New York Times: Tether's Co-founder and His Shattered Encryption Dream

Compiled by Luffy, Foresight News.

On a sunny day in 2022, Cryptocurrency entrepreneur Brock Pierce likes to take his friends on a boat trip to Vieques Island, about 75 miles from his home in Puerto Rico. Pierce wants to show off to his friends a place he called his “favorite of all time”: a once-glamorous beach resort that he bought for over $15 million.

During its heyday, this resort was a W hotel with a 6,000 square foot spa, a restaurant run by Michelin-starred chefs, and stunning ocean views, making it a pillar of tourism on St. Bux Island. However, in 2017, the hotel was hit by Hurricane Maria and was forced to close. Pierce reopened it, using his wealth earned from Cryptocurrency to revitalize the hotel and the local economy.

Brock Pierce moved to Puerto Rico in 2017.

Pierce was once a child star who excelled in acting. On the way to the island of Bex, he will moor an Italian-made yacht at a local port and lead guests along a beach where wild horses roam, heading to the closed gates of Hotel W.

“This is a major gamble for me,” Pierce said, “and also where my heart lies.”

But Pierce’s luxury performance is just an illusion. Like many other grand projects he 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, with broken windows, mold and horse manure on the floor. A $17,000 lounge chair designed by a famous Spanish architect is covered in dust in the empty courtyard.

Pierce’s dream of reopening the W Hotel in St. Barts did not come true.

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

In 2017, when Pierce moved to Puerto Rico, he invested in a series of experimental Crypto Assets companies. With the help of the think tank, he made an amazing commitment to revitalize the local economy. Pierce is known for his participation in creating one of the world’s most popular Digital Money, USDT. He led a wave of industry immigrants to Puerto Rico, many of whom began buying land and promoting their project called Puertopia, hoping to turn this American territory into a center for Crypto Assets investors and technology startups.

Pierce said in 2019, “If you are American and working in the crypto industry, you should at least visit Puerto Rico.”

Puerto Rico is a paradise for Crypto Assets. In 2012, the local government passed legislation turning the archipelago into a tax haven for wealthy immigrants. Under what is now known as Law 60, those who move there can apply for a benefit that exempts them from paying capital gains tax. The measure aims to increase investment in the Puerto Rican economy, which has been striving to recover from a 20-year financial crisis.

But based on hundreds of pages of court records and interviews with more than twenty people familiar with his efforts in Puerto Rico, Pierce’s vision of cryptocurrency driving economic recovery has not materialized. His business partners betrayed him, and some colleagues say he’s running out of money. There is no clear evidence that Pierce’s arrival has helped the local economy. Instead, Bill 60 has become a symbol of a new era of exploitation.

Many locals see Pierce as the latest evidence that Puerto Rico has been treated as a private playground by global elites for centuries. After the U.S. invasion in the late 19th century, American businessmen occupied hundreds of acres of local land, built sugarcane plantations, and then transported the profits back to the U.S. Decades later, the U.S. Navy conducted military exercises on Vieques Island, including bomb tests that destroyed the ecosystem and caused long-term health problems.

With the arrival of Pierce and other wealthy immigrants, Puerto Rican residents have seen new cracks, skyrocketing house prices, especially in coastal towns, forcing local families to be displaced. On a wall outside the W Hotel, a group of local artists painted a mural depicting Pierce wearing a dark red corseted coat, holding a symbol of the BTC logo in his hand, with the title saying, ‘Colonialism’.

Chameleon Instinct

On a recent Friday night, 43-year-old Pierce sat down for coffee at the Monastery Hotel in Old San Juan. The hotel, formerly a Masonic lodge, served as an informal base for secret immigrants to Puerto Rico. He wore a wide-brimmed orange hat and an oversized white T-shirt with the words ‘Scars Never Break’ printed on it. With an exaggerated gesture, he pointed outside to a bustling cobblestone street named Cristo Street, one of the oldest streets in the city.

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

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

When Pierce came to Puerto Rico, he brought with him a unique resume: he was the son of a house builder and a church official in Minnesota, a former child star who had a brief role in the movie ‘Flying Giant Duck’, and co-starred with comedian Simbada in a film called ‘The First Child’. As an adult, he became an early investor in several well-known cryptocurrency projects, ultimately earning a fortune of 7-10 billion dollars.

