Millions of files related to Jeffrey Epstein have brought to light his ties to the highest echelons of the cryptocurrency industry.
Documents published last week by the US Department of Justice reveal Epstein bankrolled the “principal home and funding source” for bitcoin, the world’s largest cryptocurrency, during its nascent stages; he also invested $3m in Coinbase in 2014, the largest cryptocurrency exchange in the US, and cut a check that same year to Blockstream, a prominent bitcoin-focused technology firm. Both crypto startups accepted Epstein’s investments in 2014 – six years after his 2008 conviction in Florida for soliciting prostitution from a minor.
Despite murmurings among crypto communities online about the need for a sector-level reckoning around the Epstein files’ revelations, most industry players predict few consequences for crypto companies or the sector writ large. Some see Epstein as a “skeptical investor” who pulled out of his crypto investments prematurely; others go so far as to claim Epstein was attempting to “undermine bitcoin”.
Coinbase’s questionable cash
The crypto companies that secured Epstein’s investment have grown into multibillion-dollar giants, especially Coinbase, which went public on the Nasdaq in 2021, and whose co-founder, Brian Armstrong, has heavily influenced crypto regulation in the United States.
Epstein’s 2014 investment in Coinbase was brokered by the crypto evangelist Brock Pierce, a former child actor and a co-founder of Tether, the world’s largest issuer of stablecoins, a kind of cryptocurrency whose value is typically pegged to a national currency.
Documents published by the justice department reveal Fred Ehrsam, a co-founder of Coinbase who spearheaded its fundraise, liaised with Pierce about Epstein’s investment in the company and sought to meet with Epstein “if convenient”. Additional filings suggest Epstein sold half of his shares to Pierce’s firm, Blockchain Capital, for $15m in 2018.
A spokeswoman for Coinbase declined to comment; Pierce did not respond to requests for comment.
Backing bitcoin
Epstein’s financing of bitcoin’s development stemmed from his role as a donor to the Massachusetts Institute of Technology (MIT). Over the course of 20 years, MIT accepted more than $800,000 from Epstein, who also facilitated more than $7m in donations from other wealthy individuals.
In communications from 2015 between Joichi Ito, then director of MIT’s Media Lab, a tech-focused research institute, and Epstein, Ito wrote that Epstein’s “gift funds” were used to “underwrite” the launch of the Digital Currency Initiative, an offshoot of the Lab tasked with researching and developing open-source crypto technologies; in the same email thread, Ito explained that the Lab’s role was to serve as the “principal home and funding source” for bitcoin. The Digital Currency Initiative did not respond to requests for comment.
In 2014, Ito brokered Epstein’s investment in Blockstream, which builds bitcoin-focused tech solutions. Epstein made a $500,000 early-stage investment in the company through an investment fund he co-owned with Ito. Email communications reveal Blockstream’s co-founders, Adam Back and Austin Hill, were invited by Epstein to meet in St Thomas, close to Little Saint James, the private island Epstein owned.
On Twitter, Back claimed that Blockstream understood Epstein to be a “limited partner in Ito’s fund”, which later divested from Blockstream “due to a potential conflict of interest, and other concerns” – meaning that “Blockstream has no direct nor indirect financial connection with Jeffrey Epstein, or his estate”.
In communications with an Italian investor, Epstein noted that he “like[d]” Back. Hill continued communicating with Epstein into 2017, checking in with his “friend” following a storm in the Caribbean. “Just checking that your Island is OK,” reads the email thread’s subject line. Representatives for Blockstream and Hill did not respond to requests for comment.
Epstein emails elicit muted backlash from crypto industry
Luke Dashjr, an early contributor to bitcoin’s development as well as to Blockstream, has called for Adam Back to resign from his role as Blockstream’s CEO over ties to Epstein. In an interview with the Guardian, Dashjr said Epstein’s interest in bitcoin – namely, his “attempts to undermine” bitcoin’s network, early-stage companies, and developers – was a sign that “evil men often seek to destroy what is good”.
Charlotte Fang, the founder of Remilia, which makes NFTs and other crypto-based art, said “only unserious people might care” about Epstein’s investment in bitcoin and Coinbase; in the latter case, “only the financially unsophisticated” would assume that he had “any degree of influence over the direction” of the exchange, as his seven-figure investment was a small part of Coinbase’s fundraise.
“Bitcoin is a decentralized technology that required no funding, and Epstein was evidently a skeptical investor, who got in later than I did, and exited earlier than he should have,” Fang said.
“Generally speaking, retail consumers will not change their habits” around crypto following this recent release of Epstein files, according to Kadan Stadelmann of Komodo, a crypto platform. Investor practices, including their dependence on connections to cut checks, will probably adhere to the status quo, he added. Some competitor crypto exchanges might see new customers who are leaving Coinbase following these new allegations, he hypothesized – as long as these exchanges didn’t take money from “similar unsavory sources”.
As to why Epstein was so interested in crypto, and in Coinbase specifically? “Epstein might have liked Coinbase’s IPO prospects,” he surmised.
Cryptocurrencies’ technological capabilities may have also played a role in Epstein’s interest in the sector, said Antulio Rosales, a professor at York University who studies crypto.
“There’s his possibility of seeing markets without any ethical commitments, and without any pressures of social norms and of the law itself,” he said.