Confessions of a Crypto Millionaire

by Dan Conway

  And it wasn’t just the crypto ICO charlatans who made all the money. The whole thing was like the U.S. stock market before regulation. The book Patriarch tells the story of how Joe Kennedy (and scores of others) made their money in the 1920s—not through bootlegging but through insider information. Back then, before the creation of the Securities and Exchange Commission (SEC), getting tips from friends and sweetheart deals from business partners was legal.

  The same thing was happening with ICOs. Crypto heavy hitters, with names that would cause a bull run on the token simply by association, were given huge swaths of tokens for free or at severely discounted rates in exchange for their endorsement. Since crypto is fully liquid at all times, those advisers and the ICO leaders themselves were able to cash out and leave all of the unsuspecting noobs with full bags of a coin that would soon crash in value. It was like shooting fish in a barrel.

  Later, when it became clear what had been going on, crypto wise man Ryan Selkis called a spade a spade. Ryan is a man I respect for his clear-headed approach to crypto investing. He was an early employee of the Digital Currency Group who led Coindesk for two years. He is currently leading a much-needed project called Messari, which is bringing objective analysis to coin economics and casting light as a disinfectant. He tweeted, The worst part about the ICO cool down/maturation/whatever you call it: You know a bunch of people who knew better are going to make $$$, leave people holding the bag, never get in trouble, and write in their memoirs they regretted the excesses. Fuck that. Call it out now.

  At the time, few did. Those sweet gains were all anyone seemed to care about. The ICO madness in the spring and summer of 2017 was eclipsing the Ethereum story. ICOs were good for the ETH token in the short term because ICOs could only be purchased with ETH or bitcoin. But it was bad from a brand perspective, and it also complicated the narrative to mainstream investors and enthusiasts. The story in February 2017 was, “Ethereum is transformational technology.” Now it was, “If you aren’t playing roulette with these crazy crypto ICOs, you’re leaving money on the table!”

  There has always been a delicate balance between greed and idealism in crypto, a dynamic I could appreciate because it was present in my own mind. When they work together, the result is technology development at breakneck speed. The onslaught of ICOs in 2017 was proof that greed was in control for the foreseeable future. I never invested in a single one, nor did I assist with any PR. I’d like to say I was an idealist, but I was as greedy as the next guy.

  I just looked at these projects, even the legit ones, and believed that my best bet, the safest in the insane crypto world, was Ethereum, which seemed to be led by a mature and growing group of developers. My investment in ETH was based on so much research, and I simply didn’t have the time or inclination to investigate even more risky propositions. My version of risk was betting a large amount on one coin rather than throwing smaller amounts at a bunch of new projects.

  I also couldn’t deny the upside and what it portended for the future of blockchain in general and Ethereum in particular. ICOs were the first mainstream embrace of the democratization of funding.

  American angel investors and venture capitalists are required to be accredited before investing in the hot tech companies that have made them so rich. Most other first world countries have similar regulations. Accredited investors in the U.S. must have at least one million dollars in liquid wealth. The purpose of the regulation is to protect people from losing everything on speculative investments. But one of the unintended or intended consequences of the law is that accredited investors get access to all the best investment opportunities.

  The Ethereum crowdsale in October 2014 was one of the first major open-funding opportunities in crypto. The sale generated the equivalent of $2.3 million. It was a rare opportunity for Joe Public to invest in something early, without being an accredited investor.

  While the rules needed to be sorted out and some industry-led or even government-assisted regulations needed to be put in place, the long-game optimist in me was excited. The public could participate in these liquidity events from wherever they were without having to be an accredited investor.

  Since most of these ICO tokens would be built on top of the Ethereum blockchain, it was clear that Ethereum had become the go-to for fundraising and innovation. It could host any ambitious decentralization project. While many, maybe most, of these projects would likely go bust, I was confident the cream would rise to the top, and their success would validate their own project’s objective and contribute to the overall Ethereum ecosystem.

