The majority of current discourse on Scientology centers around insider revelations regarding the radical belief system coded within the pay-to-play hierarchy of the Church –– e.g. allusions to an alien god named Xenu, hydrogen bombs exploding in ancient volcanoes, auditing sessions with e-Meters, and parasitic past-lives in spirit-form covering human bodies known as Thetans. The deepest secrets of Scientology are only made available to members who have diligently climbed the ranks and dished out vast sums of money. Slowly but surely, these secrets have been published on the internet by disgruntled ex-Scientologists, and thus the discussions surrounding this controversial religion have been commandeered into sensational silos. Whether intentional or not, the end result is that the immense ties of the Church to intelligence and drug trafficking –– not to mention the intersection of both as it relates to the CIA’s MK-ULTRA mind control program –– remain largely ignored.

Scientology’s methods and their extremely pervasive effects on the minds of its own cult members only truly begin to make sense when understood within the context of the non-redacted history of founder L. Ron Hubbard, including the Church’s primordial Hubbard Dianetic Research Foundation connections to the intelligence community, and Hubbard’s own intelligence career. His role in under-discussed operations, on the behalf of US Naval and other intelligence agencies, include Hubbard’s work at St. Elizabeth’s Hospital in Washington, D.C. in the 1930s –– the hot-bed of psychiatric research during Project Bluebird and Project Artichoke, the precursors to the infamous MK-ULTRA program –– in addition to his infiltration of Jack Parsons’ occult-influenced rocket program, the Jet Propulsion Laboratory, whose work became the scientific foundation for NASA.

In 1953, The MK-ULTRA program was formally authorized by CIA Director Allen Dulles in order to close the “brainwashing gap” after the US learned of Korean mind-control techniques that had been used on American prisoners of war. As detailed later in this investigation, Scientology itself would later employ such tactics to direct fanatical members of the Church to infiltrate a handful of US agencies, including the IRS, the Treasury, and the FDA, among others, to enact an elaborate intelligence gathering operation in the largest infiltration of the US government in history –– Operation Snow White.

This piece, the first in a two-part series, attempts to abridge the history of the Church of Scientology from its formation through the mid-1990s in order to properly frame an ensuing article on Scientologist Sky Dayton and his numerous internet businesses strewn across his prolific data-mining venture portfolio.

Ultimately, Scientology is far more than just another run-of-the-mill religion. In fact, its mostly untold history paints a picture of an organization that much more closely resembles a tax-exempt intelligence operation –– signed off by the highest members of the CIA and its primordial OSS –– than a wacky cult of alien worshippers invented by a pulp science-fiction author.

St. Elizabeth’s, the OSS, and Project Artichoke

Remember one thing, we are not running a business, we are running a government. We are in direct control of people’s lives.

–– L. Ron Hubbard, Policy Letter from August 5, 1959

Lafayette Ronald Hubbard was born March 13, 1911 in Tilden, Nebraska, the son of a teacher and a US Navy officer. Hubbard spent his early childhood on various Navy bases, including a lengthy stay in the US territory of Guam. Before authoring the concepts of Dianetics and founding Scientology, Hubbard was a well-published science-fiction author. Hubbard began his ventures into the study of the mind after sailing alongside the former Navy spy and pioneering-yet-controversial psychoanalyst Commander Joseph “Snake” Thompson. His father, Harry Ross Hubbard, was ordered to return to the east coast, and thus the Hubbard family was deployed alongside Thompson on the USS Ulysses S. Grant in 1923. Despite the young Hubbard being only 12 years old at the time of meeting, the two engaged in friendly correspondence for years. Hubbard later attended George Washington University to study engineering, but would leave before graduating.

Hubbard encountered and befriended William Alanson White, a professor of psychiatry at the university. For the remainder of the 1930s, Hubbard stayed in Washington, D.C. and volunteered with the psychiatric community in the nation’s capital, including alongside White, who was then also serving as the Superintendent of St. Elizabeth’s Hospital. His former shipmate, Thompson, soon became the Vice President of the Washington Psychoanalytic Association, of which White was President, and was also stationed at St. Elizabeth’s hospital. Scientologist John Galusha later penned a letter to the FBI in 1954 stating that Hubbard was “trained in psycho-analysis in Washington, D.C.” by both Thompson and White.

