Confessions of a Crypto Millionaire

by Dan Conway

  After doing her own extensive research, she bought a big stack of ETH a few months later with money from a home refinance and the remainder of her 401(k).

  My brother Joey said he could tell I was on to something. He knew I was prone to passions, but he’d never seen me like this. He said he wanted to buy some ETH, but he wasn’t in any rush. He eventually bought a big chunk.

  “How much have you put in?” he asked.

  “I’ve made a pretty big investment.”

  Normally we talked freely about money. It wasn’t a taboo subject in my family, like it was in Eileen’s.

  “Wow, if you aren’t going to spill the beans, it must be a lot!”

  It was getting late, and my mother stood up and headed toward the back bedrooms. “Boy, it sure sounds good, Daniel, but I really hope you haven’t bet too much.” She stopped on the way to wipe the dust off a table of knick knacks. She straightens things up when she’s nervous.

  Unfortunately, something was happening right then on the Ethereum blockchain that would concern everyone who owned ETH. On April 15, the Decentralized Autonomous Organization (DAO) had launched as the first ambitious Ethereum-based decentralized application on the Ethereum blockchain. The DAO was the embodiment of my two great hopes: that a decentralized alternative to the corporation was possible and that successful projects would cause the value of ETH to rise exponentially.

  The problem was that the DAO was years, maybe decades, too early. Ethereum was still experimental technology. By comparison, the DAO was nearly science fiction. It aimed to run an entire corporation with governance, long-term planning, and day-to-day administration on the blockchain immediately. Blockchain technology was still so new. It was like trying to create YouTube in 1995 before LTE, when most people were just learning about email. The tech simply wasn’t there yet.

  It seemed to me that the project was being rushed out before its time to ride the wave of interest in Ethereum. I listened to a dozen hours of podcasts featuring the leaders of the DAO. I didn’t think they were ready for prime time. There were a lot of questions. Their answers were basically, “I don’t know. We’ll see.”

  The DAO’s launch generated massive coverage, including articles in The Wall Street Journal (“Chiefless Company Rakes in More Than $100M”), Bloomberg (“Blockchain Company Wants to Reinvent Companies”) and the New York Times (“A Venture Fund with Plenty of Virtual Capital, But no Capitalist.”)

  On June 18, 2016, my forty-fifth birthday, Eileen, the kids, and I walked to our favorite breakfast spot. I glanced at my phone and noticed crypto Twitter was blowing up. The DAO had been hacked, and everyone was freaking out. This was not a flaw in Ethereum, but it hardly mattered. The DAO had stolen the headlines for the past month. Now it had failed spectacularly, and everyone was running for cover.

  The price of ETH dropped 40 percent over the next three days. There was no telling when the bleeding would stop.

  At this stage of its development, cryptocurrency in general and Ethereum in particular were prone to extremes. Mind-blowing highs and earth-rattling lows. ETH is a currency of black swans. If it works, it may black swan much of corporate America, but in the meantime, many black swans could destroy it, including hacks, bugs, regulations, cartels, and competitors. This thing I’d fallen in love with was so revolutionary, so cutting edge, so rife for attack, so disruptive and so exotic, that it could explode into nothing at any time or rapidly ascend as the ownerless foundation of a new decentralized economy, as zealots like me thought it would. For an addict, a dude who was mad as hell, an adrenaline junkie with illusions of grandeur, for the drunken Irishman trying to express himself even when he was sober, ETH’s insane volatility and high stakes suited me perfectly.

  So when the DAO was hacked, I wasn’t worried about losing my investment. I wanted to get more ETH. It was poised to go lower in the short term. The handwriting was on the wall.

  I could sell all of my coins and buy back lower to increase my already-large stake.

  On June 19, as Eileen watched TV downstairs, I logged into my Gemini account from our bedroom and started selling big blocks of ETH. The order books were thin with limited liquidity in those days. It wasn’t long before people on r/EthTrader commented that something big was happening. “Holy shit, someone is selling massive chunks of ETH on Gemini” was the gist of the scared post from a trader fearing a crash. The price started dropping, reducing my ability to get a fair price, as other traders tried to get out ahead of the broader dump I was inadvertently creating.

