Bitcoin Billionaires

by Ben Mezrich

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  Table of Contents

  About the Author

  Copyright Page

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  To Asher, Arya, Tonya, and Bugsy: HODL. It’s all an adventure, and it gets more fun every day.

  AUTHOR’S NOTE

  Bitcoin Billionaires is a dramatic, narrative account based on dozens of interviews, hundreds of sources, and thousands of pages of documents, including records from several court proceedings. There are a number of different and often contentious opinions about some of the events in the story; to the best of my ability, I re-created the scenes in the book based on the information I uncovered from documents and interviews. Other scenes are written in a way that describes individual perceptions without endorsing them. In some instances, details of settings and descriptions have been changed or imagined.

  In 2010, I published The Accidental Billionaires: The Founding of Facebook, which was soon adapted into the film The Social Network. I could never have guessed that one day I would revisit two of the characters from that story—Tyler and Cameron Winklevoss, the identical twins who challenged Mark Zuckerberg over the origins of what would soon be one of the most powerful companies on Earth.

  In the world The Accidental Billionaires was published into, Facebook was the revolution, and Mark Zuckerberg the revolutionary. He was attempting to change the social order—how society interacted and how people met, communicated, fell in love, and lived. The Winklevoss twins were his perfect foils: buttoned-down “Men of Harvard,” privileged jocks who, in many ways easy to see, appeared to represent the “Establishment.”

  Today things seem different. Mark Zuckerberg is a household name. Facebook is ubiquitous, dominating much of the internet (even as it seems to be constantly embroiled in scandals ranging from hacked user data to fake news items and providing a platform for political-based disruptions). Meanwhile, Tyler and Cameron Winklevoss have reappeared in the news—in an unexpected way—as leaders of an entirely new digital revolution.

  The irony of the situation is not lost on me; not only that Zuckerberg’s and the twins’ roles as rebels and Evil Empire seem to have been reversed, but also that my book and the film that followed helped enshrine an image of the twins that is in need of revising. It is my opinion that Tyler and Cameron Winklevoss didn’t just happen to be standing in the exact right place at the exact right time—twice—by chance.

  Second acts, in literature as in life, are rare. And as I hope to show, there is every chance that the Winklevoss twins’ second act will eventually overshadow their first. Bitcoin and the technology behind it has the capacity to upend the internet. Just as Facebook was developed to enable social networks to move from the physical world to the internet, cryptocurrencies such as Bitcoin were developed for a financial world that now functions largely online. The technology behind Bitcoin isn’t a fad, or a bubble, or a scheme; it’s a fundamental paradigm shift, and it will eventually change everything.

  ACT ONE

  Moral wounds have this peculiarity— they may be hidden, but they never close; always painful, always ready to bleed when touched, they remain fresh and open in the heart.

  —ALEXANDRE DUMAS,

  The Count of Monte Cristo

  1

  INTO THE TIGER’S CAGE

  February 22, 2008.

  The twenty-third floor of a nondescript office tower on the outskirts of San Francisco’s Financial District.

  The usual glass, steel, and concrete sliced and diced into overly air-conditioned, brightly lit cubes. Eggshell-colored walls and industrial-beige carpets. Fluorescent strips bisecting tic-tac-toe tiled dropped ceilings. Bug-eyed watercoolers, chrome-edged conference tables, faux-leather adjustable chairs.

  It was a little past three on a Friday afternoon, and Tyler Winklevoss stood by a floor-to-ceiling window overlooking a pincushion of similar office buildings piercing the midday fog. He was trying his best to sip filtered water from a tissue-thin disposable cup, without spilling too much onto his tie. After so many days, months, hell, years, the tie was hardly necessary. The longer this ordeal dragged on, the more likely it was that sooner or later he’d show up to the next endless session wearing his Olympic rowing jacket.