In a lecture given in June 1955, Hubbard himself confirmed this mentorship:

“And I came back to this very city in which we’re giving this congress, and I took engineering… And majored, in that engineering, in finite energies, and thought of the finest energy I could think of – it must be the human mind. Experimented to discover how memory was stored, and found by no computation I could ever compute, that it – a man couldn’t remember, certainly by this computation, more than three month’s worth. Because there wasn’t that much storage space because energies weren’t that small. And I was proposed, as a young engineer, a conundrum of such magnitude that I went over to my very good friend, the head of Saint Elizabeth’s Hospital… Dr. William Alan White. He said, ‘If you pursue along this line’ (…he was a golf friend of mine) – and ‘if you pursue along this line,’ he said, ‘you tell me about it from time to time,’ he says, ‘because I’ll be watching.’

Now, another fellow who had been more or less my mentor when I was a little kid – as a matter of fact, I followed in the footsteps of this man – Commander Thompson, who brought psychoanalysis straight from Vienna to the US Navy, and introduced psychoanalysis into the Navy… I told Commander Thompson about this work, I tried to get more information, and when I had turned to Commander Thompson and Dr. Alan White, I had turned to the only two probables in the country who could have shed any light on this subject at all.”

Despite a fondness for his former teacher White, White’s successor at St. Elizabeth’s, Winfred Overholser, became an object of Hubbard’s hatred following Overholser’s dismissal of his Dianetic research. Hubbard lectured in 1952 about the dangers of Overholser’s treatment of schizophrenics at the hospital’s Chestnut Lodge. The lecture even includes mention that three members of the staff from the Chestnut Lodge were sent to service Hubbard himself during the 1930s. This overlaps with CIA activity at Chestnut Lodge, which directly involved Overholser. According to the CIA, in 1942, then-OSS Chief William Donovan assembled “a half-dozen prestigious American scientists” tasked to “come up with a substance that could break down the psychological defenses of captured spies and POWs” in order to cause an “uninhibited disclosure of classified information.” Overholser was appointed chairman of the panel working on this “Truth Drug.”

According to a University of London research paper titled “The Role of Psychoanalytic Knowledge in CIA’s ARTICHOKE and MKULTRA Documents During the Years 1947-1963: Use and Misuse of Psychoanalytic Techniques,” the Chestnut Lodge “held CIA-cleared psychiatrists ‘for in-house employees and other sensitive cases’ and was officially ‘approved by the CIA Security Office for use’ in 1953.” The paper asserts that “the collaboration between US-intelligence and Chestnut Lodge psychiatrists and psychoanalysts” had began even earlier, during World War II. For example, Chestnut Lodge employees Mabel B. Cohen, Robert A. Cohen, and Alfred H. Stanton were “all security-cleared OSS-medical personnel” who were, at the time, “assigned to Henry A. Murray’s OSS Assessment Staff.” The paper also states that some of their OSS assignments were “conducted at the Lodge,” and that “this collaboration continued when the CIA superseded the OSS in 1947.” St. Elizabeth’s Hospital, the Chestnut Lodge, and the CIA’s headquarters at Langley are all within a few miles of each other, and two CIA Directors, Richard Helms and Allen Dulles, employed the same psychoanalyst at the Chestnut Lodge for their personal care.

A published memo from Paul Gaynor, the CIA Security Research chief, to Project ARTICHOKE director, Morse Allen, reads: “It is imperative that we move forward more aggressively on identifying and securing a more reliable ready group, or groups, of human research subjects for ongoing Artichoke work.” According to the Alliance for Human Research Protection, the now defunct Department of Health, Education, and Welfare (HEW) was created in 1953, the same year as the aforementioned memo was written, and “the CIA found it remarkably easy to gain HEW’s approval for use of Federal medical facilities as fronts for covert drug and interrogation experiments using unwitting human subjects.”