  Most of the people on the boards, at least those who were commenting, had bought ETH during the initial crowdsale in 2015. Anecdotally—there is no way to know for sure—most had invested less than a thousand dollars (denominated in bitcoin) and owned between three hundred and three thousand ETH. I had much more to gain and much more to lose than most. I wasn’t the biggest whale on the boards. A whale was someone with a huge stack of coins. But after reading lots of posts over many months, I knew I was in the upper echelons. As I finished offloading all of my tokens, someone commented, “Looks like the Winklevoss twins are selling.” But it was only me.

  My plan was to watch the price drop for the next few days, then pick up all my coins at a thirty percent discount, allowing me to increase my stack. Except it never works that way.

  After a long day at work on June 22, I decided to take the kids to the local pool for a swim. I drove there but didn’t see much of the road, because virtually the entire ride I was staring at my phone, watching the price of ETH go up. I was terrified. I might miss the launch of the rocket ship, which could happen at any time, despite the DAO fiasco. I could hardly stand myself, not to mention care for the three darlings in the back seat whom I’d loved just an hour ago. But I couldn’t exactly turn around, drive home and tell Eileen I needed to make some crypto trades while the kids dissolved into pouts and tantrums. In fact, I hadn’t mentioned the DAO disaster to her at all. After we made our initial investment, she never asked about Ethereum, and I wasn’t about to use this opportunity to tell her, “You wouldn’t believe what’s happened!”

  We were going swimming, dammit, even though ETH was rising quickly, and there was nothing I could do about it until they were in the pool. So I started slathering suntan lotion on them. I’m obsessive about this because my aunt died young of melanoma. They were going to get their standard full-body lotion application, just at a faster rate and with more force. A dad in the lounge chair next to us stared at me, because I was obviously a very serious asshole.

  Finally, they were in the pool, and I could log into Gemini from my phone. I was going to get back in, no matter what.

  I’ve found crypto trading akin to playing blackjack in Vegas. Meaning, you’re going to lose. If you have nineteen, the delear’s about to get a seven of clubs to make twenty-one. If you have twelve, your hit card is going to be a joker. So as I desperately signed in and started buying big blocks of ETH, the price kept shooting up. The bots and gods and other traders all somehow knew that I was desperate, so the price continued to rise.

  Since exchange trades are public and viewable, albeit anonymous, every trader could see that a whale was buying back in. The scramble was on to buy their coins at a lower price before I scooped everything up for myself. That’s what I did. I basically bought up all of the coins that were available at that time on Gemini. This set off a bidding war. My final trade, after which I finally looked up to ensure my kids hadn’t drowned, was a market buy, a desperate, determined play to get my coins no matter what. A market buy is when you buy whatever coins are available at whatever price, even if the price is wildly high.

  Over the course of an hour, I bought back all I could, 5,584 ETH at an average price of $14.40. I’d lost 20 percent of our stack, a heartbreaking amount. I wanted to cry. I vowed to never, ever try to time the market again with a short-term trade—and I never did.

  Then the ETH price started dropping, just as I predicted it would, just not on my timeline. By early
July, ETH had fallen to $10.12. Our investment was $45,000 in the red. Fuck.

  I thought of solar panels. My parents got caught up in a late 1970s solar energy tax shelter scam. After hearing about the opportunity from their accountant, they attended a slick day-long presentation. There were scientists in white lab coats and smoke billowing from smokestacks. Many doctors and lawyers had invested, my dad later explained.

  My parents put in ten thousand dollars, a lot of money for them, and in return they owned shares of solar panels located somewhere in the desert. Soon after, they stopped hearing good news from the custodians. Then they stopped hearing from them at all. Like the doctors and lawyers who also got suckered, they lost everything.

