In the Zone - Puerto Rico, Honduras, Golden Triangle, and New York CityA Scammer Darkly · September 13, 2024 |
Puerto RicoAs US territories go, Puerto Rico is the most populous and accessible to Americans. Despite this, and the many Puerto Rican communities around the country, the relationship between island and mainland has long been fraught. American companies exploited the island for cheap land and labor since we invaded in the 1800s, and successive governments haven’t been much more generous. Thanks to a 2012 law allowing new Puerto Rican ‘residents’ (not indigenous locals) to evade capital gains tax, the island has become a hideout for crypto enthusiasts. One of the island’s biggest boosters is quasi-famous crypto bro Brock Pierce:
Brock started buying up real estate in Puerto Rico - hotels, museums, and other buildings he planned to develop - imagining that his crypto flock would follow him there and create a paradise of like-minded Bitcoin and NFT dudes. It is impossible to know how much Pierce and others like him are really ‘worth’, since their assets are tied up in highly volatile digital currencies, but it didn’t take long for many of his ambitious ideas to falter financially:
Pierce’s story mirrors that of many ‘entrepreneurs’ trying to create their version of a utopia in a place that doesn’t especially want them. They show up, spend some money, make big promises, and run out on the bill. In their wake are shuttered buildings, half-finished projects, and unpaid debts. There are an estimated 2,600 wealthy Americans taking advantage of Article 60 in Puerto Rico, including celebrities like Logan Paul. The island may not end up with crypto-utopian communities or become a hub of international digital currency trading, but it has its fair share of tax dodgers using it to keep more of their money without contributing any of it to the island’s economy - Puerto Rico still struggles with the effects of climate change on its infrastructure, underfunded health services, and poverty. The issue of Puerto Rican statehood is complicated, and should ultimately be the choice of the island’s inhabitants, but at the very least the US should treat its citizens as the full Americans they are, with access to services, benefits, and freedom from exploitation by wealthy Americans. HondurasWhat if I told you there was a more refined version of Pierce’s libertarian crypto paradise being built in Honduras, of all places? And, rather than existing in the mind’s eye of a drug-addled child actor, it was funded by some of Silicon Valley’s wealthiest assholes? And both Milton Friedman’s grandson and Ronald Reagan’s son were involved, for some fucking reason? Friends, I give you Próspera, the brainchild of the world’s most unpleasant technocrats:
Yes, this ‘experimental town’ doesn’t have much in the way of places for anyone to live, but, more importantly, they can easily create tax-free businesses and pay with crypto and uhhhh undergo untested medical treatments:
Maybe the universe does have a sense of humor, and Milton Friedman’s unpleasant spawn will turn himself into the Toxic Avenger with a combination of exotic bacteria and implanted keyfobs. John Galt would be proud. Where Puerto Rico is a place for the tax-averse and exploitation-curious, Próspera is a well-funded startup in a special economic zone granting it significantly more legal authority and powers. It came into existence because Honduras’s conservative president saw a TED talk by a reactionary economist about building charter cities in poor countries to bring prosperity and thought it was a great idea. Really. Then, despite resistance from Hondurans, he rammed through the necessary constitutional amendments in 2013:
Nothing says ‘democracy’ like engineering judicial coups to pass laws so a bunch of rich foreigners can run economic experiments in your country without legal oversight. It goes without saying there are a lot of really insidious philosophies at play here, as a former Coinbase exec explains:
It cannot be overstated how dangerous it is that people whose idea of an ideal country is a right-wing online forum Voltroning into a lawless enclave modeled after a violent apartheid state are also wealthy enough to make it happen, with a little help from corrupt dictators. But! Sometimes when you’re trying to build a fancy resort city for yourself and your fascist investor friends, you might go to a local community meeting and put your foot in your mouth:
Weirdly, a dude from Arizona trying to explain to native Hondurans that his new city had the right to eminent domain land it wanted did not go over well, and video of the encounter created a nationwide protest movement against the ZEDE (the Spanish acronym for exclusion zones like Próspera.) In 2021, the country’s new president was elected primarily on the platform of repealing ZEDE laws. A year later, the Honduran Congress passed constitution reforms to abolish ZEDEs. A rare victory for the little guy, right? Maybe not. The original law had guaranteed the technocrats 50 years of ‘stability’, so questions remain around whether the new laws can override the original. And! Perhaps most critically, the company behind Próspera has filed a ten billion dollar lawsuit against Honduras in a World Bank tribunal court that allows companies to sue sovereign nations, but (of course) prohibits countries from suing corporations. Legal observers believe the company may win, which would not only financially ruin Honduras, but give other organizations trying to found these charter cities renewed confidence in the ability to bully and extort poor governments and corrupt politicians. So, if you wondered what a lot of the worst rich people from Twitter were up to, a decent number of them are biohacking at a golf resort in the Honduran jungle, when they aren’t busy seizing land from local farmers and creating tax and wealth havens for themselves and their friends. Cool, right? Golden TriangleWhat if, instead of a bunch of annoying VCs, a special economic zone and charter city were instead run by a Chinese mafia kingpin? Friends, I give you the GTSEZ:
In 2007, the Laotian government handed over a 99-year lease on 39 square miles of undeveloped land on the Mekong river, near where the countries of Thailand, Laos, and Myanmar meet. It gave Zhao Wei, a Chinese national with a background running shady casinos, his own Exclusion Zone, meaning the government would not interfere in the city’s affairs, no matter how illicit. Zhao built a casino, and hotels, and has spent years expanding the settlement to cater mostly to Chinese tourists, who can use GTSEZ casinos to launder and move money outside of China, which is otherwise against the law. Since its inception, the GTSEZ operated as a hub for the area’s drug gangs to move their narcotics and cash. Rumor was, Zhao took a cut of all the business that went on in his zone, and he didn’t turn anyone away. Zhao made sure the local authorities got a cut as well - he gave the government of Laos 20% of the GTSEZ as part of the deal. With a captive local government and neighbors too politically weak to do much, the only player in the region who could exert any influence was China. They turned a blind eye for awhile, but Zhao’s city has become a hub for another sort of crime that impacts China - crypto scams:
These signs sit on the Thai border outside the GTSEZ because people from all over the world are enlisted by crypto scammers to come to Thailand for jobs, only to be tricked and kidnapped to work in ‘pig butchering’ scam operations, swindling people out of their savings with phony crypto investments. The scale of the fraud is staggering:
This week, the FBI said Americans lost almost $6 billion dollars last year to crypto scams, which indicates how much of the fraud going on in the Mekong is targeting Chinese citizens. The good news is that China appears to be starting to crack down within the GTSEZ:
It remains to be seen how willing China is to rein in Zhao, since the government may view him as an ally in a region where it is trying to gain more political control. But the GTSEZ is a stark example of what can happen when you give one person or a group of people control of a place, outside international law. New York CityWhat if, instead of getting permission to set up an extrajudicial state, you simply ran your mayor’s office like one? It might look a lot like Eric Adams’ administration right now. Two days ago, the brother of two Adams officials under federal investigation was also revealed to be under investigation:
I can only imagine what it’s like to be an FBI investigator on one of the increasing number of Eric Adams cases - you confiscate some phones, go through the texts, then head back to the judge to get more warrants. They must be running out of corkboard space to put all the photos on. The same day the Banks family was racking up potential indictments, this story dropped about the NYPD:
What could possibly have the notoriously untouchable NYPD’s top brass so worried they’re acting like extras on the Sopranos? Maybe this:
So, to recap, two of the mayor’s top aides have a brother with a corrupt contracting business, and the NYPD commissioner (appointed by the mayor) has a twin bother who is a ‘nightlife consultant’ - definitely a real job - and they’ve all had their phones seized by the FBI in the last few weeks. While the NYPD is busy doing daily bug sweeps of its headquarters. All of this would have been so easily avoided had Adams simply declared New York City an exclusionary zone before doing the corruption. I am just saying. Short ConsInquirer - “Fannie Mae, a government-controlled mortgage financier, filed a federal lawsuit Monday in the Eastern District of Pennsylvania alleging that Pulley-affiliated companies defaulted on the mortgages for properties in Philadelphia and Delaware County.” AP - “The IRS has collected $1.3 billion from high-wealth tax dodgers since last fall, the agency announced Friday, crediting spending that has ramped up collection enforcement through President Joe Biden’s signature climate, health care and tax package signed into law in 2022.” WSJ - “In 2016, Steward Health Care System paid out a $790 million dividend—the lion’s share going to the hospital chain’s private-equity owner, Cerberus Capital Management.” WaPo - “During a scorching, relentless wildfire season, Facebook has been flagging and removing dozens of posts containing links and screenshots from Watch Duty, a widely relied-upon wildfire alert app, as well as from federal and state agencies…” NY Post - “A new TikTok trend has people posting their attempts to exploit a “glitch” in Chase Bank ATMs that offers “infinite free money” — but quickly learning that a bank and its money are not so easily parted. Experts say the “glitch” videos look an awful lot like check fraud — one of the oldest scams in the book.” FT - “The profitmaking urge may have been in the room when the studio agreed to make another Alien film, but it doesn’t seem to have stuck around long enough to prompt any searching questions, like “you want to spend how much to do what?”.” If you enjoy ASD, share these newsletters far and wide to help us reach more people. Thanks! |