Allen later suggested to Gaynor in another memo titled “Artichoke Research Program” that “there are some four thousand American military men who are serving court martial sentences in the federal prisons at the present time,” and he suggested “offer[ing] reduced sentences” to these men in order to gain their consent to participate in Artichoke-related experimentation. About a week later, Allen tweaked the aforementioned memo to include “federal hospitals and institutions under the control of the [U.S.] Public Health Service.” Shortly after, Artichoke progress reports were sent to the CIA via Gaynor about “the experiments at three federal prisons,” in addition to experiments conducted at Hubbard’s former haunt, St. Elizabeth’s Hospital.

The aforementioned OSS agent in charge of St. Elizabeth’s staff, Henry A. Murray, later joined Harvard as a researcher, where he conducted the infamous Harvard Experiment, whose research subjects included Theodore Kaczynski –– more famously known as “The Unabomber” –– in addition to supervising Timothy Leary’s controversial work with psychedelic drugs. Leary’s deeper connections to Scientology and intelligence will be explored later in this piece. Murray remained secretly employed by the CIA during this time, leading many to theorize that Murray’s work were conducted as a part of MK-ULTRA or related projects. Murray was far from being the only intelligence-linked figure who served in a prominent role at Chestnut Lodge. For instance, Harry Stack Sullivan, the one-time head psychiatrist at Chestnut Lodge and founder of the William Alanson White Institute, left the hospital before helping establish a CIA-precursor, the Office of War Information in 1942.

In a lecture titled “How to Handle Audiences” delivered by Hubbard on November 1, 1956, the Church’s founder confirmed his 1930s stint at the D.C.-area mental hospital, and even boasted of tricking the workers at St. Elizabeth’s using advanced hypnotism:

“I hypnotized one time the staff at St. Elizabeth’s. Told him they’d heard a good speech and left the stage. They all came around afterwards saying, ‘What a good speech that you gave!’ They might afterwards have suspected my knowledge of the mind, but certainly not my knowledge of hypnotism. It’s very easy to hypnotize groups.”

At the onset of World War II, Hubbard himself enlisted in the Navy after his stint at St. Elizabeth’s. There is much discrepancy about his rank and accomplishments during the war, but by nearly all accounts –– including critical biographers and the Church itself –– Hubbard served as an intelligence officer. In 1945, upon the war’s conclusion, Hubbard moved into an estate in Pasadena, CA owned by Jack Parsons, the aforementioned founder of the Jet Propulsion Laboratory.

The Parsonage

John Whiteside Parsons was born in Pasadena, CA in 1914 and spent his early life reading science-fiction and emulating his desires for space travel in his backyard with model rockets and fireworks with his childhood friend, Edward Foreman. After numerous craters were made in his mother’s backyard, and while still enrolled in high school, Parsons joined the Hercules Powder Company and began experimenting with solid-fueled rockets. He later left Hercules and, along with his childhood friend Foreman, joined the Halifax Explosives company based in the Mojave Desert. During their time at Halifax, in 1937, both of the aspiring rocketeers attended a lecture on the subject at Caltech, where they met Frank Malina.

Parsons, Foreman and Malina went on to pitch Theodore Von Karman of the Guggenheim Aeronautical Laboratories of the California Institute of Technology (GALCIT) on their ideas of rocket propulsion, with Malina’s proposal for a doctorate eventually being approved by the “legendary aerodynamicist.” The trio, now with access to the labs and literature available via Caltech and GALCIT, began their experiments in earnest –– with their infamous explosive tendencies earning them the name the “Suicide Squad.” Their work formed the basis of the Jet Proposal Laboratory (JPL) on the outskirts of Parsons’ hometown. As mentioned previously, the JPL was eventually incorporated into NASA, and Malina’s son, Roger Malina –– the husband of Christine Maxwell, the daughter of Robert Maxwell and sister to Jeffrey Epstein’s accomplice Ghislaine Maxwell –– later served as the first Director of this new joint venture.