A bird’s-eye view of San Juan, Puerto Rico. Pierce led a group of investors to Puerto Rico, where they are committed to turning this US territory into a center for cryptocurrency investors and tech startups.

After the passage of Bill No. 60, tourists from the United States have become a beautiful scenery in restaurants and nightclubs throughout Puerto Rico. Pierce is a frequent visitor to the Fire Festival and one of the most recognizable tourists. People often see him walking on the streets of Old San Juan: he is short, energetic, wearing a T-shirt and a leather vest, with a necklace around his neck.

Pierce bought two houses in a gated community in Doral, where the rich gather, and he and his partner, entrepreneur Crystal Rose, and mother Lynette Calabro live there. According to two party attendees, Pierce has frequent dealings with local politicians, hosts luxurious gatherings, and guests sometimes indulge in drugs such as cocaine and ketamine.

For a while, Pierce successfully attracted some locals with his openness and curiosity. Like a skilled actor, he had a chameleon-like instinct to adjust his behavior based on the audience’s preferences. ‘If the other person is serious, he will behave seriously,’ said Hugo de la Uz, a local maritime expert who helps manage Pierce’s yacht, ‘but if they are crazy, he will behave crazy.’

Pierce showed interest in almost all world religions and had a hippie spirit. Once, while traveling with some fellow immigrants from the 60th Act, he leaned against the embrace of a kapok tree, which is a tree worshiped by some Puerto Ricans. ‘I feel a certain connection with him because he has a spiritual Depth,’ said Carli Muñoz, a Puerto Rican pianist who had a relationship with Pierce in San Juan.

The Kapok Tree Park is a tourist attraction and protected area on Vieques Island. The center of the park is home to the oldest kapok tree in Puerto Rico.

But that’s as far as the good feeling goes. “I have made up my mind not to do business with him anymore,” Munoz said.

Real estate transaction records show that Muñoz has purchased at least 14 properties since moving to Puerto Rico. Some of these properties, such as monasteries, are already functioning businesses. But Muñoz also announced plans to convert most of his portfolio into new projects, including an art gallery and a community center. None of these projects came to fruition. A hospital he bought late last year in the city of Humacau is in trouble, and the gallery has recently been put up for sale. In 2019, Pierce took over a three-story building in Old San Juan, which was once a children’s museum. At one point, he told local media that he was using it as “a place to meet with Fren and discuss ideas”. Today, the building is empty, and the paint on the walls is peeling.

The abandoned space in the former Children’s Museum of Old San Juan, Pierce said he bought it as a place for ‘gathering and discussing great ideas’.

“This is 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.”

Pierce repeatedly turned to local Puerto Ricans for help with his development projects, but many of these collaborators later said they were exploited and not properly compensated. At the same time, he was also embroiled in a legal dispute with another 60 Act immigrant, Joseph Lipsey III, who seized control of the W Hotel last year, claiming Pierce owed him a loan.

Pierce denies deceiving anyone. However, there are at least three lawsuits against him currently being heard in local courts. While drinking coffee at the monastery, he admitted that his erroneous judgment and immature behavior disrupted his plans in Puerto Rico. ‘I trusted others,’ he said, ‘and that was one of the reasons that got me into trouble.’

Boos in beauty pageants

Pierce likes to portray himself as a geopolitical mover and shaker. In 2020, he ran for the US presidency as an independent candidate and received nearly 50,000 votes. He boasted about having ‘dates’ in El Salvador and Panama, and one evening in June, his assistant announced that Pierce would be participating 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 religious leaders in the world,” Pierce said in the monastery, “as well as leaders of many nationalities.”

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

As soon as Pierce arrived, the locals showed strong opposition. Someone wrote in red paint on the wall of the children’s museum: ‘Foreigners go home.’ But behind the scenes, Buicks Island is expanding his real estate empire. He hired the local renowned hotel developer Gonzalo Gracia to help him find buildings in Puerto Rico that can be restored and transformed into tourist attractions.

Pierce assisted in hosting the 2021 Miss World pageant in San Juan. When he was introduced as one of the judges, there was a chorus of boos from the audience.

