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

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

Compiled by: Luffy, Foresight News

On sunny days in 2022, cryptocurrency entrepreneur Brock Pierce enjoyed taking friends on boat trips to Vieques Island, about 75 miles from his home in Puerto Rico. Pierce wanted to show off a property he called "one of my favorite places in the world": a once-glamorous seaside resort that he purchased for over $15 million.

At its peak, the resort was a W Hotel, featuring a 6,000-square-foot spa, a restaurant run by a Michelin-starred chef, and unobstructed ocean views, serving as a pillar of Vieques' tourism industry. 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, a former child star skilled in acting, would dock his Italian-made yacht at a local harbor during trips to Vieques, then lead guests along a beach where wild horses roamed to the gates of the shuttered W Hotel.

"This is a major bet for me personally," Pierce said, "and it's where my heart is."

But Pierce's luxurious display was merely an illusion. Like many other grand projects he launched in Puerto Rico, the 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, the floors covered in mold and horse manure. A $17,000 chaise lounge designed by a renowned Spanish architect sits dusty in the empty courtyard.

Pierce's dream of reopening the Vieques W Hotel has not materialized

Chairs of various colors piled in the shaded lobby of the W Hotel

In 2017, when Pierce moved to Puerto Rico, he invested in a series of experimental cryptocurrency ventures. With the help of think tanks, he made astonishing commitments to revitalize the local economy. Pierce is known for his role 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 buying land and promoting a project they called Puertopia, aiming to transform the U.S. territory into a hub for cryptocurrency investors and tech startups.

In 2019, Pierce stated, "If you're an American and you're in the cryptocurrency industry, you have to at least visit Puerto Rico."

Puerto Rico became a paradise for cryptocurrency. In 2012, the local government legislated to turn the island into a tax haven for wealthy immigrants. Under what is now known as Act 60, newcomers can apply for a benefit that exempts them from paying capital gains taxes. The measure aimed to increase investment in Puerto Rico's economy, which has been struggling to recover from a two-decade financial crisis.

But 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 cryptocurrency driving economic recovery has not materialized. His business partners betrayed him, and some colleagues say he is running out of money. There is 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 view Pierce as the latest testament to how global elites have treated Puerto Rico as a private playground for centuries. After the U.S. invasion in the late 19th century, American businessmen seized hundreds of acres of local land to build sugar plantations, funneling profits back to the U.S. Decades later, the U.S. Navy conducted military exercises on Vieques, including bombing tests that destroyed ecosystems and caused long-term health issues.

With the arrival of Pierce and other wealthy immigrants, Puerto Rican residents have seen new fractures, with skyrocketing housing 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 in a deep red corset, holding a Bitcoin logo, with the caption: "Colonialism."

Chameleon Instinct

On a recent Friday evening, 43-year-old Pierce sat down for coffee at the Hotel El Conquistador in Old San Juan. The hotel, converted from a Masonic lodge, serves as an informal base for Puerto Rico's secretive immigrants. He wore a wide-brimmed orange hat and an oversized white T-shirt that read "Scars Never Break." He gestured dramatically toward the window, which overlooked a bustling cobblestone street called Cristo Street, one of the oldest streets in the city.

"This is the first colonial infrastructure built by Spanish conquerors," he explained, "the first brick road in the entire Western Hemisphere."

Now, this landscape belongs to Pierce: he purchased the lodge in 2018 for $4.8 million.

When Pierce arrived in Puerto Rico, he came with a unique background: the son of a homebuilder and a church official from Minnesota, he was a child star who had a brief role in the film "Mighty Ducks" and co-starred with comedian Sinbad in a movie called "First Kid." As an adult, he became an early investor in several prominent cryptocurrency projects, ultimately amassing a fortune estimated between $700 million and $1 billion.

An aerial view of San Juan, Puerto Rico.

Pierce led a group of investors to Puerto Rico, committed to transforming the U.S. territory into a hub for cryptocurrency investors and tech startups.

After Act 60 was passed, tourists from the U.S. became a vibrant presence in restaurants and nightclubs across Puerto Rico. Pierce was a regular at Burning Man and one of the most recognizable visitors. He was often seen walking the streets of Old San Juan: short, energetic, dressed in T-shirts and leather vests, with a necklace around his neck.

Pierce bought two houses in a gated community in Dorado, a wealthy enclave, where he lived with his partner, entrepreneur Crystal Rose, and his mother, Lynette Calabro. According to two attendees of parties, Pierce frequently mingled with local politicians and hosted lavish gatherings where guests sometimes indulged in drugs like cocaine and ketamine.

For a time, Pierce successfully attracted some locals with his openness and curiosity. He had a chameleon-like instinct, adjusting his behavior to suit the preferences of his audience. "If the 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 a wild person, he will act wild."

Pierce showed interest in nearly all world religions, embodying a hippie spirit. Once, while traveling with fellow Act 60 immigrants, he nestled against a ceiba tree, a species revered by some Puerto Ricans. "I felt a connection with him because he has spiritual depth," said Puerto Rican pianist Carli Muñoz, who had a brief relationship with Pierce in San Juan.