  He managed to get the barest taste of water before the cup folded inward beneath his fingers, rivulets missing his tie but drenching the sleeve of his dress shirt. He tossed the cup toward a trash can beneath the window, shaking his damp wrist. “Another thing to add to the list. Paper cups shaped like ice-cream cones. What kind of sadist came up with these?”

  “Maybe the same guy who invented the lights. I’ve gotten two shades tanner since they moved us to this floor. Forget pits of fire, I’m betting purgatory is lined with fluorescent tubes.”

  Tyler’s brother, Cameron, was stretched out across two of the faux-leather chairs on the other side of the room, his long legs propped up against the corner of a rectangular conference table. He was wearing a blazer but no tie. One of his size fourteen leather shoes rested perilously close to the screen of Tyler’s open laptop, but Tyler let it slide. It had already been a long day.

  Tyler knew the tedium was by design. Mediation was different from litigation. The latter was a pitched battle, two parties trying to fight their way to victory, what mathematicians and economists would call a zero-sum game. Litigation had highs and lows, but beneath the surface there lurked a primal energy; at its heart, it was war. But mediation was different. When properly conducted, there wasn’t a winner or a loser, just two parties who compromised their way to a resolution, who “split the baby.” Mediation didn’t feel like war. It was more like a really long bus ride that ended only when everyone on board got tired enough of the scenery to agree on a destination.

  “If you want to be accurate,” Tyler said, turning back to the window and the gray on gray of another Northern California afternoon, “we’re not the ones in purgatory.”

  Whenever the lawyers were out of the room, Tyler and Cameron did their best not to dwell on the case itself. There had been plenty of that in the beginning. They had once been so filled with anger and a feeling of betrayal that they could hardly think of anything else. But as the weeks turned into months, they had decided that anger wasn’t doing their sanity any good. As the lawyers kept telling them, they had to trust in the system. So when they were alone, they tried to talk about anything but what had brought them to this place.

  That they were now on the topic of medieval literature, specifically Dante’s conception of the many circles of hell, showed that the avoidance strategy was beginning to fray; trusting the system had seemingly trapped them in one of Dante’s inventions. Even so, it gave them something to focus on. As teenagers growing up in Connecticut, Tyler and Cameron had both been obsessed with Latin. With no courses left to take by senior year of high school, they petitioned their school principal to let them form a Medieval Latin Seminar with the Jesuit priest who was the director of the Latin program. Together, the twins and the father translated the Confessions of St. Augustine of Hippo and other medieval scholarly works. Though D
ante hadn’t written his most famous work in Latin, they’d both also studied enough Italian to play the game of updating the scenery in his inferno: watercoolers, fluorescent lights, whiteboards … lawyers.

  “Technically,” Tyler said. “We’re in limbo. He’s the one in purgatory. We didn’t do anything wrong.”

  There was a sudden knock. One of their own lawyers, Peter Calamari, entered first. His receding hairline framed a protruding forehead and undersize, jowly chin. His palm tree–patterned Tommy Bahama shirt was poorly tucked into the waistband of a pair of blue jeans so big for him they made him walk funny; Tyler wouldn’t have been surprised if the tag was still on. Worse yet, Calamari was actually wearing sandals. He’d likely purchased them at the same place he’d bought his jeans.

  Behind their lawyer came the mediator. Antonio “Tony” Piazza cut a much more impressive figure. Trim to the point of being gaunt, he was impeccably dressed in suit and tie. His snowflaked hair was shorn tight and proper, his cheeks appropriately tanned. In the press, Piazza was known as “the master of mediation”—he had successfully resolved more than four thousand complex disputes, supposedly had a photographic memory, and was also an expert in martial arts—believing that his training in aikido had taught him how to channel aggression into something productive. Piazza was indefatigable. In theory, he was the perfect bus driver for this seemingly endless ride.

  Before the two lawyers had even shut the door behind them, Cameron had his legs off the table.

  “Did he agree?”

