The New York Times: Tether Co-Founder and His Shattered Encryption Dream

Authors: David Yaffe-Bellany, Laura N. Pérez Sánchez

Compiled by: Luffy, Foresight News

On sunny days in 2022, crypto assets entrepreneur Brock Pierce enjoyed taking friends by boat to Buck’s Island, which is about 75 miles from his home in Puerto Rico. Pierce wanted to show off to his friends a property he calls “one of his favorite in life”: a once-glamorous seaside resort that he purchased for over $15 million.

At its peak, this resort was a W Hotel, featuring a 6,000 square foot spa, a restaurant run by a Michelin-starred chef, and unobstructed ocean views, making it a pillar of the tourism industry on Vieques Island. However, in 2017, the hotel was hit by Hurricane Maria and was forced to close. Pierce reopened it, using the wealth he earned from Crypto Assets to revitalize the hotel and the local economy.

Brock Pierce moved to Puerto Rico in 2017.

Pierce was once a child star, and he is skilled in acting. During his journey to Bex Island, he would dock his Italian-made yacht at a local port, then lead guests along a beach where wild horses roam, heading towards the closed gates of the W Hotel.

“This is a significant bet for me,” Pierce said, “and it’s where my heart lies.”

But Pierce’s luxurious display is just an illusion. Like many of his other grand projects launched in Puerto Rico, this hotel is now mired in debt and legal disputes. Last fall, Pierce lost the W Hotel in a dispute with another investor. Now, the hotel remains closed, its windows shattered, and the floors covered in mold and horse manure. A $17,000 chaise longue designed by a famous Spanish architect sits dusty in the empty atrium.

Pierce’s dream of reopening the W Hotel on Bex Island has not been realized.

Chairs of various colors are stacked in the cool lobby of W Hotel.

In 2017, when Pierce moved to Puerto Rico, he had invested in a series of experimental crypto assets enterprises. With the help of think tanks, he made a remarkable commitment to revitalize the local economy. Pierce is known for his involvement in creating one of the world’s most popular digital currencies, USDT. He led a wave of industry immigrants to Puerto Rico, many of whom began purchasing land and promoting what they called the Puertopia project, aiming to transform this U.S. territory into a hub for cryptocurrency investors and tech startups.

Puerto Rico is a paradise for Crypto Assets. In 2012, the local government legislated to transform this archipelago into a tax haven for wealthy immigrants. Under the law now known as Act 60, those who relocate there can apply for a benefit that exempts them from paying capital gains tax. This measure aims to increase investment in the Puerto Rican economy, which has been struggling to recover from a twenty-year financial crisis.

However, according to hundreds of pages of court records and interviews with more than twenty people familiar with his efforts in Puerto Rico, Pierce’s vision of using Crypto Assets to drive economic recovery has yet to be realized. His business partners betrayed him, and some colleagues say he is nearly out of money. There is no clear evidence that Pierce’s arrival has helped the local economy. On the contrary, Bill 60 has become a symbol of a new era of exploitation.

Many locals believe that Pierce is the latest evidence of global elites viewing Puerto Rico as a private playground for centuries. After the American invasion at the end of the 19th century, American businessmen occupied hundreds of acres of local land, built sugarcane plantations, and then sent the profits back to the United States. Decades later, the U.S. Navy conducted military exercises on Vieques Island, including bomb testing that destroyed ecosystems and caused long-term health issues.

With the arrival of Pierce and other wealthy immigrants, residents of Puerto Rico have seen new fractures, with housing prices skyrocketing, especially in coastal towns, forcing local families to become displaced. Outside the W Hotel, a group of local artists painted a mural depicting Pierce in a deep red corset, holding a Bitcoin logo symbol, with the title reading: “Colonialism.”

Chameleon’s Instinct

On a recent Friday night, 43-year-old Pierce sat down to drink coffee at the Hotel El Convento in Old San Juan. The Hotel El Convento is a hotel converted from a Masonic lodge and serves as an informal base for Puerto Rican secret immigrants. He wore a wide-brimmed orange hat and an oversized white T-shirt with the words “Scars Never Break” printed on it. He gestured dramatically towards the window, which overlooked a bustling cobblestone avenue called Calle Cristo, one of the oldest streets in the city.

“This is the first batch of colonial infrastructure built by the Spanish conquistadors,” he explained, “this is the first road in the entire Western Hemisphere constructed with bricks.”

Now, this landscape belongs to Pierce: he bought this monastery in 2018 for $4.8 million.

When Pierce arrived in Puerto Rico, he brought with him a unique resume: he is the son of a home builder and a church official from Minnesota, was once a child star who had a brief appearance in the movie “DuckTales the Movie: Treasure of the Lost Lamp,” and co-starred in a film called “The First Kid” with comedian Sinbad. As an adult, he became an early investor in several prominent Crypto Assets projects, ultimately amassing a fortune of 700 million to 1 billion dollars.

