As Hurricane Fiona battered Puerto Rico, wiping out power across the island, the real estate influencer and crypto investor Hayden Bowles posted a message on TikTok. “An official emergency has been declared, which means in the tax program, your physical presence time is suspended,” he says to the camera, looking cheerful. “So I am headed out of the island.”
Bowles’ video was met with a fierce backlash by Puerto Rican commenters, many of whom felt it epitomized the crypto community’s extractive relationship with the island. In the last couple years, Puerto Rico has received a flood of crypto entrepreneurs, investors and influencers who have sought to take advantage of the island’s tax benefits. While these transplants argue they are bringing jobs and capital to the island, local organizers say they are driving up housing prices, privatizing beaches, erasing culture and destroying communities.
The emergence of cryptocurrency business activity is among many of the island’s climate concerns. The mining of certain crypto-assets have significant climate impacts, contributing to annual greenhouse gas emission levels in the U.S. that are roughly similar to the diesel fuel used by railroads nationwide, according to a recent White House press release.
These tensions have come to a head once again during the hurricane that has killed at least eight in Puerto Rico and posed a grave threat to the country’s agricultural future. Local organizers say promises that crypto leaders made about hurricane preparedness and relief years ago have not been kept; that many newcomers have simply left the island in its time of need; and that new crypto fundraisers have been started without community input.
Dean Huertas, a content creator and activist, responded to Bowles quick-exit message with a viral TikTok that called out tax beneficiaries who chose to leave the island.
“People come here to exploit and displace the local population while having the benefit of leaving whenever they please,” Huertas tells TIME. “False promises have been made, and if promises have been kept to people, it’s for their own people in their gated communities.”
Other members of Puerto Rico’s crypto community, however, are trying to shake off their reputation as “colonizers,” and have committed themselves to relief efforts this week. They argue that they can play a unique role in the recovery, both through local efforts and by tapping into crypto’s enormous global wealth, and that their detractors simply don’t understand. “It’s just ignorance: A lack of awareness and knowledge of what crypto means to the island,” says Alexander Díaz, a founding member of the newly formed crypto-fundraising organization, Puerto Rico DAO.
Why crypto came to Puerto Rico
The main reason crypto entrepreneurs are flocking to Puerto Rico lies in laws passed by Puerto Rican legislators in 2012. Act 20, also known as the Export Service Act, services businesses looking to lower their corporate tax rates and eliminate taxation on the dividends they distribute to investors. Act 22, also known as the Individual Investors Act, hoped to lure new, wealthy residents to the island by offering them a zero-percent tax on capital gains. In the U.S., in comparison, investors pay as much as 37% on short-term capital gains and up to 20% on long-term gains.
And as cryptocurrencies like Bitcoin and Ethereum skyrocketed over the last two years, crypto investors realized they could cash out much more of their gains if they moved to Puerto Rico. All they had to do was spend at least 183 days on the island each year. Real estate prices had also sunk in the wake of Hurricane Maria, which devastated the island in 2017.
In recent years, a community began to form, with high-profile influencers like Logan Paul and Brock Pierce moving from the mainland. More than 4,500 individuals and businesses have relocated their homes or businesses, primarily from the mainland U.S., to Puerto Rico under the Acts, according to a study commissioned by the Department of Economic Development and Commerce. Many companies, like the investment firm Pantera Capital and the blockchain infrastructure company DLTx, set up outposts in San Juan. “I get a call almost every week about someone moving into the neighborhood,” Johnston tells TIME.
But locals don’t qualify for the capital gains tax exemption, which explicitly benefits non-Puerto Ricans. “The tax incentives are upsetting,” says community organizer Marilyn Figueroa. “Puerto Ricans here aren’t able to benefit from them in the same way, so it feels like our homeland is being sold off.” Last month, Figueroa’s rent was more than doubled after an outside investor bought the apartment building she’d lived in for two years in Santurce. Up until days before the hurricane, she was forced to begin living out of her car.
Gustavo Díaz-Skoff, the founder of online technology platform BĀSED, says that crypto entrepreneurs who arrived in Puerto Rico in the wake of Hurricane Maria came with many promises to help mitigate the damage of future disasters. But he says barely any of their proposals came to fruition. “From the most high-tech ideas, such as a decentralized energy grid being backed by blockchain, to low-tech—like buying a gallon of vinegar, putting it in some water and spraying some walls to help us clean the fungi Maria left behind—they didn’t happen,” he says. “Even if a tenth of the promises were met, the island would be in a very different situation today.”
Days before Hurricane Fiona, Puerto Rican pop superstar Bad Bunny and independent journalist Bianca Graulau released a 22-minute video for his song “El Apagón,” which highlighted the damage that wealthy migrants, including crypto professionals, are causing on local communities, including closing schools, forcing evictions, and reducing access to beaches. “The only thing these investor millionaires have done for us is rock us to sleep,” says Jorge Luis González, a resident of Puerto Rico, in the video.
Puerto Rico DAO: key fundraiser or tax write-off?
On September 19, after power went out in Puerto Rico, a new account on Twitter appeared called Puerto Rico DAO. The account purported to raise money for Puerto Rican aid groups, and its posts were quickly shared around the global crypto community. Rapid cross-border fundraising is one of the main current strengths of crypto, its aficionados argue: a Ukrainian official said in March–within weeks of Russia’s invasion–that the country had received nearly $100 million in crypto donations. (A DAO, or decentralized autonomous organization, is a new form of digital collective in which decision-making and resources are spread among the organization.)
