Sarasota Has Become a Hub for Cryptocurrency Entrepreneurs – Sarasota
1255 N. Gulfstream Avenue, Suite 101, Sarasota, FL 34236
Phone: (941) 487-1100
By Isaac Eger Published in the May-June 2022 issue of Sarasota Magazine
Courtney and Charlie Shrem. Photograph by Michael Kinsey.
I first met Charlie Shrem, 32, and his wife, Courtney, in an office that overlooks Sarasota Bay from the seventh floor of downtown’s Palm Tower Suites. It’s from here that Shrem runs Crypto.IQ, a consulting company that works with investors in cryptocurrencies like Bitcoin.
A decade ago, Shrem was one of the biggest names in crypto. In 2011, he founded BitInstant, one of the first cryptocurrency exchanges, and later helped launch the nonprofit Bitcoin Foundation. The Winklevoss twins, famous for their role in the development of Facebook with Mark Zuckerberg and the acrimonious breakup and lawsuit that followed, bought their first stake in crypto from Shrem. (According to Forbes, the twins are now both Bitcoin billionaires.) Thanks to crypto, Shrem’s official net worth grew to $500,000, a number that underestimates how wealthy he was, considering the amount of Bitcoin he owned. His life was a fantasy of luxury and tech celebrity.
“I walked around like my shit didn’t stink,” says Shrem. “I was 22, just out of college. I met Courtney. Life was grand. We owned a nightclub in Manhattan that we were living on top of.” Bitcoin was going for $1,000 a unit and rising.
“I did the very first transaction for Bitcoin to be accepted in a nightclub,” says Courtney. She showed me a picture from a Bloomberg article that shows her exchanging cryptocurrency for a cocktail.
The good times didn’t last long. In 2014, when he was 24, Shrem was arrested for aiding and abetting the operation of an unlicensed money transmitting business related to Silk Road, the now-defunct online black market. He spent a year in prison in Pennsylvania.
“My whole world came crashing down,” he says.
Courtney stuck it out with Shrem, abandoning an acting career in New York to move to Pennsylvania to be closer to him. After his release, traumatized by his incarceration and his fall from grace, Shrem moved into his mother-in-law’s basement with Courtney. He had no idea what to do next.
That’s when he came to Sarasota. In 2016, he visited the city after Courtney’s grandmother passed away and immediately decided this was where he wanted to live. He told Courtney, “Let’s never leave this place.” He proposed to her on Lido Beach.
Shrem says that at the time, there was no real crypto community in Sarasota to speak of. But then Shrem met Jesse Biter, a Sarasota entrepreneur who, at the time, ran a tech incubator called the HuB with Rich Swier. Biter had gotten interested in Bitcoin years earlier, and the HuB had begun accepting rent payments in Bitcoin.
“Jesse Biter has supported the tech community a lot,” says Shrem. “He basically didn’t charge me rent when I worked out of his building at the HuB.” (Biter calls Shrem a “superstar in the business.”)
Five years after moving to Sarasota, the Shrems have rebuilt their Bitcoin empire, and now own homes in Laurel Park and Lido Shores and on Bird Key. “Sarasota gave me the second chance that I needed,” says Shrem.
Crypto.IQ isn’t the only cryptocurrency operation based out of Palm Tower Suites, where I met Shrem for the first time. These days, nearly all seven floors of the building located at 1343 Main St. are filled with crypto entrepreneurs. In just a few short years, Sarasota, a place best known for its white sand beaches and its world-class arts scene, has become a destination and an incubator for some of the biggest players in the young and hungry Wild West of crypto.
A disclaimer: I cannot explain how Bitcoin works. I only vaguely understand what the blockchain is. I have no idea why people are paying millions of dollars for digital images of monkeys. No matter how many times people patiently try to educate me about the crypto world, my eyes glaze over like I’m back in high school, snoring through calculus class. I also wonder if it’s all one big multilevel marketing scheme.