  Chapter Twenty-Three

  Be Careful What You Ask For

  The rise of ETH was so violent and unapologetic, it was unsettling. On May 4, 2017, ETH crossed $84. We were up $2 million.

  By this time, Kathleen had made a big investment. She went beyond me by also investing in Ethereum-related ICOs—and she was making a killing. She’d learned a lot about crypto and started taking leadership roles on various projects, managing a Slack for one of them. She was a sixty-year-old public school administrator. No one knew Kathleen’s demographic. And it didn’t matter, because she was obviously a badass.

  Kathleen had always been a gunslinger. We had always shared an affinity for unhealthy addictions and recovery from them, and now we shared this. At family parties, we’d cordon ourselves in a corner of the backyard and compare notes. Not on the tech but about how it felt to be riding this train. Was this supposed to happen to us? When would it stop? What happened if it kept going up? It sounded ridiculous, but we were scared and euphoric at the same time.

  While ETH was rising steadily, on any given day, the price could drop 20 percent in a matter of minutes. That’s the nature of volatile markets, and ETH was the most volatile market on the planet. One day, the value of our ETH dropped $500,000 during the two-hour period when I was watching a movie in a theater and thankfully had my phone turned off.

  At those moments, with so much at stake, I had the gnawing sense that this was too good to be true and that I’d curse myself for the rest of my life for not selling earlier. Trolls would post the suicide prevention hotline on r/EthTrader, and some people who were in too deep or unmoored emotionally used it. One of my favorite personalities on the thread was Lagofjesus. He had absurdist humor and the best satire posts, hands-down. One day he posted a sad, cautionary tale about how he would have been rich if he hadn’t been greedy and foolish with his coins, eventually trading most of them away during FUD and FOMO cycles.

  On the way back from Hawaii, the next trip on our negotiated travel list, I started having trouble breathing. I thought it must be because of the smoking I’d been doing while watching the charts. But the next day, I was still struggling. So I went to my doctor. He thought I might have a blood clot from my flight, which led to an emergency room visit, multiple tests, a big hospital bill and the diagnosis that I was experiencing severe anxiety. Was anything making me anxious?

  As Sonny said in The Godfather, the world was realizing there was a lot of money in that powder.

  Crypto culture was changing like Haight-Ashbury did after the Summer of Love. Like everything in crypto, the change was happening at an unprecedented, breakneck pace, over a period of months rather than years. There was suddenly less interest in changing the world and more interest in acquiring crypto by any means necessary, legal or not.

  I was having lunch on Burlingame Avenue one day that spring when I received an email from a family friend. He was a nice older man who was interested in finance. I’d just seen him at a party, and we’d discussed crypto, IRA strategy, and other investment stuff. He attached a Dropbox file that said, Per our conversation. It was just like him to send me a file after we talked. But you can never be too careful, so I sent him this note:

  Hi Carlo, Can you let me know what this is before I download it? Sometimes viruses masquerade as Dropbox files.

  He immediately wrote back:

  Lol, It’s all about financial plan. I find it very
interesting that is why am sharing with you.

  With that taken care of, I clicked on the file, thinking it might be the perfect thing to read during lunch. Nothing happened. I clicked on it again. Nothing. Then I took another look at the email and noticed the typos.

  “MOTHERFUCKER!” I screamed, to the shock of the lady and her preschooler at the next table. I’d been emailing with the hackers! Had I been targeted? My blog about buying ETH had been read by more than twenty thousand people by this time, so I had to assume it was a possibility. Reasonably, I knew that even though I’d downloaded a virus, hackers would have a hard time getting my crypto. I’d put precautions in place, but really, who the fuck knew what type of new exploit they’d come up with?