Long before the JPL was formalized under the Executive Branch, Parsons and his crew received funding from the US Army in 1938 to develop rocket engines to assist in the launch of small aircraft. The military was pleased with the results on their JATO canisters –– “Jet Assisted Take Off” –– and funneled more money towards developing these fuel sources. The solid rocket fuel that had been developed by Parsons became “the basis of the Minuteman missile, the Titan rocket, and the Space Shuttle solid rocket booster.” Despite, by nearly all metrics, the success of the primordial JPL –– then-known as the GALCIT Rocket Project –– Parsons soon turned his eye away from the stars and, in 1939, began focusing on the works of English Occultist, Aleister Crowley.

Crowley, a member of The Hermetic Order of The Golden Dawn, joined the Ordo Templi Orientis (OTO) in 1910, a Freemasonry off-shoot, that was quickly influenced by Crowley’s interest in his Thelemic religion, occult ceremonies, and “Sex Magick.” Parsons and his then-wife, Helen Northup, joined the OTO in 1939, and Parsons engaged in frequent correspondence with Crowley, eventually becoming the American representative of the OTO. In order to further his study of Crowley’s teachings and the OTO, Parsons purchased a mansion in Pasadena to create a commune of occultists he dubbed “The Parsonage.” The manor soon became a hot bed of lavish parties, orgies and occult rituals. Meanwhile, the military continued to pour funding into the GALCIT Rocket Project and, in 1942, the rocket builders founded the Aerojet Engineering Company to keep up with the increasing demand for militarized propulsion. The next year, in 1943, the military formally took over the GALCIT Rocket Project, and renamed it the Jet Propulsion Laboratory. Now under military control, JPL developed “several weapon deployment systems based on the liquid and solid fuel technology” including the WAC Corporal sounding rocket, which played a large part in the construction of “the first American rocket ever to exit the Earth’s atmosphere.”

As his interest in the occult deepened, the military became wary of Parsons’ ways, and strong-armed him into unloading his shares of the Aerojet Engineering Company. The ensuing payout provided further funding for his “spiritual” life and the Parsonage itself. At this time, in 1945, L. Ron Hubbard became acquainted with Parsons, and was quickly initiated into the OTO. Hubbard subsequently moved into Parsons’ Pasadena estate. In a letter to Crowley describing Hubbard, Parsons wrote, “I deduced that he is in direct touch with some higher intelligence. He is the most Thelemic person I have ever met and is in complete accord with our own principles.”

Hubbard and Parsons soon became inseparable, with the pair even sharing Parsons’ then-partner Sara Northrup –– the half-sister of Parsons´ first wife, Helen. In the winter and spring of 1946, Parsons and Hubbard toiled on a series of occult rituals in the Mojave Desert dubbed “Babalon Working,” in which the pair attempted to incarnate the Thelemite goddess Babalon onto Earth. Shortly after its conclusion, and having believed the ritual to be a success, Parsons sold the Parsonage for cash and looked to Hubbard for business concepts to pay back the hefty expenses from their years of occult investigations. Hubbard promptly took nearly all the funds from the sale of the estate, as well as Parson’s wife Sara. The pair then eloped in Mexico. While Parsons did eventually get his money back, Hubbard, Sara and Parson’s sailboat continued on without him.

In 1950, Parsons lost his security clearance after the FBI began investigating the occult scientist for the theft of “rocket plans,” plans which the bureau claimed Parsons “had planned to exchange” with “the newly founded Israeli government in exchange for admission into Israel.” The US Air Force told the FBI that they had been “monitoring Parsons and his relationship with Crowley,” stating in a report that “a religious cult, believed to advocate sexual perversion, was organized at subject’s home at 1003 South Orange Grove Avenue, Pasadena, California, which has been reported subversive.” According to statements made by the Church in December 1969 to the Sunday Times, Hubbard was sent by the US Navy to “[break] up black magic in America.” The Church wrote, “He went to live at the house and investigated the black magic rites and the situation and found them very bad… Hubbard rescued a girl they were using. The black magic group was dispersed and destroyed.” In 1952, Parsons died suspiciously in an explosion at his workshop. Hours after the explosion, Parsons’ mother, Ruth, purposefully overdosed on sedatives and died the same day.