The Ceiba Tree Park is a tourist attraction and sanctuary on Vieques Island, featuring one of Puerto Rico's oldest ceiba trees

But that goodwill was short-lived. "I have resolved not to do business with him anymore," Muñoz said.

Real estate records show that since moving to Puerto Rico, Muñoz has purchased at least 14 properties. Some of these, like the lodge, are already operational businesses. But Muñoz also announced plans to transform most of his portfolio into new projects, including an art gallery and a community center. None of these projects have 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 once housed a children's museum. For a time, he told local media he used it as "a place to meet friends and discuss ideas." Today, the building stands empty, with peeling paint on the walls.

The abandoned space inside the former children's museum in Old San Juan, where 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 before selling it to Pierce for $2 million, "I wanted to sell it to someone who could maintain it."

Pierce repeatedly sought out local Puerto Ricans to help him with development projects, but many of those collaborators later claimed they were exploited and did not receive fair compensation. Meanwhile, he became embroiled in a legal dispute 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 having deceived anyone. However, at least three lawsuits against him are currently pending in local courts. While having coffee at the lodge, he acknowledged that his misjudgments and naivety had disrupted his plans in Puerto Rico. "I trust others," he said, "and that's one of the reasons I got into trouble."

Booed at the Beauty Pageant

Pierce likes to portray himself as a geopolitical mover. In 2020, he ran for U.S. president as an independent candidate, garnering nearly 50,000 votes. He boasted about having "dates" in El Salvador and Panama, and one June evening, his assistant announced that Pierce would participate in a Zoom call with the president of the Pacific island nation of Palau.

"I have spent a lot of time with almost every religious leader in the world," Pierce said at the lodge, "as well as leaders of many nation-states around the globe."

But Pierce's main focus is Puerto Rico, where he has become a prominent spokesperson 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." This rhetoric helped make Puerto Rico a popular destination for cryptocurrency enthusiasts: according to government data, about 2,600 people currently enjoy tax breaks under Act 60.

As soon as Pierce arrived, locals expressed strong opposition. Someone spray-painted on the wall of the children's museum: "Foreigners go home." But behind the scenes, Vieques was expanding his real estate empire. He hired local hotel developer Gonzalo Gracia to help him find buildings in Puerto Rico that could be renovated and turned into tourist attractions.

Pierce assisted in hosting 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, frequently embroiled in legal disputes with local partners. In 2021, he helped host the Miss World pageant at a concert venue in San Juan. By then, Pierce was already regarded as a speculative politician in Puerto Rico: when he was introduced as one of the judges, the crowd booed him. Later, he sued Puerto Rico pageant executives, including former Miss World Stephanie del Valle, claiming she owed him $1.2 million. Ms. del Valle countered with a lawsuit against him, accusing Pierce of defamation and seeking $31 million in damages. (The dispute is currently pending in local courts. Pierce stated he is "committed to a fair resolution of this matter.")

Del Valle was one of the first Puerto Ricans to clash with Pierce, accusing him of deception and manipulation. During the pageant, Pierce purchased 80% of the W Hotel. This deal was 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 the acquisition. Court records show he met with local officials on Pierce's behalf and found an architect to plan the hotel's reopening.

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

Another project on Vieques faced a similar fate. In 2021, Pierce asked a local naval engineer to help him open a hotel and museum on a boat docked off the island's northern coast. The engineer, who requested anonymity to avoid business repercussions, arranged meetings with local officials and discussed the project with the mayor, but Pierce abruptly abandoned the plan. In an interview, he stated that Pierce still owed him $17,000 for engineering fees. (Pierce said he does not owe that debt.)

Last year, signs indicated that Pierce was in financial trouble. He had asked De la Uz to repair the "Aurora," the yacht he used to ferry friends back and forth to the West Coast. De la Uz recalled that most guests were "Americans he was trying to convince to give him money," "he portrayed himself as a savior of Puerto Rico."

In a lawsuit in 2023, De la Uz claimed he and Pierce jointly owned the yacht, and Pierce owed him repair costs. De la Uz said the yacht was taking on water and slowly sinking into the Caribbean while guests partied on the deck.

Pierce declined to comment on these allegations, stating, "We are actively working through the courts to resolve these issues fairly."

"I Didn't Do Any Due Diligence"

When Pierce took the "Aurora" out, he sometimes brought along a newcomer to the Act 60 community—62-year-old logistics mogul Lipsey. For a time, Pierce only knew Lipsey by his nickname, Jopepi. Pierce found him socially awkward but likable. "I believe he is a very kind person," Pierce said.

Pierce only knew the rough circumstances of Lipsey's arrival in Puerto Rico. In 2017, Lipsey made a fortune from disaster relief work following 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 hosted by the Lipsey family led to a police investigation, and he and his wife ultimately admitted to providing alcohol to minors, receiving a 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 friends. Pierce recalled that after Ms. Calabro passed away from heart disease in 2022, Lipsey told her he would always be there for her family.