  They were sure about those solar panels like I was sure about Ethereum, although I don’t think they had solar panel hats, t-shirts, and phone cases. I knew Ethereum wasn’t a scam. But was I destined for the same fate as those hapless professionals from the 1970s who bought an investment based on a sound idea that would never pay off?

  But I processed these thoughts at an intellectual level. I still had the strongest feeling that ETH was going to go up, despite my rational brain telling me that these things didn’t usually work out. The mountain I’d had to climb before investing was too high for me to consider climbing back down. Flip Side helped me get up, but he certainly wasn’t going to help me down. He’d cut the ropes, in fact. We were going to make it big and set the record straight, once and for all. There was no going back.

  Chapter Seventeen

  Deleted

  I knew my fate at Acme was sealed when I checked my email one night a few weeks after our dereg campaign went down in flames. New York sent me a note informing me that the consultants were staying on board, even though the campaign they had been hired to work on was over. When I asked why, they responded, “Prince Charming wants them to stay.” No one had even bothered to tell me. I suspected they would never need another substantive response from me.

  I breezed through the next few days. Then on Friday afternoon, I received an email from Kermit, yet another big shot from New York. Hey, Dan, I’m going to be in your neck of the woods on Monday. Can you meet me at your office at ten a.m.?

  This was it, I told Eileen. They were coming for me. These were the possible outcomes, as I saw them, in order of likelihood:

  I’d be put into another position. This happens all the time. A make-believe “special project” would be created, which would give me about six months to find another position before that job was eliminated.

  I’d be put on probation. Before firing me, they would need to document the hell out of it, and this meeting was the first step.

  I’d be fired. They’d explain my severance package, which I hoped would be generous for someone at my level with six years at the company.

  I always wondered why people who were about to be executed in grim documentaries would simply follow orders. Why would they dig their own graves while their killers stood ready to pull the trigger once they were done? Why didn’t they turn around and smash the guy in the face with the shovel? Why not make a last-ditch effort to escape? At the very least, they’d hurt the asshole who was about to put a bullet in their head. As I greeted Kermit and was introduced to Fuckface from HR who would be joining us, I figured it out. They were tired. They wanted it to end. They knew their fate, and making a big fuss wasn’t going to change anything.

  Kermit and Fuckface asked if I could please find a conference room. Was it cruel and unusual punishment that I couldn’t find a room? It certainly was macabre. Our goddamn open-office environment meant that all of the conference rooms were filled with people trying to escape the fishbowl. It was hard finding a proper location for a corporate execution, but I was trying my damndest. I finally found a great spot, tucked into the corner of a section of the office that was under construction. Very little foot traffic. Soundproof. Perfect.

  Kermit was very short, with a nice head of hair. Fuckface was tall, gaunt and unsmiling, with thick makeup.

  “Well, Dan,” Kermit began, “you are not in our plans for the future. Fuckface and I want to give you an option that will help you make your transition away from the company. We’ve discussed your situation with one of the public relations firms that is close to the company. They would like to contract with you as an independent consultant. You have talents that you can put to use for them. If you agree to do so and resign from Acme right now, we can make that introduction. We hope you choose this option. If you do, you can stay for two more weeks, leave the company on your own terms and enjoy one more month of healthcare coverage. If not, today will be your last day, and we will escort you out of the building after this meeting.”

  “We will also take your iphone and your computer, which are company property,” Fuckface added. As if I were going to secretly slip my iphone down my pants. She wanted to make sure I recognized their leverage. Losing my job and my iphone on the same day, without having a chance to download my contacts and other stuff, would add insult to injury. I suddenly regretted not getting a second device for personal business.

  If I took this offer, I’d be leaving my stock options on the table. No severance. We’d lose our healthcare at the end of the month and have to buy it on the open market. And the arrangement would be a handshake deal, no written contract.

  I’d always wondered what happened to those desperate forty and fifty-somethings who applied for lower-level jobs on my team. This is what had happened to them.