Shortly after splitting from Parsons and settling in with his now-wife Sara, Hubbard penned the beginnings of his life work with Scientology, then-known as Dianetics, publishing his first work on the subject in May 1950.

Dianetics and the CIA’s Influence on Scientology

Initially published as an article in the Astounding Science Fiction magazine’s May 1950 issue, “Dianetics: The Evolution of Science” was written by Hubbard over three weeks on an IBM typewriter. In April 1950, a month before the release of the article, the magazine’s editor John W. Campbell –– an extremely important figure in the blossoming science fiction scene having mentored and published Isaac Asimov, Robert Heinlein, Arthur C. Clarke, and Hubbard, among others –– worked with Hubbard to coalesce the pre-publication hype into a foundation to spread its teachings. This culminated in the founding of the Hubbard Dianetic Research Foundation. Coincidentally, the same month, the CIA’s mind control program Project BLUEBIRD was authorized by the CIA. According to letters from John Galusha –– a Board member of the Hubbard Association of Scientologists International –– later released by the FBI, the idea for the formation of the Dianetics Research Foundation was suggested by Charles Parker Morgan.

In a declassified report from the FDA, files cited by ex-Scientologist investigator Mike McClaughry, “the Dianetic Research Foundation was incorporated in New Jersey, in April 1950, as a ‘non-profit, scientific and educational corporation, the primary purpose of which is to do research in the field of Dianetics and, for the correction of all psychosomatic ills of mankind’.” The report lists Hubbard as President, Parker Morgan as Secretary & General Counsel, Campbell as Treasurer, alongside Sara Hubbard and Donald H. Rogers as Trustees of the Foundation. The same report also lists Parker Morgan as a “former special agent for the FBI,” while his name also appears on a government-hosted list of OSS Agents, confirming the primordial intelligence ties to the formation of Scientology. An FBI Memo from the L. Ron Hubbard Files dated March 21, 1951 also refers to Donald H. Rogers, the Director of Research at the newly formed foundation, as a former FBI agent.

In January 1951, the New Jersey State Board of Medical Examiners filed a lawsuit against the Foundation, and Hubbard found himself in need of a new operational strategy for Dianetics. According to both McClaughry and The Royal Maze, two separate intelligence officers suggested that Hubbard incorporate Dianetics as a religion as a defense mechanism against these lawsuits. They were the aforementioned OSS/FBI agent Charles Parker Morgan, and John Starr Cooke.

In The Game Player by ex-CIA agent Miles Copeland, Copeland describes his political influence work with fellow agent Bob Mandlestam, which they referred to as “Occultism in High Places” or “OHP.” OHP was “a theory of political activism based on an impressively detailed study of ways in which leaders of the world based their judgements on one form or another of divine guidance.” Copeland further described the duo’s theory that “properly ‘charismatized’ leaders, placed in certain positions in the ‘free world’s’ ‘key’ bureaucracies, could be used as political levers by which an enlightened American foreign policy could uplift the world,” which would “enable a properly employed CIA to fulfill the Wilsonian pledge to ‘make the world safe for democracy’ while removing certain goings-on here and there that were inconveniencing the American way of life.” Consider, for example, the influence of Presidential spiritual advisors such as Ronald Reagan’s astrologer Joan Quigley, or Choi Soon-sil over former South Korean President, Park Geun-hye.

Copeland specifically mentions such “arrangements” with the Church of Scientology:

“When Bob Mandlestam made similar arrangements with Scientology, the brainchild of another nut, this one a science-fiction writer named Ron Hubbard, we were on our way to having a political action capability which would make the highly expensive, largely ineffective and largely overt ‘covert action’ of Bill Casey’s CIA seem trivial by comparison. ‘MRA will hit ’em high, and the Church of Scientology will hit ‘em low!’ Bob liked to boast, and he was right… we planted an agent in the Scientology cult who became a ‘clear’ under the tutelage of Ron Hubbard himself, and then demanded and got more and more ‘operation expenses’ to be turned over, in addition to his own life’s savings, to the cause of Dianetics.”