Aerial view of San Juan, Puerto Rico. Pierce leads a group of investors to Puerto Rico, dedicated to transforming this U.S. territory into a hub for Crypto Assets investors and tech startups.

After the passage of Bill No. 60, tourists from the United States became a vibrant sight in restaurants and nightclubs throughout Puerto Rico. Pierce is a regular at the Fire Festival and one of the most recognizable tourists. He is often seen walking the streets of Old San Juan: he is short, energetic, and wears a T-shirt and leather vest, with a necklace around his neck.

Pierce bought two houses in a gated community in Dorado, which is a wealthy enclave, where he lives with his partner, entrepreneur Crystal Rose, and his mother Lynette Calabro. According to two attendees at a party, Pierce frequently socializes with local politicians and hosts lavish parties, where guests sometimes use drugs like cocaine and ketamine.

For a time, Pierce successfully attracted some locals with his openness and curiosity. He was like a skilled actor, possessing chameleon-like instincts to adjust his behavior according to the audience’s preferences. “If the other person is serious, he will act very seriously,” said local maritime expert Hugo de la Uz, who helps manage Pierce’s yacht, “but if it’s a crazy person, he will act very crazy.”

Pierce shows interest in almost all world religions, embodying a sort of hippie spirit. Once, while traveling with some companions who were also immigrants under the 60th Act, he nestled in the embrace of a kapok tree, a type of tree worshipped by some Puerto Ricans. “I feel a certain connection to him because he has spiritual 深度,” said Puerto Rican pianist Carli Muñoz, who had interacted with Pierce in San Juan.

The Silk Cotton Tree Park is a tourist attraction and reserve on Buques Island, featuring one of the oldest silk cotton trees in Puerto Rico at its center.

But this goodwill is just that. “I have made up my mind not to do business with him anymore,” Muñoz said.

Real estate transaction records show that since moving to Puerto Rico, Muñoz has purchased at least 14 properties. Some of these properties, like the monastery, are already operational businesses. However, Muñoz also announced plans to transform most of his portfolio into new projects, including an art gallery and a community center. These projects have not materialized. A hospital he purchased in Humacao at the end of last year is struggling, and the gallery has recently been put up for sale. In 2019, Pierce took over a three-story building in Old San Juan that used to be a children’s museum. For a time, he told local media that he used it as “a place to meet with fren and discuss ideas.” Today, the building is empty, and the paint on the walls has peeled.

The abandoned space inside the former Children’s Museum of Old San Juan, Pierce said he bought it “to serve as a place for gatherings and discussions of great ideas.”

“This is so sad,” said Puerto Rican businessman Robert Cimino, who owned the building for 19 years and later sold it to Pierce for $2 million. “I wanted to sell it to someone who could maintain it.”

Pierce repeatedly found local Puerto Ricans to help him with development projects, but later many of these collaborators claimed they were exploited and did not receive the compensation they deserved. Meanwhile, he was also embroiled in a court dispute with another 60 Bill immigrant, Joseph Lipsey III, who seized control of the W Hotel last year, claiming that Pierce defaulted on a loan.

Pierce denies having deceived anyone. However, there are at least three lawsuits against him currently under review by the local court. While drinking coffee at the monastery, he admitted that his poor judgment and naivety disrupted his plans in Puerto Rico. “I trusted others,” he said, “and that is one of the reasons I got into trouble.”

Booing in Beauty Pageants

Pierce likes to position himself as a driver of geopolitics. In 2020, he ran for U.S. president as an independent candidate, receiving nearly 50,000 votes. He boasts about having “dates” in El Salvador and Panama, and one evening in June, his assistant announced that Pierce would participate in a Zoom call with the president of Palau, a small island nation in the Western Pacific.

“I have spent a lot of time with almost all the religious leaders in the world,” Pierce said at the monastery, “as well as leaders of many nation-states around the world.”

But Pierce’s main focus is Puerto Rico, where he has become the leading spokesperson for Act 60. After moving, he told Rolling Stone magazine that he would “rebuild the economy with the money we saved from the IRS in a Robin Hood way.” This promotion has helped Puerto Rico become a popular destination for Crypto Assets enthusiasts: according to government data, approximately 2,600 people currently enjoy tax exemptions under Act 60.

Pierce assisted in hosting the 2021 Miss World pageant in San Juan. When he was introduced as one of the judges, the audience booed loudly.