Soon, Pierce’s business dealings began to deteriorate, and he frequently became embroiled in legal disputes with local partners. In 2021, he helped organize the Miss World competition at a music 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 at him. Later, he sued the executives of the Miss Puerto Rico competition, including former Miss World Stephanie del Valle, claiming that she owed him $1.2 million. Ms. Del Valle countered the lawsuit, accusing Pierce of defamation and demanding $31 million in compensation. (The dispute is 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 have a conflict with Pierce, accusing him of deception and manipulation. During the beauty pageant, Pierce purchased 80% of the shares of the W Hotel. This transaction is one of his largest investments in Puerto Rico and paved the way for him to seek over 30 million dollars in tax breaks from the local government.

Gracia assisted in this acquisition. Court records show that he represented Pierce in meeting with local officials in Buicks, and found an architect to plan the reopening of the hotel.

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

Another project on Bocas del Toro faced 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 northern coast of the island. The engineer, who requested anonymity to avoid commercial repercussions, arranged meetings with local officials and discussed the project with the mayor, but Pierce suddenly abandoned the plan. In an interview, he claimed that Pierce still owed him $17,000 for the engineering work. (Pierce stated that he did not owe this debt.)

Last year, there were signs that Pierce was in financial trouble. He had asked De la Uz to repair the “Aurora”, his yacht used to ferry friends back and forth along the West Coast. De la Uz recalls that most of the guests were “Americans he tried to persuade for money,” portraying himself as Puerto Rico’s savior.

In a lawsuit in 2023, De la Uz claimed that he and Pierce jointly owned the yacht, and Pierce owed maintenance costs. De la Uz said 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 these allegations, saying, “We are actively resolving these issues through the court to reach a fair resolution.”

“I have not done any due diligence”

When Pierce travels on the Aurora, he sometimes brings a newcomer to join the 60th district community, 62-year-old logistics tycoon Lipsey. For a while, Pierce only knew Lipsey’s nickname Jopepi. Pierce thought he was not good at socializing, but he was very likable. “I believe he 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 lot of money from the relief work after Hurricane Maria through a contract with the US government. However, two years later, a legal scandal exposed his high society life in Aspen, Colorado. A wild New Year’s party hosted by the Lipsey family sparked a police investigation, and he and his wife eventually admitted to providing alcohol to minors and were sentenced to one year of probation.

The Lipsey family 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 fren. Pierce recalls that after Ms. Calabro passed away in 2022 due to a heart attack, Lipsey said he had promised her: he would always be there for her family.

Pierce and Lipsey have collaborated on various business projects, but the most significant transaction involved the W Hotel. Last October, Lipsey agreed to lend Pierce 10 million dollars, with 4 million dollars for purchasing the remaining 20% stake in the hotel and 6 million dollars for investing in a bankrupt chain of hospitals. These terms posed significant risks 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 requirements but agreed nonetheless. “I didn’t do any due diligence,” he recalled.

One month after the protocol was signed, Lipsey accused Pierce of violating the protocol and taking control of the hotel. Lipsey later claimed in legal documents that Pierce did not use the borrowed funds as planned, but spent the money on a private plane and held 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. The small hotel, located in Buques, was bought by Pierce for $3.2 million. Lipsey later told Puerto Rican police that the meeting was akin to a kidnapping. Pierce took his phone and locked the door, with an armed guard patrolling nearby.

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

In court, Pierce denies embezzling borrowed money or kidnapping Lipsey. But one of his advisors, Cassandra Wesselman, recently moved to Puerto Rico and said that his mindset was not good when the W Hotel dispute began. Ms. Wesselman said it was her suggestion to bring armed guards to the Tamarindo estate to protect Pierce from harm by a couple living in another room. She explained that the couple belonged to a cult.

A month after the controversial meeting ended, Pierce sued Lipsey in an attempt to regain control of the W Hotel and accused him of fraud and theft.

The judge rejected Pierce’s injunction request, which should have restored his ownership of the W Hotel during the trial. Pierce and Lipsey have been in contact, discussing possible settlement options. But their friendship has come to an end.