The 1985 book Acid Dreams by Martin Lee and Bruce Shlain confirms the agency’s infiltration, suggests that the aforementioned John Star Cooke had been the CIA proxy sent by Copeland and Mandlestam:

“A man of wealth and influential family connections, Cooke was no stranger to high-level CIA personnel. His sister, Alice, to whom he was very close, was married to Roger Kent, a prominent figure in the California state Democratic party; Roger’s brother, Sherman Kent, was head of the CIA’s National Board of Estimates (an extremely powerful position) and served as CIA director Allen Dulles’s right-hand man during the Cold War. John Cooke hobnobbed with Sherman Kent at annual family reunions and is said to have made the acquaintance of a number of CIA operatives while traveling in Europe.

Driven by an avid interest in the occult, Cooke journeyed around the world befriending an assortment of mystics and spiritual teachers. In the early 1950’s, he became a close confidant of L. Ron Hubbard, the ex-navy officer who founded the Scientology organization. Cooke rose high in the ranks of the newly formed religious cult. (He was the first “clear” in America, meaning he had attained the level of an advanced Scientology initiate.) Before long, however, he grew disillusioned with Hubbard and they parted ways.”

Cooke moved back to California, and became an important pillar in the blossoming occult scene, with numerous connections to Timothy Leary, the CIA, and many of the chemists and traffickers associated with the LSD movement. Cooke died at his home in Cuernavaca, Mexico in 1976, but not before being visited by Andrija Puharich, an ex-Military scientist and researcher, and Seymour “The Head” Lazare, a long-time affiliate of William Mellon Hitchcock, who will be discussed shortly.

Puharich was famous for his study on parapsychological phenomenon, and attempted to find military applications of such practices of remote viewing and telekinesis. His work led to the founding of the Stanford Research Institute, which employed high-ranking Scientologists Hal Puthoff, Ingo Swann, Pat Price and Eli Primose. Puthoff had worked for the National Security Agency, and Swann for the United Nations. Their research, eventually merged under the CIA’s infamous Project Stargate, was directly supervised at Langley by John McMahon, the “second-in-command under [CIA Director] William Casey. “Many of the SRI empaths were mustered from L. Ron Hubbard’s Church of Scientology,” according to a December 1996 report from Alex Constantine titled “CIA MIND CONTROL AT STANFORD RESEARCH INSTITUTE”:

“Harold Puthoff, the Institute’s senior researcher, was a leading Scientologist. Two remote viewers from SRI have also held rank in the Church: Ingo Swann, a Class VII Operating Thetan, a founder of the Scientology Center in Los Angeles, and the late Pat Price. Puthoff and Targ’s lab assistant was a Scientologist married to a minister of the church. When Swann joined SRI, he stated openly, ‘fourteen Clears participated in the experiments, more than I would suspect.’ At the time he denied CIA involvement, but now acknowledges, ‘it was rather common knowledge all along who the sponsor was, although in documents the identity of the Agency was concealed behind the sobriquet of an east-coast scientist.’”

According to the CIA, the SRI’s work was funded by the CIA, the Parsons-founded Jet Proposal Laboratory (now within NASA), ARPA and the Military. The CIA and the Church of Scientology had become direct partners in their advancement of psychic and paranormal research by the 1970s. However, the groundwork for this relationship appears to have started years earlier, given numerous connections between the CIA’s LSD trafficking scheme and Hubbard’s newly-formed personal navy, the Sea Organization.

Drug Running, LSD, and The Sea Org

“I give the CIA a total credit for sponsoring and initiating the entire consciousness movement counter culture events of the 1960s.”

