ENGLEWOOD, Colo. – The market for cryptocurrencies was in ruins. But Tyler and Cameron Winklevoss were bumping.
The billionaire twins, best known for their supportive role in the creation of Facebook, last week with their new cover group, Mars Junction, at a concert venue outside Denver, the latest stop on a coast-to-coast, across the stage turned and shot. tour. They have hits like the Killers’ “Mr. Brightside “and Journey’s” Don’t Stop Believin ‘. “Tickets cost $ 25.
The Winklevosses were moonlit like rockers a few weeks after their $ 7 billion company, Gemini, which provides a platform for buying and selling digital currencies, laid off 10 percent of its staff. Since early May, more than $ 700 billion has been wiped out in a devastating crypto crash, plunging investors into financial ruin and forcing companies like Gemini to cut costs.
“Restriction is the mother of innovation and difficult times are a compelling feature of focus,” Winklevosses, 40, said in a note on the retrenchments this month.
Cryptocurrencies have long been touted as a vehicle for economic empowerment. Enthusiasts promote digital currencies – which are exchanged using computer networks that verify transactions, rather than through a centralized entity such as a bank – as a way for people of all backgrounds to transform wealth beyond the traditional financial system to reach.
But for all those so-called egalitarian principles, crypto’s collapse has revealed a gaping gap: as employees of crypto companies lose their jobs and ordinary investors suffer huge losses, top executives emerged relatively unharmed.
No crypto-investor has fully escaped the downturn. But a small group of industries have accumulated enormous wealth as prices have risen over the past two years, giving them an enviable cushion. Many of them bought Bitcoin, Ether and other virtual currencies years ago, when prices were a small fraction of their current value. Some locked up their profits early and sold parts of their crypto holdings. Others operate publicly traded crypto companies and have traded out of their shares or invested in real estate.
In contrast, many amateur traders flooded the crypto market during the pandemic, when prices had already started to rise. Some dumped in their life savings, leaving them vulnerable to an accident. Thousands also flocked to work for crypto companies, thinking it was a ticket to new wealth. Now many of them have seen their savings disappear or lose their jobs.
The fallout from the crypto-accident follows the pattern of other financial downturns, said Todd Phillips, director of financial regulation and corporate governance at the Center for American Progress, a liberal think tank.
“No matter what, those with money will end up being good,” he said.
The combined fortune of the 16 richest crypto-billionaires exceeded $ 135 billion in March, Forbes estimated. As of this week, the total was about $ 76 billion, but most of the loss was suffered by a single billionaire, Changpeng Zhao, the CEO of the crypto exchange Binance, whose $ 65 billion fortune shrank to $ 17.4 billion .
Cameron and Tyler Winklevoss, whose fortunes before the crash stood at $ 4 billion each, were worth $ 3.3 billion each this week, according to Forbes. They declined to comment.
For retail investors like Ben Thompson, 33, the reality is different. Mr. Thompson, who lives in Sydney, Australia, lost about $ 45,000 – half of his savings – in the crash. He has been gambling with crypto since 2018 and plans to use the money to open a brewery.
“A lot of people who looked pretty reliable had a lot of confidence,” he said. Thompson said. “The smaller people are being exploited.”
The unequal consequences of the crash are evident even within crypto companies. Coinbase, the largest crypto exchange in the United States, became known in April 2021 when interest in digital currencies emerged. As part of the company’s public listing, CEO Brian Armstrong sold nearly $ 300 million worth of shares. He allegedly bought a $ 133 million estate in the Los Angeles suburb of Bel-Air in December.
In total, six of Coinbase’s top executives have sold shares worth more than $ 850 million since April 2021, according to Equilar, which follows executive compensation. Emilie Choi, the chief operating officer, raised about $ 235 million, while Surojit Chatterjee, the chief product officer, sold $ 110 million worth of shares. Coinbase’s share, which peaked at around $ 357 in November, is now trading at $ 51.