Soon, Pierce’s business prospects began to deteriorate, frequently getting embroiled in legal disputes with local partners. In 2021, he helped host the Miss World beauty pageant at a concert venue in San Juan. At that time, Pierce was already considered a speculative politician in Puerto Rico: when he was introduced as one of the judges, the crowd booed him. Later, he sued the executives of the Puerto Rico beauty pageant and former Miss World Stephanie del Valle, claiming she owed him $1.2 million. Ms. Del Valle countered the lawsuit against her, accusing Pierce of defamation and seeking $31 million in damages. (The dispute is currently being heard in local court. Pierce stated that he “is committed to a fair resolution of this matter.”)

Del Valle is one of the first Puerto Ricans to clash with Pierce, accusing him of deceiving and manipulating them. During the beauty pageant, Pierce purchased 80% of the W Hotel. This deal is one of his largest investments in Puerto Rico and paved the way for him to seek over $30 million in tax credits from the local government.

Gracia assisted with this acquisition. Court records show that he met with local officials in Bex and found an architect to plan the hotel’s reopening.

But this partnership was short-lived: Gracia claimed in a lawsuit in 2022 that after the deal was completed, Pierce excluded him from the project and refused to pay him a commission of $790,000.

Another project on Bexley Island encountered a similar situation. In 2021, Pierce asked a local naval engineer to help him set up a hotel and museum on a ship docked off the island’s northern coast. The engineer requested anonymity to avoid business repercussions; he arranged a meeting with local officials 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 engineering work. (Pierce claimed he did not have this debt.)

Last year, there were signs that Pierce was in a tight spot. He had asked De la Uz to repair the ‘Aurora,’ the yacht he used to transport fren back and forth to the West Coast. De la Uz recalled that most of the guests were ‘Americans he was trying to persuade to give him money,’ and ‘he portrayed himself as the savior of Puerto Rico.’

In a lawsuit in 2023, De la Uz claimed that he and Pierce jointly owned the yacht, and that Pierce was in arrears on maintenance fees. De la Uz stated that while guests were partying on the deck, the yacht was taking on water and slowly sinking into the Caribbean Sea.

Pierce declined to comment on the allegations, stating, “We are actively working through the courts to resolve these issues and reach a fair resolution.”

“I did not conduct any due diligence”

When Pierce goes out on the “Aurora”, he sometimes brings a newcomer into the 60th Amendment community—62-year-old logistics tycoon Lipsey. For a while, Pierce only knew Lipsey by the nickname Jopepi. Pierce thinks he is not good at socializing, but very likable. “I believe this is a very kind person,” Pierce said.

Pierce only knew the general situation of Lipsey’s arrival in Puerto Rico. In 2017, Lipsey made a fortune from the disaster relief work following Hurricane Maria through a contract signed with the U.S. government. However, two years later, a legal scandal revealed his high-society lifestyle in Aspen, Colorado. A wild New Year’s party hosted by the Lipsey family triggered a police investigation, and he and his wife ultimately admitted to providing alcoholic beverages to minors, resulting in a one-year probation sentence.

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 and Pierce’s mother became friends. Pierce recalls that after Mrs. Calabro passed away from heart disease in 2022, Lipsey said he had promised her: he would always be there for her family.

Pierce and Lipsey collaborated on various business projects, but the most significant deal was related to the W Hotel. In October last year, Lipsey agreed to lend Pierce $10 million, of which $4 million was for purchasing the remaining 20% stake in the hotel and $6 million for investing in a bankrupt chain of hospitals. These terms were very risky for Pierce: he had to complete the hotel transaction within two weeks. As collateral, he had to put up all his shares in the W Hotel. Pierce said he felt uncomfortable with these demands, but still agreed. “I didn’t do any due diligence,” he recalled.

One month after the signing of the protocol, Lipsey accused Pierce of breaching the protocol and seizing control of the hotel. Lipsey later claimed in legal documents that Pierce did not use the borrowed funds as planned, but instead spent the money on a private jet and hosted a 72-hour birthday party spanning San Juan, Miami, and Los Angeles.

As the dispute escalated, Pierce arranged to meet Lipsey at the Hacienda Tamarindo hotel. This small hotel located in Vieques was purchased by Pierce for $3.2 million. Lipsey later told the Puerto Rican police that the meeting amounted to kidnapping. Pierce had locked his phone at the time and then locked the door, with an armed guard patrolling nearby.

In 2021, Pierce completed the acquisition of the boutique hotel Hacienda Tamarindo for $3.2 million.

In court, Pierce denied misappropriating borrowed money or kidnapping Lipsey. However, one of his advisors, Cassandra Wesselman, who recently moved to Puerto Rico, said that his mindset was not good when the W Hotel dispute started. Ms. Wesselman stated that it was her suggestion to bring armed guards to the Tamarindo estate to protect Pierce from a couple staying in another room. She explained that the couple belonged to a cult.

A month after the controversial meeting, Pierce sued Lipsey, attempting to regain control of the W Hotel, accusing him of fraud and theft.