– Timothy Leary

Timothy Leary, a student of former St. Elizabeth’s staff and OSS/CIA agent Henry A. Murray, became an FBI informant with numerous connections to the CIA over the course of his psychedelic missionary work across the United States. For starters, the estate where Leary conducted much of his LSD experiments was gifted to him by the Mellon banking family‘s William “Billy” Hitchcock after being visited numerous times by family friend and eventual CIA Director Richard Helms. The Mellon family had many family members serve in the OSS, including OSS Station Chief of London, David Bruce, who was coincidentally the son-in-law of former US Treasury Secretary, Andrew Mellon. Hitchcock himself had ties to intelligence-linked sexual blackmail operations, such as the Profumo Affair, and he also held an account at Castle Bank and Trust, a mob-affiliated bank founded in the Bahamas by the CIA banker Paul Helliwell. In addition, he was a frequent guest at Resorts International-owned properties –– known infamous meeting grounds of the mob, off-shore bankers, and the CIA. Hitchcock concurrently had served as the banker and financial advisor to the LSD cult and drug operation, The Brotherhood of Eternal Love (BEL).

Hitchcock evicted Leary off his estate in 1967, but shortly thereafter in the spring of 1968, Hitchcock traveled to the Bahamas with LSD chemist and BEL member, Nick Sand. Sand had been appointed the alchemist of Leary’s League for Spiritual Discovery, a religion formed in September 1966 that “incorporated psychedelic drugs as sacraments.” Sand’s chemistry operations, culminating in the infamously pure LSD known as Orange Sunshine, were a product of a long-time partnership with David Mantell, a Scientologist who studied directly under Hubbard’s successor, David Miscavige.

This trip to the Bahamas led to Hitchcock and Sand staying at an estate owned by Sam Clapp, a chair of the Fiduciary Trust Company, in addition to being a “college-chum” and long-time business partner of Hitchcock. According to Acid Dreams, Hitchcock and Clapp “arranged for Sand to open an account under a false name at Clapp’s bank,” while simultaneously looking “into the feasibility of setting up an offshore LSD laboratory on one of Bahamas secluded cays.” The book furthers Hitchcock’s financial activity during this trip, directly connecting his account at Clapp’s Fiduciary Trust with the CIA-front set up by Allen Dulles and Thomas Dewey known as the Mary Carter Paint Company (later renamed Resorts International):

“Hitchcock took full advantage of his unlimited borrowing privileges at Fiduciary. At Clapp’s urging he poured over $5,000,000 into unregistered ‘letter stocks’ (the kind that aren’t traded publicly but tend to show dramatic gains on paper) associated with the Mary Carter Paint Company, later known as Resorts International. It was the single largest chunk of money raised by Resorts, an organization suspected of having ties to organized crime. Resorts International proceeded to build a casino on an exclusive piece of Bahamian real estate called Paradise Island…”

The 1987 book, Hot Money and the Politics of Debt by R.T. Naylor, further details Hitchcock’s connection with the off-shore banking enterprise linked to intelligence and organized crime, alluding to his shares in Resorts being managed by the CIA-linked bank, Castle Bank & Trust:

“To finance these activities [various efforts to topple the government of Cuba], the CIA turned to Castle Bank & Trust of Nassau. The bank was established by Paul Helliwell, a former OSS China hand with a background in drug-trade intelligence. After the war, Helliwell had run CIA front companies in Florida. Through his Bahamian bank, and a companion institution in Florida, millions of dollars were funneled for covert military operations staged off Andros Island in the Bahamas. Castle also facilitated tax evasion, and, in its trust-company capacity, voted the shares of certain nonresident owners of Resorts International, the top [Meyer] Lansky-era casino operation on Nassau. When one of those shareholders so strongly objected to the way Castle was voting his shares that he sued the bank, the scheme began to unravel.

The shareholder was William Mellon Hitchcock, the New York stockbroker who had been using the Paravicini Bank of Berne, Switzerland, to circumvent the New York Fed’s margin requirements. Allegedly, Hitchcock also put his business experience to work in ‘high finance,’ along with the Brotherhood of Eternal Love, whose clandestine California laboratories reportedly produced more than half the LSD that levitated political debate on American campuses in the 1960s. It was Hitchcock’s friend Timothy Leary, the era’s most publicized advocate of the chemical lobotomy, who got him involved with the LSD operation. The profits were laundered through the Paravicini Bank until its demise and through the IOS-controlled Fiduciary Trust in the Bahamas.