This month, while Coinbase was facing declining prices and declining consumer interest in crypto, it laid off 18 percent of its staff, or about 1,100 workers. Mr. Armstrong said the company had “sublet”.
Coinbase has also recalled hundreds of job offers. Some of those new employees have already quit their previous jobs, or relied on Coinbase to work visas.
Michael Doss, a product manager, accepted a job at Coinbase in May after months of interviews. He canceled his lease and made arrangements to move to Britain and join the company’s London operations when Coinbase withdrew the offer.
“I have to relax it all,” he said. Doss (33) said. “This is what I saw as a career – creating move.”
A Coinbase spokesman declined to comment on the retrenchments and the recalled offers. She said that many of the share sales were part of the direct listing process and that managers “retain large positions in the company that reflect their commitment”.
The crypto crash began in May when an experimental coin called TerraUSD lost almost all of its value overnight and a digital sister currency, Luna, also declined. Its collapse devastated some retailers who spent their life savings on TerraUSD through Anchor Protocol, a lending program that allows investors to deposit the coin and receive interest rates as high as 19.5 percent.
TerraUSD was launched by Terraform Labs, a start-up that has raised funding from venture capital firms, including Galaxy Digital and Lightspeed Venture Partners. Some of these investors exchanged money before the project collapsed. Galaxy Digital said in a pre-accident filing that sales of its Luna interests were “the biggest contributor” to $ 355 million in profit in the first quarter. (The company declined to comment for this article.)
The impact of the Luna-Terra crash has spread and hit the prices of Bitcoin and Ether, the two most valuable digital currencies. Last year, Elliot Liebman, a 30-year-old musician in Austin, Texas, began investing a portion of each salary in some of those currencies in hopes of building a nest egg. Of his $ 10,000 investment, about $ 3,000 remain.
“People say this technology is going to level the playing field,” he said. Liebman said. “Obviously a lot of people end up on the wrong side of the trade.”
The crash worsened this month when Celsius Network, a crypto bank, announced it was halting withdrawals. As prices dropped, Gemini became the first major crypto firm to announce retrenchments, followed by BlockFi, Crypto.com and Coinbase.
Yet, unlike Coinbase, the vast majority of these crypto companies are kept private, meaning their value is less linked to daily price fluctuations. This has given managers at some companies some protection.
“My personal net worth has probably not been affected too much,” says MoonPay CEO Ivan Soto-Wright, launching a $ 3.4 billion crypto payment. “We are sitting on a substantial cash reserve.”
Mr. Soto-Wright recently bought a $ 38 million, seven-bedroom mansion in Miami, with a spa and an outdoor kitchen, according to Zillow. He said he was trying to build a studio where the artists working with MoonPay could come and produce music.
“It’s almost like a hacker house,” he said. “It was a good investment.”
The Winklevosses started stockpiling Bitcoin in 2012 when its price hovered below $ 10. Even after the crash, it remains an extremely lucrative investment for them: Bitcoin peaked at nearly $ 70,000 in November and is now closer to $ 20,000. In 2014, the Winklevosses founded Gemini and have since raised $ 400 million from investors.
The brothers started Mars Junction, their band, as a pandemic project. When the crypto market collapsed this month, they kicked off their tour with a show in Asbury Park, NJ
“The contract I made with myself was that it’s about having FUN,” lead singer Tyler Winklevoss wrote in a blog post about the group.
Last week, about 50 spectators watched them perform at the Gothic Theater in Englewood. Two women showed up in Harvard sweatshirts they bought on eBay, a tribute to the campus where the Winklevosses quarreled with Mark Zuckerberg over control of Facebook. A concession stall sold branded goods, including hats, T-shirts and carrying case; a portion will go to MusiCares, a charity that helps musicians recover from addiction, according to Tyler’s blog post.
During the 90-minute set, the Winklevosses rode through a series of rock classics, with Cameron on guitar. A small group danced in front of the stage while the group covered a Red Hot Chili Peppers song.
“Hit me,” Tyler shouted into the microphone. “You can ‘t hurt me.”