But what I do know is that Florida is becoming one of the premier destinations for crypto culture. The mayor of Miami wants his city to be the capital of the cryptocurrency universe and is taking his government paycheck in Bitcoin. This past legislative session, only one Florida lawmaker voted against House Bill 273, a law that would undo a previous court ruling preventing individuals who own Bitcoin and other cryptocurrencies from selling them without a license. Byte Federal, a Venice-based company founded by Lee Hansen, Lennart Lopin and Mark Paolillo that manufactures Bitcoin ATMs, was recognized this year as the seventh-fastest growing company in the Southeast. You can find seven of its 1,300-plus ATMs in and around Sarasota.
It’s easy to see why Miami, with its reputation for ostentatious wealth and glamorous parties, is a draw for crypto investors, many of them young and suddenly flush with cash. The appeal of Sarasota, however, may be less obvious.
Robert Genito, photographed on location at The Westin Sarasota.
Image: Michael Kinsey
Robert Genito, 38, got rich mining Bitcoin in Sarasota. He moved here in 2010 to work as a software engineer for Clickbooth, the digital marketing company now known as Perform[cb]. At the time, Bitcoin was a niche online curiosity.
“When I got to Sarasota, I went balls to the wall mining Bitcoin because my girlfriend at the time didn’t move in with me right away,” says Genito. “I loaded the house up, used every single outlet, every single circuit, to draw as much power as possible.”
To mine Bitcoin is not to dig it up from the earth, but to have computers solve complex cryptographic equations that are then put on the blockchain, a visible, unchangeable list of records meant to show transactions. Each time someone solves an equation, he or she is given a single Bitcoin (or BTC). Only 21 million Bitcoins will ever be minted, and the equations get more complex with each one solved, requiring massive amounts of energy for computing power.
Bitcoin was meant to be a new form of currency, but it has turned into an asset akin to stocks. Some people refer to it as “digital gold.” Other metaphors are less kind. “Imagine if keeping your car idling 24/7 produced solved Sudokus you could trade for heroin,” one Twitter user opined.
imagine if keeping your car idling 24/7 produced solved Sudokus you could trade for heroin
Over time, Genito mined hundreds of millions of dollars’ worth of Bitcoin. When I spoke with him, he wore a deep blue Versace sweater and, under that, an embroidered Versace shirt. On his feet were Prada slip-ons. On one arm, he wore a giant gold watch; on the other, a Cuban link bracelet that looked an inch thick. Genito didn’t always dress this way. Even after he amassed a small fortune mining Bitcoin, he lived an austere life.
“I was so into hoarding Bitcoin, I didn’t have furniture in my first apartment,” he says. “Just a bed and little chaise thing.” It wasn’t until a little over a year ago that Genito started splurging. “I was programmed as a little kid to think you only needed one pair of shoes,” he says. “Then I got attracted to feeling uncomfortable in expensive things. I was like, ‘Whatever,’ and started buying a lot of Louis Vuitton, Gucci and Burberry.”
Although Genito considers himself retired, he says he still wants to add another zero to his net worth and become a billionaire. He owns a house in Lakewood Ranch and is continually adding to his car collection. He’s not sure how much longer he’ll stick around in Sarasota, but, in the meantime, he is convincing other people in the crypto world to come here.
“Anthony Di Iorio called me not long ago,” says Genito. Di Iorio is one of the cofounders of Ethereum, the second most popular cryptocurrency, just behind Bitcoin. “He said, ‘Hey, I’m looking to buy a place in Fort Myers.’ I said, ‘Dude, no, ugh. You saw some ad and you think Fort Myers is the shit. Do not go to Fort Myers. They call it Fort Misery for a reason.’ I told him to come to Sarasota.” (Di Iorio declined a request for an interview.)
I asked Genito how he sold his friend on Sarasota. “The beach, the art, the culture,” says Genito. “I told him that Sarasota allows itself to be more relaxed than a place like Fort Myers or Miami.” A week later, Di Iorio called Genito and said he was closing on a house in Lakewood Ranch, five minutes from Genito.
Image: Michael Kinsey
A big part of the appeal of crypto is that you can do it anywhere. In the same way that the Covid-19 pandemic encouraged white collar professionals to move to Florida and work remotely, it has also brought crypto investors to the Sunshine State.