Pierce and Lipsey collaborated on various business projects, but the most significant deal involved the W Hotel. Last October, 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. The terms were 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 agreed. "I didn't do any due diligence," he recalled.

A month after the agreement was signed, Lipsey accused Pierce of breaching the contract and seized 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 invited Lipsey to meet at the Hacienda Tamarindo hotel. This small hotel on Vieques was purchased by Pierce for $3.2 million. Lipsey later told Puerto Rican police that the meeting felt like a kidnapping. At the time, Pierce demanded his phone and then locked the door, with an armed guard patrolling nearby.

In 2021, Pierce acquired 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 when the W Hotel dispute began, his mindset was not good. 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 that controversial meeting, Pierce sued Lipsey, attempting to regain control of the W Hotel and accusing him of fraud and theft.

The judge dismissed Pierce's request for an injunction, which would have restored his ownership of the W Hotel during the case proceedings. Pierce and Lipsey maintained contact to discuss possible settlement options. But their friendship was over.

Lipsey did not publicly discuss the dispute until July, when he spoke for two hours with a New York Times reporter via WhatsApp. Lipsey, smoking a cigarette, virtually toured his house in Tennessee, where he spends part of the year, showing off his unusual art collection on camera. On one wall hung a canvas with two red paint splatters. Lipsey explained that it was the work of his son's girlfriend.

Lipsey described Pierce as "not a good person," a terrible businessman. "Everything he did when he moved to Puerto Rico, and everything he promised, he hasn't delivered."

He said the same thing in front of Pierce. Lipsey recounted that in a heated conversation, he told Pierce, "You really let your mother down."

Carefree Confidence

On a June morning, Pierce strolled through Old San Juan, winding along narrow sidewalks, pointing out his favorite spots. Despite the heat, he wore all black, a daily choice to avoid the hassle of time-consuming outfit decisions. "Mark Zuckerberg and Steve Jobs, they wear the same clothes every day," Pierce explained.

He stopped outside Carly's Bar, an upscale jazz bar run by pianist Muñoz. Pierce said Muñoz had composed a song specifically for him and Ms. Rose. He chuckled at the thought. "The song is called 'Superhero,'" Pierce said. (The actual title is "Superpower.")

Despite all the setbacks, Pierce remained confident, believing he could be a force for progress in Puerto Rico. But his confidence masked the ongoing chaos in his business affairs. The conflict between Pierce and Lipsey sparked intense speculation among his friends. Robert Anderson, a cryptocurrency enthusiast living in Puerto Rico who is friendly with both Lipsey and Pierce, said their behavior was "like children."

Pierce's friends 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. Documents reviewed by The New York Times indicated that this summer, a representative from the Puerto Rican basketball team Mets de Guaynabo emailed Pierce, complaining that he had failed to pay over $25,000 in sponsorship fees owed to the team.

Pierce 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. He said the armory would provide some level of protection if locals rose up against him.

In a lengthy 17-page statement, Pierce denied proposing the establishment of an armory and asserted that he is still wealthy, countering claims of his financial distress. He stated that the complaint from Mets de Guaynabo was a "misunderstanding" stemming 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, one of Pierce's public relations staff mistakenly sent a message to a group chat that included a New York Times reporter and advisor Wesselman: "We haven't been paid yet." "I guess you don't have the money to pay us, or you would have already," Wesselman quipped, calling the public relations staffer "completely messing with us." After learning that a reporter had seen the message, the public relations staffer claimed that Pierce "always pays on time."

Pierce defended his work in Puerto Rico. He stated he has made charitable donations, including a six-figure contribution 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 accomplishments, Pierce mentioned the hospital he purchased in Humacao at the end of 2023—an investment he pitched to Lipsey. He claimed he worked with Puerto Rican radiologist Josué Vázquez Delgado to pull the hospital out of bankruptcy and retain over 90% of the staff.

But in an interview, an anonymous doctor at the hospital stated that Pierce owes him tens of thousands of dollars in wages. The doctor indicated that the hospital has been delinquent in payments to suppliers, and some surgeons lack adequate equipment. (Pierce stated that his team has resolved these issues and "greatly improved the hospital's operations.")

Last month, while walking in San Juan, Pierce attempted to visually showcase his success in Puerto Rico. He led two New York Times reporters to a building he purchased in 2019, which was sparsely furnished, with a TV screen prominently displayed. He claimed this building housed the world's first NFT art gallery. "You might not think Puerto Rico would be the first place in the world to pioneer in technology," he said. The displayed images included a glowing dinosaur resting in a massive cactus forest, which Pierce said was designed by his 5-year-old daughter using artificial intelligence tools.

But he did not mention that a luxury real estate company had posted a notice to sell the building and held an open house. Faced with this fact, Pierce admitted that he had recently attempted to sell the gallery. He explained that it had never fully opened and that he had been struggling to make money.