A significant revelation has emerged from the recent release of Jeffrey Epstein”s files, indicating that he was an early investor in Coinbase. This investment, amounting to $3 million, took place in December 2014, as detailed in emails from the Department of Justice.
The arrangement was facilitated by Brock Pierce, a co-founder of Tether, through his firm Blockchain Capital, at a time when Coinbase was valued at $400 million. Today, Coinbase boasts a market valuation of approximately $51 billion. Notably, Coinbase”s co-founder, Fred Ehrsam, seemed to be aware of Epstein”s involvement. In a December 3, 2014 email, Ehrsam expressed interest in meeting Epstein, stating, “I have a gap between noon and 3pm today, but again, not crucial for me, but would be nice to meet him if convenient.”
Following the confirmation of the investment from Blockchain Capital, Coinbase”s wiring details were promptly shared with Epstein”s executive assistant, Darren Indyke. It”s important to note that this investment occurred six years after Epstein”s 2008 conviction for procuring a child for prostitution, and by 2014, his status as a registered sex offender was publicly known.
In 2018, Epstein reportedly cashed out half of his stake for nearly $15 million, with an initial allocation of $1.5 million, retaining the remainder until his death in 2019.
Reactions to these revelations have been notably absent from Coinbase, Ehrsam, Pierce, and Blockchain Capital. Furthermore, Reid Hoffman, the founder of LinkedIn, was also involved in Epstein”s crypto interests. When Epstein inquired about the Coinbase round, Hoffman advised against participating.
The implications of Epstein”s investment in Coinbase raise significant ethical questions regarding the early days of the cryptocurrency industry. While taking money from a convicted felon is not illegal, the context of the investment is concerning. It highlights the evolving nature of due diligence in the fast-paced world of cryptocurrency.
Several points warrant attention: the timing of the investment, the awareness of Coinbase leadership regarding Epstein”s background, and the notable network surrounding Brock Pierce, who played a crucial role in brokering the deal. Additionally, the investment”s returns are staggering; a $3 million stake at a $400 million valuation has yielded a return of over 125 times, indicating that Epstein”s estate may still have exposure to Coinbase.
This news is unlikely to disrupt Coinbase significantly, yet it serves as a stark reminder of the complexities and ethical dilemmas faced during the industry”s formative years. The cryptocurrency sector”s “move fast and break things” approach has not come without its trade-offs, and as the industry matures, it must confront the implications of its past.
