted with that fact, Pierce admitted that he had recently tried to sell the gallery. It had never fully opened, he explained, and that he had been struggling to make money.