Still, many on social media are raising questions about this new organization. Puerto Rico DAO’s website claimed that it would send money to three local organizations, including the Foundation for Puerto Rico and the Puerto Rico Community Foundation. But representatives for both of those organizations responded with confusion.
“We don’t know who they are or about this initiative they have,” Libni Sanjurjo, the communications officer of the Puerto Rico Community Foundation, wrote to TIME in an email on September 21. Alexandra Lúgaro, the executive director and policy leader of the Center for Strategic Innovation of Foundation for Puerto Rico, tweeted that the Foundation had not received a “single cent or cryptocurrency from said organization.”
Lúgaro’s statement—as well as other angry Twitter posts against Puerto Rico DAO—led to users mass-reporting the group’s account, which was suspended on September 22. Figueroa, the community organizer, is advising the public to instead donate to Puerto Rican-led grassroot organizations. “We don’t trust these organizations or the government to show up for us,” she says. “They’re self-interested and haven’t served to be helpful.”
On the day the group’s account was suspended, TIME held a video conference with several members of Puerto Rico DAO, including Brittany Kaiser, a controversial Cambridge Analytica veteran who played a key role in cryptocurrency fundraising for Ukraine’s war against Russia; Alexander Díaz, and Keiko Yoshino, the executive director of the Puerto Rico Blockchain Trade Association. All three were still living in Puerto Rico during the power outage and said they were contributing their time and money to local relief efforts. Yoshino, while on the video call, was helping to unload two trucks of dry foods, canned goods and other emergency supplies in the southern city of Ponce.
On the call, the team acknowledged that they might have moved too fast in setting up their website. “We rushed that part: It was done before we actually started contacting them,” Díaz says. He says that they have since met with the two aforementioned organizations, who are “on board and looking forward to receiving crypto donations from the DAO.”
However, both organizations refuted this characterization in follow-up emails. “It isn’t true. I let them know that we do not accept cryptocurrencies, that if they make a contribution they would have to make the change and make a check to the Foundation,” Mary Ann Gabino, the senior vice-president of the Puerto Rico Community Foundation, wrote to TIME. Alma Frontera, the vice president of operations and programs at the Foundation for Puerto Rico, wrote to TIME later that day that the foundation “does not have any agreement with the DAO. We are focused on the relief and recovery of the communities of Puerto Rico as part of our continued efforts to pursue a socio economic transformation for the island.”
Yoshino says that Puerto Rico DAO has collectively put more than $40,000 of members’ own money toward “operations and assistance,” and that the group’s main publicity and fundraising campaign would begin on Monday (September 26). Kaiser says one hundred percent of all crypto donations will go straight to yet-to-be-chosen local partner organizations, which will be selected based on an internal DAO vote. “No one is getting paid for this: We’re 100% volunteer,” Kaiser says.
Yoshino stressed the local organizations themselves would choose how to deploy and use the funds. “We’re partnering with grassroots organizations: We’re just providing support and resources and following their lead,” she says. “We’re just facilitating.”
Kaiser is confident about the long-term impact that Puerto Rico DAO can have on the island despite the initial wariness. She points to her eventual success in Ukraine fundraising after initial setbacks, as more than $100 million in cryptocurrency flowed into the country from around the world. “When we launched Aid for Ukraine, many people thought we were a scam and we had to work hard to overturn that,” she says.
As the DAO moves toward becoming operational, Yoshino says she and others in the crypto community will continue to volunteer and aid efforts on the ground, including delivering food, water and off grid solar energy systems. David Johnston, the COO of DLTx, tells TIME that crypto entrepreneurs have been offering housing and supplies to those in need. “As someone that wants to be vested in the next 5 to 10 years in the growth of Puerto Rico, I think everybody wants to show the community can respond and play a positive role where government and other agencies may take months or longer to respond,” he says.
Another one of the main operations that needs assistance at the moment is the rescuing of coffee crops, which have been flooded and will rot if not harvested immediately. Coffee plants take 5 years to yield, so to lose them would be economically disastrous for many farmers.
BĀSED founder Díaz-Skoff has been part of those efforts this week. And he says that while the technological revolution that was promised for the island has yet to materialize, he’s appreciative that members of the crypto community have joined in on the grueling work. “Technology isn’t going to fertilize our soil or harvest our plants,” he says. “But I know there are members from the community that are actually getting their hands dirty and going out there. It’s a matter of synchronicity, empathy and listening to the needs of the people.”
Even so, artist River L. Ramirez, whose family originates from Rincón, a West Coast town at the center of the island’s fight against the privatization of their beaches, isn’t confident that crypto-led efforts will ever be capable of benefiting Puerto Ricans. “The problem is them being there in the first place,” they say. “Whatever help they provide is a lie, because ultimately their choice to still live in Puerto Rico is in favor of themselves and their monetary gains of evading taxes.”
- Here's Where All The Strongest Hurricanes Have Hit the U.S. in the Past 50 Years
- 2022 Time100 NEXT: TIME’s List Of Emerging Leaders Who Are Shaping the Future
- Industrial Farming Causes Climate Change. The ‘Slow Food’ Movement Wants to Stop It
- Here Are the 12 New Books You Should Read in October
- Artist Oliver Jeffers Wants to Paint the World Out of a Corner
- A Vibrant North Korean Community in London Finds Its Days Are Numbered
- COVID-19 Vaccines Can Make Periods Longer, Study Says
- Column: What Happened When My Entire Family Came Out