  But could I really complain? I’d sabotaged myself, even if my fate had been sealed anyway.

  I kept my cool and never got emotional. I’m a pussy during normal business interactions, but I get steely calm when I’m truly in a jam, like Michael Corleone lighting that guy’s cigarette. Or so I like to think. But there was no doubt about it, I was wounded. Contemplating getting fired had a much different impact on my psyche than actually being fired. I was seriously being FIRED. I kept turning it over in my head.

  It seemed to me that the purpose of their approach was to squeeze me. Since I hadn’t had a written plan documenting a subpar performance, I might have an opening to sue the company. If I officially resigned that day, I’d nullify any legal case. But that didn’t bother me. They were firing me because they thought I was an idiot, and they also needed a scapegoat for our big defeat in Sacramento, not because of my advanced age, whitish skin color, or raging-hot heterosexual orientation.

  I asked if I could take an hour to call my wife and think it over.

  “Why would you need to do that?” Fuckface asked, staring deeply into my eyes. “This is a more generous offer than you should expect.” Apparently this woman whom I’d never met before, who flew here from god knows what state, had a very firm opinion of my worth and what I should expect after six years with the company. She was the embodiment of the Acme Machines… cold blooded and malevolent. And I was simply a digit that needed to be deleted from the code like the bodies flushed out of the Matrix once their energy was harvested.

  “Because this is a very big deal, and I need to gather myself for a moment,” I said. “Don’t you think that’s a reasonable request?”

  To my utter fucking dismay, she actually started to smirk, like I was her adversary to be defeated rather than a middle age man being fired from his job. “This is a very generous offer. I don’t think we can...”

  I was about to crawl down this demon’s throat when Kermit interceded. His look reminded her that they were there to kill, not torture. After six years at the company, taking a short break to think it over, even if the choice seemed obvious, was entirely reasonable. Fuckface’s display of insensitivity was no surprise. Nearly every HR person I’ve dealt with is sadistic.

  My signature or my brains were required on that resignation note, and so I signed it. They left the building, and I went about my morning as if nothing had happened.

  ***

  On my last day, when it was time for me to leave the building, I said a few goodbye
s and headed for the elevator. The doors shut as I watched a group of now-former colleagues in the conference room hammering out the details of an event I’d been involved with just a few days before. I had thought that a few of my most loyal employees might walk me out. I didn’t want them to quit, I just wanted them to exit with me, like someone walking by my side to the gallows. They didn’t, because they had jobs to do.

  I saw a friend later that afternoon in our neighborhood when I was taking the dog out. He walked with me for half an hour while I told him exactly what happened, blow by blow, not hiding the fact that I’d been spit out. That was the way I’d always processed things, by getting it out of my system. That night at a Cub Scout event, while the kids bobbed for apples, I told a few other friends. It was like I was telling everyone, “I just died!” Talking it out, sparing no humiliating detail, helped me drain the poison.

  I’d heard divorced people who’d struggled in their relationship for years say they were happy once they got divorced. In this instance, Acme had taken the initiative and dumped me. Like a newly divorced person, I was in shock. But I also knew I was out of a situation that made me miserable.

  Eileen was very supportive. It had been clear to her long before that I was being squeezed out. She was proud that I’d gritted it out until the very end. So she wasn’t upset with me. We both knew I couldn’t afford to sit around, though. I needed to start up a new career and make some money.

  It was time to see if blockchain and cryptocurrency were make-believe or the real deal.

  Chapter Eighteen

  Zealot

  Eileen and I decided to start our own PR firm. She was already a successful consultant. We’d combine forces and go after bigger clients. I’d focus on crypto/blockchain. My hunch was that few PR consultants understood this world. I knew that the demand for strong communicators in the space was growing. There was a gap between the hundreds of fascinating projects brewing and conventional wisdom, which suggested that the whole industry was fraudulent. This discouraged professionals from joining in. We launched Zealot Communications on October 1, 2016.