“I think it picked up because of Covid,” says Charlie Shrem. “People always knew about this place because their grandparents lived here and they visited, so once offices let them work online, why would they go back to New York or California?”
But why Sarasota and not Miami or any of the other coastal cities in Florida competing for this new industry? Shrem likes how close Miami is. He no longer has to fly to San Francisco for meetings or conventions. But more than that, he likes that Sarasota wasn’t trying to convince him to move here.
“Sarasota isn’t a place looking for anyone,” he says. “Other places are trying to attract outsiders in. Sarasota was always comfortable with what it is.”
Shrem says local government officials like Sarasota City Commissioner Kyle Battie are also supportive. “If you have a question about something, the commissioners are very reachable,” he says. “Kyle is awesome. He came to our Christmas lunch. We want transparent government, and the city and county commission here have a good reputation.” (Battie declined a request for an interview.)
Sarasota’s existing wealth is another reason the crypto world might feel welcome here. There are reportedly several billionaires who call this town home. One of the benefits and criticisms of cryptocurrency is that it provides a significant amount of anonymity. Because Sarasota is already a very wealthy community, there’s a built-in culture of privacy and security.
“When we go to New York City, Miami or any event in California for a conference, we always hire security,” says Shrem. But he and Courtney don’t need that here. In fact, Shrem is unafraid of making his presence known in Sarasota—something he wouldn’t do elsewhere.
“Everyone here is already a celebrity or a billionaire,” he says. “You’re going to be persona non grata if you try to walk up to someone and ask for an autograph or pitch business at The Gator Club. The people here don’t do that. They’ve already made it.”
Not everyone thinks Sarasota is friendly toward the crypto industry. Mike Vazquez, one of the stars of the MTV reality show Siesta Key and a co-founder of the crypto company Fanverse, says that, in his experience, local investors aren’t interested in the success of his project. They just see the kinds of wild returns others are earning and expect to get the same results in an extraordinarily short period of time.
“It’s a lot of really rich people who are selfish. Quote me on that,” says Vazquez. “The very rich are the most annoying. They panic the most. They accuse you of being a fraud if they don’t get quick money back within a couple weeks. They’re the first to be banging on your door.” He finds the pressure frustrating because his investors are people who have so much money that it won’t really affect their lives whether they win or lose.
“They don’t care,” says Vazquez. “They just don’t want other people to make lots of money while they aren’t.”
Image: Michael Kinsey
Sarasota isn’t just a destination for crypto investors looking to move to sunny Florida. A number of crypto coins have gotten their start here.
For the past year, Tony Marchuk’s face has been turned toward his phone. “With crypto, it’s always on—24/7, global,” says Marchuk, 32. “The markets don’t stop at 4 p.m. like they do with stocks.” Marchuk is the chief executive officer of Cryptonite Group Inc., a Sarasota-based business that runs Mishka Token and Bad Bears, a series of non-fungible tokens, or NFTs.
Originally from Ukraine, Marchuk moved to Sarasota about 10 years ago. Right away, he found himself in the tech community. “Sarasota has this underground entrepreneur startup energy,” says Marchuk. “There’s also a thriving art scene. So when you combine tech business with creativity, you’re going to get a lot of cool stuff.”
In 2021, Marchuk started Mishka and Bad Bears. When we met, he made a valiant effort to explain to me how Bad Bears work. Something about a passive yield and how Bitcoin is gold, but Ethereum is more like oil. I politely nodded. He showed me Bad Bear NFTs on his laptop. The images, mostly JPG or GIF files, show a black bear, a brown bear, a panda bear or a psychedelic bear with different accoutrements.
“There will only ever be 5,555 Bad Bears minted,” says Marchuk. He typed in some code and generated a unique Bad Bear in front of my eyes. “The artwork was done by a Ringling student,” says Marchuk. “There are a lot of people from Ringling involved in the crypto-creative world.”
I asked him how Bad Bears are different from Bored Ape Yacht Club, the popular NFT featured on the cover of Rolling Stone and displayed on late-night TV, when Paris Hilton and Jimmy Fallon showed each other their expensive cartoon apes. Bored Ape images can fetch millions of dollars. Marchuk says Bored Ape has a sizable head start over its competitors in the NFT world, but he expects Bad Bears to catch up.