  He’d aimed the question at Piazza. They’d begun to think of Calamari, a partner at the ever-boastful, chest-pounding Quinn Emanuel law firm, as little more than a messenger between them and the aikido master. If his roomy jeans and sandals were an attempt to connect with the Silicon Valley atmosphere, Cameron felt that they marked him as more gimmick than lawyer.

  In fact, he wasn’t even supposed to be there. Calamari was standing in for Rick Werder Jr., the lead lawyer on their case, who couldn’t make it at the last minute because he had decided to represent a company in a $2 billion bankruptcy action. Despite the entire fate of the twins’ case resting on his shoulders, Werder hadn’t shown up to the mediation, the case’s defining moment. The twins’ understanding was that he was busy chasing what he thought was the bigger, better deal.

  The twins had hired the Quinn Emanuel firm in an effort to add muscle to their legal team, as discovery was coming to a close and trial was on the horizon. Founded in 1986 by John B. Quinn, the firm had a reputation for being tough litigators dedicated solely to business litigation and arbitration. The firm had also pioneered a lack of a formal dress code—something unheard of in the world of white shoe law firms. This innovation was to blame for Calamari’s sartorial failure.

  “It’s not a no,” Piazza said. “But he has some concerns.”

  Tyler looked at his brother. The request they’d made had originally been Cameron’s idea. They had spent so much time going back and forth through their lawyers—and now Piazza in the middle, a silvery sphinx constantly searching for middle ground—Cameron had wondered if maybe there was a way to cut through all the theater. Hell, they were three people who not long ago had met in a college dining hall. Maybe they could sit down again, just the three of them, no lawyers, and talk this thing through.

  “What sort of concerns?” Cameron asked.

  Piazza paused.

  “Security concerns.”

  It took Tyler a moment to realize what the man was saying. His brother stood up from his chair.

  “He thinks we’re going to take a swing at him?” Cameron asked. “Really?”

  Tyler felt his cheeks growing red.

  “You’ve got to be kidding.”

  Their lawyer stepped forward, placating. “The important thing is, other than the security concerns, he’s amenable to the idea.”

  “Seriously, let me understand this,” Tyler said. “He thinks we’re going to beat him up? During mediation. In the corporate offices of a mediator.”

  Piazza’s face didn’t change but his voice shifted lower—to an octave so soothing it could put you to sleep.

  “Let’s try to keep focus. He’s agreed to the meeting in theory. It’s just a matter of working out the details.”

  “You want to handcuff us to the watercooler?” Cameron asked. “Will that make him more comfortable?”

  “That won’t be necessary. There’s a glass conference room at the end of the hall. We can set the meeting there. Just one of you will go in for the face-to-face. The rest of us will sit outside and watch.”

  It was utterly absurd. Tyler felt like they were being treated like wild animals. Security concerns. He had a feeling the words themselves had come from him. They sounded exactly like something only he would say, or even think. Maybe it was some sort of ploy; the idea that he’d be any physically safer facing just one of them was almost as ludicrous as the idea that they’d beat him up, but maybe he thought talking to only one of them would give him some sort of intellectual advantage. The twins felt he’d judged them from the very beginning because of the way they looked. To him, they had always been nothing more than the cool kids on campus. Dumb jocks who couldn’t even code, who needed to hire a nerd to build their website, a website only he, the boy genius, could have, or rather should have, possibly invented. Because if they were the inventors, they would have invented it. Of course, in this logic, they’d want to knock him out if they could get him in a room alone.

  Tyler closed his eyes, took a moment. Then he shrugged.

  “Cameron will go in.”

  His brother had always been a little more rounded at the edges, less alpha, a little more willing to bend when bending was the only option available. No doubt this would be one of those situations.

  “Like a tiger in a cage,” Cameron said as they followed Piazza and their lawyer out into the hallway. “Keep the tranquilizer gun ready. If you see me going for his throat, do me a favor and aim for the blazer. It’s my brother’s.”

  Neither the lawyer nor the mediator cracked even the slightest of smiles.

