Crypto millionaires building their own cities in Central America

Romer initially collaborated with the Honduran government, but split over differences over how his idea was being implemented. (Romer did not respond to a request for comment.)

Prospera, which demolished the land in 2020, plans to impose an ultra-low tax, usually on public-sector outsourced services, setting up an “arbitration center” instead of a court and charging an annual fee for citizenship (physical or e-residency). Including signing a “social contract”, the company hopes it will discourage misconduct.

The central office was one of the few completed buildings when I visited the site in February. There was no private Prospera police force, but at the front desk was a number for Bulldog Security International, a private security company run by hotels on the island that considered the local police force inadequate. Office workers live in a pair of two-story buildings. The rest was mostly construction site, although work on a residential tower block is underway.

The rendering of the future Prospera features apartments that appear to be inspired by the island’s indigenous conch shell – pearl-like corals, soft curves in cream and glass. The white sand strip separates the apartment block from the lighter lap of the Caribbean Sea.

Businesses that are likely to be drawn here are eager to avoid regulation in their own countries – highlighting almost every aspect of Prospera’s chief of staff, Trey Goff, medical innovation, health tourism and the cryptocurrency industry.

“There’s an automatic degree of overlap with the crypto industry and what we’re doing,” he says. “Because they see themselves at the forefront of financial innovation and we want to enable it.”

Bitcoin Butterfly

Michael Byers

Some people who work in tech and crypto have already established themselves in the jurisdiction through its e-residency program. Businesses can transact freely in whatever cryptocurrency they choose, and five have been approved for use at the government level.

Prospera’s advisers include Oliver Porter, founder of Sandy Springs, Georgia – the most recently privatized city in the U.S. that will mimic Prospera’s outsourcing model. So far, Silicon Valley venture capitalists and private investors have invested 50 million in the project, with another $ 100 million in the process of raising funds, Prospera said.

The money raised so far includes money from billionaire Peter Thiel, venture capitalist Mark Andreessen and investors Roger Ware and Balaji Srinivasan through Pronomos Capital. Pronomos Capital told Bloomberg in 2018 that it had discussed establishing semi-autonomous cities in countries including Ghana, Honduras, the Marshall Islands, Nigeria and Panama.

Broken links

If you continue on the road to Prospera, you will soon find a village of about 100 people called Crawfish Rock. The beach is a collection of wooden houses hanging in chaotic pieces of woodland, painted in fading pastels and protruding on stealths. Chicken scratches in weed patches sprouting under palm trees. It’s a long way from the bright white of Prospera’s air-conditioned boardroom.

At Crawfish Rock, I am greeted by Louisa Connor, head of the village petronato or community board. She belongs to the Garifuna community – descendants of slaves brought to the island by British settlers in the late 1700s. Sitting on plastic chairs in her yard and her young daughter playing nearby, we discuss the pushback against Prospera, which has turned into a national outcry for ZEDEs through community-led efforts. Connor paints a picture of fraud on Prospera’s part, saying that when he asked the community to sign a consent document he presented himself as a regular tourism developer, promising that villagers would be offered first jobs on site.

However, the villagers soon discovered that the project would be something different, and the relationship quickly broke down. Connor says Prospera CEO Eric Bremen offered to buy Crawfish Rock; She refused on behalf of the village. But residents became concerned that Prospera would seize their land to make way for its expanding city-state.

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Honduras has a long, bloody history of land grabbing. Subsequent governments have authorized companies to snatch land from farmers – resulting in more than 150 murders and disappearances in a single area since 2008.

Prospera executive Daniel Frazier says the company’s contract prevents it from seizing land and plans to expand in areas where there are no settlements. But Connor says that after she turned down Bremen’s offer, he told her the Honduran government could seize her. When asked about Connor’s comments, Prospera refused to try to buy Crawfish Rock, saying that his charter and bail had prevented him from getting the land confiscated from the Honduran government.

The islanders I spoke to had a basic objection to giving the Honduran piece of land under the control of corporate entities. They “do not respect any government, any rules or laws; Just a dream, ”Rosa Daniela, a community activist involved in the anti-Prospera campaign, told me. “They don’t believe they live in your country because they want to start a new country.”

Eventually, Connor blocked Bremen’s number. The village no longer has any dialogue with Prospera, she says. Goff puts it differently: “From the very beginning, we’ve been very focused on building strong community relationships with that community.”

The political climate has changed since Prospera was launched. Amid growing reactions to ZEDEs based on concerns over crawfish rock, the new Honduran president, Ziomara Castro, ran on a platform that promised to shut down Prospera’s longevity.

“We’re just an experiment.”

The land on Bitcoin City is not yet broken, but the Conchagua volcano is already home to many settlements, adding to the haunting of displacement, says Salvador economist Jose Luis Magana – especially given that only one-fifth of the region’s farmers own land. . Work in progress

The government says the project aims to provide jobs in La Union’s poorer neighborhood, but Megana says socioeconomic disparities between the town and El Salvador’s larger cities soften the more likely outcome.

Unlike Prospera, Bitcoin City has the support of the current government. But the influx of foreign investors and the displacement of locals could eventually elicit a similar reaction. Three days after the announcement of Bitcoin City, El Salvador passed a new law that would allow the government to seize land for public use.

The exact location of Bitcoin City remains unclear to prevent speculators from raising land prices. But European real estate companies, wealthy Salvadoran businessmen and cryptocurrency companies have offered to buy land from El Espiritu de la Montana three to five times the price Diaz paid.

Diaz is adamant he won’t sell: “This is a life project for me.” He supports Buckell and believes that Bitcoin City will stimulate economic growth in the area, although he notes that there are concerns in La Union that people he knows have been forced to move.

Back in Honduras, researcher Jose Luis Palma Herrera sees projects like ZEDEs and the like as a modern turning point in the region’s painful history of corporate colonialism. “The promise to end poverty and improve lives is used to persuade citizens to accept these areas of corruption and exploitation,” he says. “However, most of the profits from the enclave go outside the country. [with] No real development has taken place where they were.

In addition to Prospera, Honduras has three more ZEDEs. Less radical private city projects are now underway in Malawi and the US. Ethereum creator Vitalic Buterin is in talks with the Zambian government about establishing a crypto-managed special economic zone.

“We’re trying to help create a whole new kind of industry … the city-building industry,” says Goff. He says he wants to see a hundred developments around the world one day – “the bright spots of prosperity work together to create a brighter future for all humanity.”

Not everyone is sold on dreams. In Roatán, Rosa Daniela is concerned about the impact on her community and others like her. “They come to us, these adventurous people, in the name of freedom,” she says. “They want to start with us; We are just an experiment. If they succeed here, they will go to your country and the rest of the world. “

Laurie Clark is a UK based freelance technology journalist,

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