  I’d heard many stories of crypto folks, savvier than me, who’d had their coins stolen by hackers, including a well-known Asian venture capitalist who’d had his phone ported to a new line, allowing the hackers to bypass his two-factor authentication. This would later surface as a scourge. Many high-profile crypto investors would suffer sophisticated hacks through phone porting, including Michael Terpin, an early crypto pioneer who lost $223 million to hackers and subsequently sued his carrier.

  I popped a twenty-dollar bill on the table like the guy in the movies who never cares about getting change. I jumped into my minivan and flew down El Camino to the Apple Store. I waited for my turn, staring out the window at the Build-A-Bear store next door. That was about the least cypherpunk way to handle a hack—waiting in line at the Genius Bar.

  Several hours later, I felt as good as I could that whatever I’d been infected with hadn’t worked. I told Carlo he’d been hacked, and he said he knew! He just didn’t know what to do about it. I recommended he let people know next time. (You stupid old bastard—just kidding, love you, Carlo.)

  Amidst it all, ETH kept going up. On May 19, it passed $100. We were up $2.3 million.

  As you can imagine, the mainstream press had taken notice. The New York Times, Forbes, Fortune, The Wall Street Journal and dozens of other publications devoted long articles to Ethereum, the rise of the ETH token, and the decentralized economy it intended to create.

  We were up so much money that it interfered with my mental makeup.

  I’d seen the clickbait headlines over the years about people with a condition that caused them to have orgasms at random times, like when they were in a meeting, waiting in line at the grocery store or parking their car. I now knew what that felt like. When I checked my phone I’d often be up another six figures since the last time I looked. I couldn’t resist stopping whatever I was doing to pump my fist and shout, “YEESSSS!”

  I was taking the dog on longer walks, sleeping less, talking faster, listening to more Nirvana and AC/DC, marinating in my own greatness.

  When ETH dipped a few dollars, the orgasms went away, and I had brutal withdrawals. I knew we were still way up. But the short-term price was its own narcotic, sloshing dopamine and serotonin around my brain. When ETH stopped going up or had a mild dip, I’d get snappy with Eileen and the kids.

  I was having trouble with my existing clients. BitGo needed a series of data sheets and other materials leading up to Consensus, and it was my job to get them done. The content was difficult and complicated. I’d have to go through a few different people to get the edits I needed.

  Then I was approached by one of the best projects in the space, Protocol Labs, which was building a file-sharing service on top of Ethereum to eventually function as a decentralized alternative to the likes of Amazon. Naval Ravikant, one of my heroes, was an investor. Juan Benet, the leader of Protocol Labs, was a personal friend of Vitalik. Now I was talking to him on the phone. He asked if I would write a sample press release so they could see me in action before choosing to bring me onto the project. Normally I’d say, “Of course,” and get to work. But I hesitated big time and then eventually, grudgingly, agreed to do it, saying, “I wouldn’t normally do this.” That wasn’t the enthusiasm he was looking for. The truth was I couldn’t have cared less.

  Whatever he was going to pay me, it wouldn’t be worth it. Previously large sums of money were suddenly insignificant. My holy grail, a $10,000 per month contract for PR services, now seemed like a lot of work for little money. I could make $10,000 in the blink of an eye.

  I still looked at LinkedIn to see what people were up to. Career advancement was a sport I’d played so long, I liked checking the box scores. An old friend of mine from Georgetown was hired to head up communications at a big financial services company. Like many of the people I knew at Georgetown who grew up in Connecticut or Manhattan, I associated him with old money. This new job couldn’t have paid more than $250,000 a year. That was a lot. In the past, I would have been jealous. But I’d made $250,000 that day. I realized I had more money than a lot of people I’d considered permanently higher up the economic ladder.

  I felt a strange new mastery over the whole topic of pursuing money, a game I’d played my whole life. Now, with my ETH investment, it was remarkably easy to get rich. I’d see people reposting corporate gibberish articles their bosses had written on LinkedIn, and I’d feel sorry for them. They were trying to advance to a higher position with a bigger salary by pretending that this or that corporate initiative was truly remarkable. They had to pretend the executive with the humblebrag post was showing “great leadership” and that they themselves gave a shit about the mission of their company. Maybe they meant it, but I never did when I applauded the same crap on social media.

