Advertisement
Advertisement

Bitcointopia: The cryptocurrency Utopia in the Nevada desert that wasn’t

Share

A barren stretch of high desert in the northeast corner of Nevada is where Bitcointopia would rise.

Residents would live in homes built by 3D printers, or in shipping containers. A police force would be aided by R2D2-like drones. Driverless buses would replace the need for cars.

The city would be powered by Tesla and watered by the North Fork Humboldt River that cuts through middle of the land, a scene framed by the snowcapped Ruby Mountains in the distance.

Advertisement

Here, above all else, bitcoin would rule.

Morgan Rockcoons, 31, envisioned a new kind of community, one not dependent on the U.S. dollar, an experiment based on artificial intelligence and automation and technology. He has likened it to the futuristic city Walt Disney dreamed up as Epcot — Experimental Prototype Community of Tomorrow — decades ago in Florida.

This past summer, cryptocurrency enthusiasts began buying into the dream — and buying up parcels of land in Elko County to secure their own slice of Bitcointopia.

Problem is, Rockcoons didn’t own the land he was selling, federal investigators said.

Last Sunday, Rockcoons was arrested in San Diego on charges of wire fraud. The indictment adds to his ongoing legal troubles in federal court here in which he is accused of trading bitcoin while thwarting anti-money laundering banking rules.

He has pleaded not guilty.

“Mr. Rockcoons has entered a denial of the allegations in Court and we will vigorously defend him,” his Las Vegas-based attorneys, David Chesnoff and Richard Schonfeld, said in a statement.

As land sale scams go, the one outlined in federal court records and by those claiming to have firsthand knowledge is a fairly straightforward one.

A slick website advertised a development of up to 1,000 acres, with 1- to 3-acre lots for sale for half a bitcoin per acre — that’s about $3,100 per acre in U.S. currency in the current market.

Chris Rice, who was hired as Bitcointopia’s chief marketing officer, said at least 25 plots were sold.

But federal authorities said it was land that Rockcoons had no right to sell; all he owned were two non-contiguous lots in the area, totaling less than 5 acres.

What made the sale of Bitcointopia successful, at least at first, was Rockcoons’ ability to sell a progressive, non-comformist Utopian vision in a climate of discontent, according to people who know him. And he had a captive audience in the crypto world — where he is both loved and scorned.

“The bitcoin community, we’re a lot of dreamers,” Rice explained in an interview with the Union-Tribune. “We want to see the world change, and this was like the start of a seed to change.”

Undercover sting

Rockcoons, who sometimes goes by the name Morgan Rockwell or his alternate musician identity “Metaballo,” was already a loud voice in the cryptocurrency world when he was arrested in February.

Besides regularly preaching the benefits of digital currency in podcasts and on social media, Rockcoons advertised on a bitcoin exchange site as a prolific bitcoin seller, according to a search warrant affidavit.

Cryptocurrency, with bitcoin being the most popular, is a long string of code with monetary value that people hold onto as an investment or use to buy goods. Blockchain is the digital method that stores and records digital currency.

According to federal law, people who work as bitcoin exchangers are considered money transmitters and must be registered as such with the Financial Crimes Enforcement Network, the arm of the U.S. Treasury Department that works to combat money laundering with regulations. As with other banking, exchangers must also know the identity of their customers and report any transactions over $10,000 to the government.

Authorities said Rockcoons did not follow any of the rules.

In 2015, an agent with U.S. Homeland Security Investigations went undercover, posing as a drug manufacturer who extracts THC from marijuana to make butane hash oil. He solicited Rockcoons’ bitcoin exchange services, telling Rockcoons that the anonymity of bitcoin was preferred because of the nature of his business, according to the affidavit.

The agent mailed $14,500 cash to Rockcoons, and Rockcoons gave him 9.998 bitcoins while taking a $5,300 service fee, the affidavit states.

After his arrest at the Palms Casino Resort in Las Vegas, where he’d been living, Rockcoons told Bitcoin Magazine that the agent tried to entrap him and had told him the hash oil was for medical use, which is legal in California.

Rockcoons said he was living in a tent in the Mendocino National Forest at the time and was working on a voice-operated bitcoin wallet.

“I was living like a mountain man, so I didn’t really need money but eventually I needed to buy food so I decided to sell some coin; when someone asked me to buy some I usually just always turn it down, but I needed cash to eat,” he told the magazine.

The charges, which Rockcoons characterized on his Twitter account as “the insane Federal Government hell bent on banning Bitcoin use,” stirred up even more anti-government, anti-regulation sentiment that was already prevalent among the bitcoin community. Many rallied to support his cause.

That’s how Rice, a North Carolina content creator and bitcoin enthusiast, met Rockcoons.

A desert Tomorrowland

Rockcoons, who says he was born and raised in Chula Vista, remembers being captivated by his childhood trips to Disneyland, especially Tomorrowland, he told VICE magazine in a June interview.

As a teenager, he aspired to live in Las Vegas, a city that seemed full of technology, “where all the innovators and dreamers live together in one place.”

“After years of living here, I became disappointed that it wasn’t,” he told VICE.

Rockcoons over the past few years has heavily promoted bitcoin in an attempt to incorporate it into the Vegas economy, but progress has been slow.

So he started to toy with the idea of starting a community from scratch.

“The vision itself was really cool,” Rice said. “He wanted to create a community for bitcoin and bring that to life in combination with today’s technologies. I’m a Libertarian/anarchist, I like that mentality what we were trying to.”

Granted, Bitcointopia was not the first.

Dozens of crypto-rich entreprenuers are working to form a Utopian blockchain-based community in Puerto Rico, especially attractive for its tax breaks. The movement is being led by former child actor and blockchain innovator Brock Pierce.