  * * *

  Walking into the fishbowl forty minutes later was one of the most surreal moments in Cameron Winklevoss’s life.

  Mark Zuckerberg was already seated at the long, rectangular table in the center of the room. It seemed to Cameron that his five-foot-seven-inch frame was propped up on a thick extra cushion placed on his chair—a billionaire’s booster seat. Cameron felt vaguely self-conscious as he closed the glass door behind him; he could see Tyler and his lawyer taking seats directly behind him on the other side of the glass. Farther down the hall, he saw Piazza, and then Zuckerberg’s lawyers, an army of men in suits. Most of them, he recognized; certainly he couldn’t forget Neel Chatterjee, of the firm Orrick Herrington & Sutcliffe LLP, a man so protective of his precious client (and what the twins might have to say about him) that when the twins had been invited to take part in a fireside chat at an internet conference in 2008, Chatterjee had appeared in the audience, presumably so that he could keep tabs on what they said. Chatterjee and the rest of the lawyers had yellow legal notepads, though Cameron had no idea what they would be writing down. As far as he could tell, the glass conference room was soundproof, and to the best of his knowledge, none of them were lip readers. The conversation would be between him and Zuckerberg: no mediator, no lawyers, nobody listening in, nobody to get in their way.

  Zuckerberg didn’t look up as Cameron approached the other end of the conference table. The strange chill running down Cameron’s spine had little to do with the overzealous air-conditioning. This was the first time he and his former Harvard classmate had seen each other in four years.

  Cameron had first met Zuckerberg in the Kirkland dining hall in October of 2003, when he, Tyler, and their friend Divya Narendra had sat down with him to discuss the social network that they had been building over the previous year. Over the next three months, the four of them had met several more times in Zuckerberg�
�s dorm room, and exchanged over fifty emails discussing the site. However, unbeknownst to the twins and Narendra at the time, Zuckerberg had secretly started working on another social network. In fact, he registered the domain name thefacebook.com on January 11, 2004, four days prior to their third meeting, on January 15, 2004.

  Three weeks later, he’d launched thefacebook.com on February 4, 2004. Cameron, Tyler, and Divya had only learned about it soon after, while reading the campus paper, the Harvard Crimson. Cameron soon confronted Zuckerberg over email. Zuckerberg had responded: “If you would like to meet to discuss any of this, I am willing to meet with you alone. Let me know.…” But Cameron had passed, feeling the trust had been irreparably damaged; what good could come of it, reasoning with someone who was capable of acting the way he did? The only thing Cameron had felt they could do at that point was rely on the system—first, by petitioning the Harvard administration and Harvard president Larry Summers to step in and enforce the honor codes pertaining to student interactions clearly delineated in the student handbook, and then, when that failed, reluctantly turning to the courts—and now here they were, four long years later.…

  Cameron had reached the table and lowered his oversize frame into one of the chairs before he finally looked up, the tiniest sliver of an awkward smile touching his lips. It was incredibly hard to read someone who had no discernable facial expressions, but Cameron thought he detected a hint of nervousness in the way Zuckerberg rocked forward, his legs crossed beneath the table at the ankles, a mere glimmer of human emotion. Surprisingly, he was not wearing his signature gray hoodie; perhaps he was finally taking this seriously. Zuckerberg nodded at Cameron, mumbling some sort of greeting.

  Over the next ten minutes, Cameron did most of the talking. He started by extending an olive branch. He congratulated Mark on all that he had accomplished over the past few years since Harvard. How he’d turned thefacebook.com—a college-based social network that had started as a small, exclusive website connecting Harvard kids with one another—into Facebook, a worldwide phenomenon that had moved from school to school, and then country to country, engaging at first millions, then billions of users, eventually drawing in more than one-fifth of the people on planet Earth, who were now willingly and regularly sharing their personalities, pictures, likes, loves, and lives on a network that showed no signs of slowing.