The judge denied Pierce’s request for an injunction, which was supposed to restore his ownership of the W Hotel during the case proceedings. Pierce and Lipsey have been in contact, discussing possible settlement options. However, their friendship has come to an end.

Lipsey only began to publicly discuss the dispute in July, when he spoke for two hours with a New York Times reporter via WhatsApp. With a cigarette in his mouth, Lipsey toured his house in Tennessee, where he spends part of the year, and he turned on the camera to showcase his unusual art collection. On one wall hung a canvas with two red paint splotches. Lipsey explained that it was the work of his son’s girlfriend.

Lipsey called Pierce “not a good person” and a terrible businessman. “Everything he promised when he moved to Puerto Rico, he has not delivered on.”

He said the same thing in front of Pierce. Lipsey said that during an intense conversation, he told Pierce, “You really disappointed your mom.”

Carefree Confidence

On a June morning, Pierce strolled through the old town of San Juan, winding along the narrow sidewalks, pointing out his favorite spots along the way. Despite the hot weather, he wore all black, the same every day, so he wouldn’t have to worry about time-consuming outfit choices. “Mark Zuckerberg and Steve Jobs, those guys wear the same clothes every day,” Pierce explained.

He stopped outside the Carly Bar, a high-end jazz bar run by Puerto Rican pianist Muñoz. Pierce said that Muñoz had composed a song specifically for him and Ms. Rose. At the thought of this, he couldn’t help but laugh. “The song is called ‘Superhero,’” Pierce said. (The actual title of the song is ‘Superpowers.’).

Even after experiencing all the setbacks, Pierce remains confident, believing that he can be a driving force for progress in Puerto Rico. However, his self-assurance masks the ongoing chaos in his business dealings. The conflict between Pierce and Lipsey has sparked intense speculation among his frens. Robert Anderson, a crypto assets enthusiast living in Puerto Rico, who is friendly with both Lipsey and Pierce, said their behavior “is like that of children.”

Pierce’s fren and colleagues said he seems to be running out of money. Lipsey’s lawyer argued in court that Pierce lacks the “funds or resources” to develop the W Hotel. According to documents reviewed by The New York Times, a representative from the Puerto Rican basketball team Mets de Guaynabo emailed Pierce this summer, complaining that he failed to pay the more than $25,000 sponsorship fee owed to the team.

Pierce is dressed in all black, wearing a black hat, sitting 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 armory on Vieques Island. He said that if locals rose up against him, this armory would provide a certain degree of protection.

In a 17-page statement, Pierce denied that he proposed the establishment of a weapons cache and stated that he is still very wealthy, refuting claims about his financial difficulties. He said the complaint from Mets de Guaynabo was a “misunderstanding” arising from a misinterpretation of the sponsorship terms, and he has now agreed to pay the fees.

However, just as The New York Times was completing its report, a PR person for Pierce mistakenly sent a message to a group chat that included New York Times reporters and Pierce advisor Ms. Wesselman: “We haven’t been paid yet.” “I guess you don’t have the money to pay us, otherwise you would have paid us long ago.” Wesselman brushed off the message with a laugh, saying the PR person was “completely messing with us.” After learning that a reporter had seen the text, the PR person stated that Pierce “always pays on time.”

Pierce defended his work in Puerto Rico. He stated that he had made charitable contributions, including a six-figure donation to support Covid relief efforts in the region. “Transformative projects take time,” Pierce said, “while some initiatives face challenges, others have achieved significant success.”

Among his many achievements, Pierce mentioned the purchase of a hospital in Humacao City at the end of 2023—an investment he pitched to Lipsey. He stated that he collaborated with Puerto Rican radiologist Josué Vázquez Delgado to rescue the hospital from bankruptcy, retaining over 90% of the staff.

But in an interview, a doctor at the hospital who wished to remain anonymous stated that Pierce owes him tens of thousands of dollars in salary. The doctor indicated that the hospital has been delaying payments to suppliers, and some surgeons do not have enough equipment. (Pierce stated that his team has addressed these issues and “greatly improved the hospital’s operations.”)

Last month, Pierce was walking in San Juan, trying to visually showcase his success in Puerto Rico. He brought two New York Times reporters to a building he purchased in 2019, which had simple furnishings and a notably large television screen. He claimed that this building houses the world’s first NFT art gallery. “You might not think that Puerto Rico would be the first place in the world to lead in technology,” he said. The displayed images included a fluorescent dinosaur resting in a giant cactus forest, which Pierce said was designed by his 5-year-old daughter using AI tools.

But what he didn’t mention is that a luxury real estate company has posted a notice for the sale of the building and held an open house. In light of this fact, Pierce admitted that he had recently tried to sell the gallery. He explained that it had never been fully open and that he had been struggling to make a profit.