  My public relations work had dried up, so I could theoretically focus on BitGo. I still couldn’t seem to get started on those data sheets. When I tried, I became violently distracted. To counteract my procrastination, I decided to work out of BitGo’s office for a few days. There would be nothing for me to do except finish those data sheets. Except I found myself leaving the office, sitting on a bench on California Street, and watching the price of ETH.

  Was my problem that BitGo was a corporation, albeit one working in crypto? Was I resisting this assignment on philosophical grounds? That would be noble, but it wouldn’t be the truth. The reason was I no longer needed the money. While BitGo was made up of nice people, it didn’t matter to the restless savage called Dan Conway. Without the monetary incentive, without the need to pay my mortgage and put food on the table for my family, I no longer had the motivation to do the work. I resigned, leaving them in the lurch. I still feel bad about that.

  I hadn’t asked Eileen if it was OK to quit BitGo. Now I had to. She’d never been a bohemian. According to her value system, quitting one’s job, in most circumstances, was what losers did. Quitting one’s job was a small step away from collecting unemployment and eating brunch at a homeless shelter, something no one in her family had ever done.

  She was walking out the door on her way to Starbucks. I joined her. It was the first warm day in weeks, and we were both wearing shorts and flip flops, which made me feel like I was already on vacation.

  “Hey, remember how I said I was having a problem with those BitGo data sheets?”

  “Oh, yeah, you told me about that.” I could tell she was worried I was going to tell her the whole thing again as part of my personal therapy process. Or ask her to do them.

  We were waiting for the light to turn red to cross the El Camino, the busy boulevard separating our neighborhood from the commercial district downtown.

  “Well, I couldn’t really get them done no matter how hard I tried.” She turned to look at me. These words seemed so weak, much less convincing than when I practiced them. “It was really brutal,” I added when she just kept staring. Even I had to admit a pair of data sheets that needed to be written didn’t qualify as “brutal.” But it was true that I had struggled very hard to get them done and couldn’t do it. It still sounds weak, even at the time of this writing, but also true.

  “I ended up telling Mike that I was going to move on.”

  “What do you mean?” A few feet in front of us a bus raced by at a high
rate of speed, momentarily throwing Eileen’s hair in her face. But her head didn’t move.

  “I told him it was time to part ways.”

  The light turned green, but she didn’t budge.

  “Excuse me?”

  “I quit BitGo. We have enough money to get by for now, so don’t worry. We have two million dollars!”

  Eileen was still getting used to the idea that crypto was real money. But we hadn’t sold yet, so it wasn’t, actually.

  “You have got to be kidding me.” She wasn’t scared, nervous, or confused. She was fucking pissed. “You quit? So what are you going to do now? I have a ton of client work, and you quit your one client?”

  “You can quit, too. We can see how it goes for six months, then go back if we need to.”

  Her mouth opened half way and she gasped.

  “You’ve gone off the deep end again, Dan. What the fuck are you thinking?”

  She hadn’t acted this way when we made the big initial investment in ETH, a much riskier and potentially cataclysmic action. But work was something she valued. It was something people did. Especially when they had kids and a lot of expenses, like us. The light was now stale yellow, but she crossed anyway, putting her hand up to slow a car that was trying to turn left in front of her. I stood there on the corner and watched her storm away. I knew it was best to just let her go, and she definitely didn’t want my company anyway.

  I could see why she was mad, but I had a hard time feeling too bad about it, since I’d made us millions of dollars. I’d been running these numbers in my head for so long, I thought the enormity of that windfall would be obvious to her as well. But I had forgotten that she wasn’t obsessed like me with financial independence and the Fourth Industrial Revolution that Ethereum would usher into the world, making us bazillionaires.