And in 2014, Bitnation billed itself as the “world’s first Decentralised Borderless Voluntary Nation” that is basically a blockchain-based virtual governance, but without the tangibility of a physical community.

Perhaps most parallel to Bitcointopia is the self-funded project by lawyer Jeffrey Berns, who got rich on Ether, another cryptocurrency. Perhaps coincidentally, his vision is also taking shape in Nevada, off the Truckee River near Reno.

Berns’ company, Blockchain LLC, which has purchased 67,000 acres for $170 million, already has preliminary county approval for a town, with thousands of homes, a school and drone delivery system, The New York Times reported Thursday, the same day Berns announced details of his project at Devcon in Prague.

The day before, Nevada’s public electricity utility company announced it had partnered with Blockchains LLC “to work together on energy projects powered by blockchain technology.”

All communities share the same idea that blockchain can facilitate more than recording digital currency, but can provide a system to store personnel data and vote outside the confines of a central government or big corporation.

“Laws & Rules will be defined by the people who live at Bitcointopia,” Rockcoons’ website explains. “To build a real republic based on direct democracy & Blockchain voting is the goal of this city. Bitcoin stands as the base legal tender & BitCongress the basis of the city government.”

In his interview with VICE, Rockcoons explained the draw of such a community.

“I think there’s a real motivation to fix the political and legal systems of the countries that we’re in. Forming this city is basically to motivate the U.S. government to get their act together; to improve their designs, their technology and also the legal system,” he said.

“There are people around the world who are fed up. I’m a patriot, but I want to push my country to upgrade itself. The federal reserve can collapse, our dollar can tank — and I’d rather be at Tomorrowland.”

There was talk of Bitcointopia seceding from the U.S. and forming a new country under the Treason Act of 1495.

But Rice, when he was hired to market Bitcointopia in June, said he advised Rockcoons to back off on that selling point, which might seem too extreme for some, and instead focus first on building the community.

Rice said it was important to him to present Bitcointopia as inclusive, not cultish. “We want this to be a real city, where people can visit,” Rice told VICE.

Rice told the Union-Tribune that the plan was to build five model homes, then invite the big technology companies — Google, Tesla — and smaller startups like Knightscope, which makes policing drones, to take a look.

Dashed dreams

Aaron Forsgren, a 45-year-old bartender in northeastern Utah, saw Bitcointopia advertised on Twitter.

A fan of sci-fi, the possibilities excited him. Plus, it was close to where he lived. He said he didn’t expect the place to be built overnight, but invested on the off-chance that it might actually work 10, 20 years from now.

“I got a little extra bitcoin. I thought why not? Who doesn’t want a Utopia or whatever,” Forsgren told the Union-Tribune. “I did it on a whim, without researching. Then I started looking into it. Yeah, it was not good.”

A San Diego man who asked to be identified by the handle “Makali” saw Bitcointopia as a vacation home or quiet place to work in the company of like-minded individuals. It was also an antidote to San Diego’s housing crisis.

“This was a way for me to put my stake out there,” he said in an interview.

He said Rockcoons came across as a compelling figure and passionate defender of bitcoin.

“He started talking about bitcoin and partnerships and all the land he had and funds were not a problem at all,” Makali said.

Both Makali and Forsgren, after buying one-acre plots for half a bitcoin each, said they quickly became suspicious when Rockcoons wouldn’t produce the deeds. Other buyers in online chatrooms were also becoming alarmed, while those who’d had past run-ins with Rockcoons claimed he owed them money.

Joseph Fitzjerrells, a crypto artist who sells under the moniker “Crypto the Giant,” saw Bitcointopia as a way to help legitimize Bitcoin, as well as a nice respite from Hollywood where he currently lives. He hoped to open an art studio/gallery/souvenir shop to sell his crypto-vector designs and T-shirts to residents and tourists alike.

He said he was promised riverfront property for residential and commercial use with his 0.2 bitcoin, but he never received a deed.

“He kept telling me he would refund me,” Fitzjerrells said. “He would be like ‘I’ll send it to you today,’ and then would send nothing. It happened several times, to me and countless others.”

Rice said he became suspicious when Rockcoons couldn’t front the cash for a plane ticket to Las Vegas for him to make an important marketing pitch.

Promises to harness the power of the Humboldt River — a protected waterway — for energy were also questioned.

“There’s no way people are going to let him manipulate that river,” Forsgren said.

Rice got a real estate agent friend to investigate the ownership of the land, a swath north of Interstate 80 between the cities of Elko and Wells. It is mostly U.S. Bureau of Land Management property, he learned. Records showed Rockcoons’ Bitcoin Inc. owned only two parcels totaling less than 5 acres.

Rice also discovered Rockcoons had not secured any permits for the work envisioned.

“Morgan was a good salesperson,” Rice said, “he just sold a dream that wasn’t legit.”

Rice and other hired executive officers parted ways with Rockcoons. Rice then began to cooperate with the federal government.

The case has put those involved in an awkward position. Suddenly, a community that is suspicious of Big Government and courtrooms in favor of decentralized democracy and economy, is working with the same authorities who are prosecuting Rockcoons for his bitcoin exchanging — charges the cryptocommunity still fully protests.

“It’s so ironic … Going to the federal government to bring down one of their own — the optics are strange and weird,” Makali said.

On Oct. 20, Rockcoons tweeted to Donald Trump following a presidential get-out-the-vote visit to Elko.

“Thanks for coming to Elko, we are building a brand new MegaCity here that will provide millions of jobs for Americans in the immediate future thanks to Bitcoin, AI and Nevada.”

Rockcoons was arrested eight days later. He remains in federal custody following his arrest on the newest charges.

kristina.davis@sduniontribune.com

Twitter: @kristinadavis

Advertisement