Lipsey did not publicly discuss the dispute until July, when he spent two hours discussing it with a New York Times reporter via WhatsApp. Lipsey was smoking a cigarette and virtually touring his Tennessee home, where he spends part of the year. He opened his camera to show off his unusual art collection, including a canvas on the wall with two red paint spots. Lipsey explained that it was a piece by his son’s girlfriend.

Lipsey called Pierce “not a good person”, a terrible businessman. “He didn’t do everything he promised when he moved to Puerto Rico.”

He said the same thing in front of Pierce. Lipsey said that in a heated conversation, he called Pierce “really disappointing your mother”.

Carefree confidence

One morning in June, Pierce strolled through the old town of San Juan, winding along narrow sidewalks, pointing out his favorite spots along the way. Despite the hot weather, he was dressed in black, as he did every day, so he didn’t have to worry about time-consuming outfit choices anymore. ‘Mark Zuckerberg and Steve Jobs, these people wear the same clothes every day,’ Pierce explained.

He stopped outside the Carlyle Bar, a high-end jazz bar run by Puerto Rican pianist Muñoz. Pierce said Muñoz had created a song specifically for him and Ms. Rose. Thinking of this, he couldn’t help but laugh. ‘This song is called ‘Superhero’,’ Pierce said. (The actual name of the song is ‘Superpower’.)

Despite all the setbacks, Pierce remains confident in himself as a force for progress in Puerto Rico. However, his confidence masks the ongoing chaos in his business affairs. The conflict between Pierce and Lipsey has sparked intense speculation among his friends. Robert Anderson, a Cryptocurrency enthusiast living in Puerto Rico, is friendly with both Pierce and Lipsey, and he says their behavior is “like children”.

Pierce’s fren and colleagues said he seemed to be running out of money. Lipsey’s lawyer argued in court that Pierce lacked the ‘funds or resources’ to develop the W hotel. According to documents reviewed by The New York Times, a representative of the Puerto Rican basketball team Mets de Guaynabo sent an email to Pierce this summer, complaining that he had not paid the team’s sponsorship fee of over 25,000 dollars.

Pierce is dressed in black clothes, wearing a black hat, sitting on a chair 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 in Vieques. He said the arsenal would provide a certain level of protection if the locals turned against him.

In a 17-page statement, Pierce denies proposing the establishment of an arsenal and claims he is still wealthy, refuting claims of financial difficulties. He says the complaint from Mets de Guaynabo is a “misunderstanding” stemming from a misinterpretation of sponsorship terms, and he has now agreed to pay the fees.

However, just as The New York Times was finishing its report, a public relations person for Pierce mistakenly sent a message to a group chat including New York Times reporters and Pierce consultant Ms. Wesselman: ‘We haven’t received our pay yet.’ ‘I guess you don’t have the money to pay us, otherwise you would have done so already.’ Wesselman shrugged off the message, saying that the public relations person was ‘just teasing us.’ After learning that a reporter had seen the message, the public relations person stated, ‘Pierce always pays on time.’

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

Among his many accomplishments, Pierce mentioned the hospital in Umacao City that he purchased at the end of 2023 - an investment he pitched to Lipsey. He said that he worked with radiologist Josué Vázquez Delgado from Puerto Rico to save the hospital from bankruptcy and retain over 90% of the employees.

However, in an interview, a doctor at the hospital, who did not want to reveal his name, said that Pierce owed him tens of thousands of dollars in wages. The doctor said that the hospital had been withholding payments to suppliers, and some surgical equipment was also insufficient. (Pierce said that his team had already solved these problems and “greatly improved the hospital’s operation”).

Last month, Pierce tried to showcase his success in Puerto Rico by taking a walk in San Juan. He led two New York Times reporters to a building he purchased in 2019, which was simply furnished with a prominent TV screen. He claimed that this building housed the world’s first Non-fungible Token art gallery. ‘You might not think of Puerto Rico as a pioneering place in the tech field,’ he said. The exhibited images include a fluorescent dinosaur living in a vast cactus forest, which Pierce said was designed by his 5-year-old daughter using artificial intelligence tools.

However, what he didn’t mention is that a luxury real estate company has already posted a notice to sell the building and held an open house. Faced with this fact, Pierce admitted that he had recently tried to sell the gallery. He explained that it has never been fully open and he has been trying to make money.