“It’s tough breaking into the market, because traditional marketing doesn’t work,” says Marchuk. “But I really think we have something to offer.” To get more people interested in buying Bad Bears, his company is raffling off a trip to space to all Bad Bear owners.
Image: Michael Kinsey
A picture of a monkey doesn’t really appeal to me,” says David Daly, 40. Daly is the founder of Door, a coin and app that use NFT technology. He has been a presence in the local tech and startup scene for years, often in partnership with Rich Swier, who founded the HuB and later partnered with Biter on the incubator project. (Biter now runs the co-working space Bold on Fruitville Road and is no longer involved with the HuB.) Daly looks like he could be a barista at a coffee shop in the Pacific Northwest, with tattoos all over his arms, a stylish haircut and black-rimmed glasses.
The NFTs that Daly and Swier offer are different from collectables like Bad Bears and Bored Apes. Door and its sister company, NIL (which stands for Name, Image & Likeness), offer users the ability to monetize their own data by using NFT technology to establish ownership of one’s personal information. When you use the Door app, the company pays you with its Door coin to sell your data to advertisers.
“We’ve been using Google and Facebook platforms for all these years, and after doing all this digital marketing, it was clear to us these ad tech platforms have been manipulating data, violating privacy laws and leveraging consumer data to build billion-dollar companies, and consumers don’t get a cut of any of that,” says Daly. He created Door with the hope of allowing private individuals to make money off their own data.
Daly first got into crypto in 2012, running small mining operations in Sarasota. Although he owns a Lamborghini, Daly says he tries not to look or act like a lot of people in the crypto world who suffer from what he calls “sudden wealth syndrome.”
“I’m not somebody who needs to flex,” says Daly. “I’ve never bought a Rolex. My wife bought me a Louis Vuitton wallet for my birthday. That’s about as fancy as I get. It’s not my style, I guess.”
According to Daly, media outlets misrepresent the average crypto person by focusing on the lottery-winner types who buy conspicuously and get in trouble with the law. “Why would anybody talk about anything else?” he says. “Everything else is boring. Showing people grinding every day? Who have long-term visions? Investment horizons? Who are slowly building their portfolios over time? Yawn. That’s not what you’re going to see on Twitter and any news outlet reporting on crypto.”
Another common charge is that crypto is nothing but a Ponzi scheme, a way for grifters to build wealth at the expense of people who put their money into investments they don’t fully understand.
“It’s a terrible term for crypto,” says Daly. “Because, if that’s the case, then real estate is a Ponzi scheme. Stocks are a Ponzi scheme. Everything that goes up in value is depending on you buying it at one price and others coming in and buying it at a higher price.”
But, as with any innovation, there will always be people who come along trying to scam people. “There are pump-and-dumps and scammers, but there will always be stuff like that,” says Daly. He contends that the potential to help people monetize their own data is worth it in the long run. “Why should people like Zuckerberg be the only one to make money off of your information?” he says.
Shrem echoes Daly’s thoughts on people who think crypto is a scam. “People are naturally hesitant about things that they don’t understand,” he says. “At the same time, the media just highlights all the negativity and all the scams. So people don’t really see the goodness.” He compares media depictions of crypto as a scam to “Florida Man” stories that emphasize the bizarre or the grotesque in order to titillate readers and viewers.
In March, President Joe Biden signed an executive order calling on federal agencies to work together to create regulations and oversight for digital assets and explore creating a digital version of the dollar. It looks like crypto technology is here to stay.
“Everything is being rebuilt on blockchain technology,” says Shrem. “Florida is the last Wild West of America, and crypto is the Wild West of the financial industry.” It makes sense that the two would intersect here.
Shrem likes to quote Satoshi Nakamoto, the enigmatic and pseudonymous developer of Bitcoin. “Satoshi always knew Bitcoin was great,” says Shrem. “He said, ‘If you don’t understand it, I don’t have time to explain it to you.’ Sarasota is kind of like that. We know we are great. Come and figure it out for yourself.”