Crypto millionaires are building their own cities in Central America

Romer initially worked with the Honduran government, but parted ways after disagreements over how to implement his idea. (Romer did not respond to a request for comment.)

Próspera, which broke ground in 2020, plans to introduce ultra-low taxes, outsource services normally managed by the public sector, create an “arbitration center” instead of a court, and charge an annual fee for citizenship (either physical or legal). electronic). residency), which involves signing a “social contract” that the company hopes will stop wrongdoing.

When I visited the site in February, one of the few completed buildings was a headquarters. There were no private Próspera police, but the reception had a number for Bulldog Security International, a private security company hired by hotels on the island that the local police found inadequate. Office workers were housed in two two-story buildings. The rest was mostly a construction site, although a high-rise apartment building is under construction.

A rendering of future Próspera features apartments that appear to be inspired by the shells of the island’s native seashell – soft curves in pearl coral, cream and glass. A strip of white sand separates the apartment block from the gentle lap of the Caribbean Sea.

The companies most likely to be drawn here are those looking to evade regulation in their own countries — Trey Goff, Chief of Staff at Prospera, highlights medical innovation, health tourism, and pretty much every facet of the cryptocurrency industry.

“There’s automatically some level of overlap with the crypto industry and what we do,” he says. “Because they see themselves as pioneers of financial innovation and we want to make that possible.”

Michael Byers

Some people working in technology and crypto have already settled in the jurisdiction remotely through the e-residency program. Businesses are free to trade in their chosen cryptocurrency, and five have been approved for use at the government level.

Prospera’s advisors include Oliver Porter, founder of Sandy Springs, Georgia — until recently a fully privatized US city — that will emulate Prospera’s outsourcing model. So far, Próspera says, Silicon Valley venture capitalists and private investors have injected $50 million into the project, and another $100 million round of funding is underway.

The amount raised so far includes funds from billionaire Peter Thiel, venture capitalist Marc Andreessen and investors Roger Ver and Balaji Srinivasan through Pronomos Capital. Pronomos Capital told Bloomberg in 2018 that it was in talks about setting up semi-autonomous cities in countries like Ghana, Honduras, the Marshall Islands, Nigeria and Panama.

Broken links

If you continue along the road that leads to Próspera, you will soon come across a village of about 100 people called Crawfish Rock. Tucked away in a patchy patch of woods on the coast lies a cluster of wooden houses painted in fading pastels and set on stilts. Chickens scratch in patches of weeds that sprout under palm trees. It’s a far cry from the stark whiteness of Próspera’s air-conditioned boardroom.

At Crawfish Rock, I am greeted by Luisa Connor, head of the village’s patronato, or community board. She belongs to the Garifuna community – descendants of slaves brought to the island by British colonizers in the late 18th century. Sitting on plastic chairs in her garden while her young daughter plays nearby, we discuss the resistance to Próspera, which has mutated from a community-led effort into a national rejection of ZEDEs. Connor paints a picture of the deception on the part of Prospera, saying that it presented itself as regular tourism development when it asked the community to sign an agreement promising that the villagers would be offered the first jobs on the site.

However, the villagers soon discovered that the project would be something else entirely, and relations quickly crumbled. Connor Says Prospera CEO Erick Brimen Offered to Buy Crawfish Rock Outright; She refused on behalf of the village. But residents worried that Próspera would confiscate their land to make way for the expanding city-state.

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Land grabbing has a long, bloody history in Honduras. Successive governments have authorized corporations to take land from farmers — sparking conflict that has resulted in more than 150 murders and disappearances in one area alone since 2008.

Próspera CEO Daniel Frazee says the company’s contract prevents it from expropriating land and plans to expand in directions where there are no settlements. But Connor says after she turned down Brimen’s offer, he told her the Honduran government could accept it. When asked about Connor’s comments, Próspera denied attempting to buy Crawfish Rock, saying its charter and statutes prohibit it from receiving expropriated land from the Honduran government.

Islanders I spoke to objected in principle to the ceding of land in Honduras to corporate control. They “respect no government, no rules, no law; just a dream,” Rosa Daniela, a community activist involved in the campaign against Prospera, told me. “They don’t think they live in your country because they want to start a new country.”

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

Since the launch of Próspera, the political climate has changed. Amid growing backlash against ZEDEs over concerns like those raised in Crawfish Rock, new Honduran President Xiomara Castro stepped in on a platform that promised to shut them down and questioned Próspera’s longevity.

“We are just an experiment”

Bitcoin City has yet to break ground, but Conchagua Volcano is already home to several settlements, raising the specter of displacement, says Salvadoran economist José Luis Magaña — especially given that only about a fifth of farmers in the region still own their land and continue to work .

The government says the project aims to create jobs in the poor neighboring city of La Unión, but Magaña says the socioeconomic differences between the city and El Salvador’s larger cities make gentrification more likely.

Unlike Próspera, Bitcoin City has the support of the current government. But an influx of foreign investors and displacement of locals could eventually trigger a similar backlash. Three days after Bitcoin City’s announcement, El Salvador passed a new law that would allow the government to expropriate land for public use.

To prevent speculators from driving up land prices, the exact location of Bitcoin City remains vague. But real estate companies from Europe, wealthy Salvadoran businessmen and cryptocurrency companies have offered to buy the land on which El Espíritu de la Montaña sits from Diaz for three to five times the price he paid.

Diaz insists he won’t sell: “This is a lifetime project for me.” He supports Bukele and believes Bitcoin City will spur economic growth in the region, although he notes that people he knows in La Unión worried about being forced to move.

Back in Honduras, researcher José Luis Palma Herrera sees ZEDEs and similar projects as a modern twist on the region’s painful history of corporate colonialism. “The promise of ending poverty and improving life was used to get citizens to accept these enclaves of corruption and exploitation,” he says. “However, most of the profits from the enclaves go abroad. [with] no real development in the regions they were in.”

In addition to Próspera, there are three other ZEDEs in Honduras. Less radical private urban projects are now being implemented in Malawi and the US. Ethereum creator Vitalik Buterin has been involved in talks with the Zambian government about establishing a crypto-powered special economic zone.

“We’re trying to help create a whole new kind of industry… the industry of building cities,” says Goff. He says he would like to one day see a few hundred developments around the world – “bright spots of prosperity all working together to create a better future for humanity.”

Not everyone is sold on the dream. In Roatán, Rosa Daniela worries about the impact on her community and others who love it. “They come to us, these adventurous guys, in the name of freedom,” she says. “They want to start with us; We’re just an experiment. If they succeed here, they will move to your country and other countries around the world.”

Laurie Clarke is a freelance technology journalist based in the UK.


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