After Hitchcock’s lawsuit, the IRS made its move, anticipating the biggest tax-evasion bust in American history. But the CIA successfully lobbied for the inquiry to be buried, and many IRS veterans quit in disgust. But Castle Bank shut down its Caymans and Bahamas operations in 1977, and moved to the more congenial environment of Panama.”

The 1985 book Acid Dreams by Martin Lee and Bruce Shlain importantly connects Castle Bank founder Helliwell with the Sea Supply, a 1950s trafficking operation run by the CIA:

“Castle Bank was founded and controlled by Paul Helliwell, a Miami lawyer with long-standing ties to American intelligence. Helliwell’s career as a spook dates back to World War II, when he served as chief of special intelligence in China with the OSS. He stayed in the Far East when the CIA was formed and bossed a bevy of spies, including E. Howard Hunt of Watergate fame. In the early 1950’s, Helliwell organized Sea Supply, a CIA proprietary company that furnished weapons and other material to anti-Communist guerrillas in the hills of Burma, Laos, and Thailand. Based in the Golden Triangle, this mercenary army cultivated fields of opium poppies, and the CIA was drawn immediately into the drug connection. Helliwell also served as paymaster for the ill-fated Bay of Pigs operation in 1961. A few years later he set up Castle Bank, serving in a dual capacity as CIA banker and legal counsel for the Cuban Mafia, which prospered by selling Southeast Asian heroin in the US. Helliwell’s law firm also represented [Meyer Lanksy Frontman] Louis Chesler and Wallace Groves, both partners in Resorts International.”

Sea Supply operated for a decade, before the former OSS and CIA officer Helliwell wound down the operation. Helliwell passed away at age 62 in 1976, but not before becoming infamous for advising Walt Disney to establish shell companies and “phantom cities” in Florida during the construction of Disney World in order for the organization to “avoid taxation and environmental regulation as well as maintain immunity from the U.S. Constitution.” Similar tactics were later employed by the Church of Scientology during their takeover of Clearwater, Florida in the 1980s.

While seemingly unconnected to the story of Scientology and L. Ron Hubbard at first glance, Sea Supply seems to have served as an inspiration and template for Hubbard’s Sea Organization, with numerous connections to the aforementioned CIA-driven drug trafficking nexus.

The Sea Organization

In the Spring of 1966, Congressman J. William Fulbright, then-chairman of the Senate Foreign Relations Committee, initiated an investigation into the CIA’s impact on foreign policy. Reporting from the Boston Globe specifically alluded to Sea Supply as an example of such operations by the intelligence agency. The report makes the case that “spying is a fact of modern international life; our enemies spy, and so must we,” before concluding that “increased congressional scrutiny of the CIA does not need to jeopardize national security.”

In May 1966, Congressman Fulbright appeared on NBC’s The Today Show to explain the reasoning for placing three committee members on a Congressional board to oversee CIA activities:

“The principle [sic] argument, I believe, is that most of the least publicized difficulties that have appeared in the press in recent years regarding the CIA have almost always been in the field of foreign relations. A number of the Committee feels that this is the area which has caused considerable question and in some cases criticism –– that it would be the responsibility of the committee to be represented there. And some of us, including myself, feel that if such a committee was created that it would improve the relations of the Senate and the public with the CIA.

Rather than being a reflection upon the CIA, I feel that it would be an improvement in our relations and would tend to modify, if not eliminate, to a great extent, the criticisms that I think sometimes arise out of a feeling that there is not sufficient and not as careful supervision of this agency as there ought to be.”

Richard Helms –– the godfather of MK-ULTRA, the long-time friend of Helliwell’s business associate Billy Hitchcock, and CIA Director since March 1966 –– went so far as to pen a letter that July in the St. Louis Globe-Democrat “expressing pleasure at a newspaper editorial critical of Fulbright.” Needless to say, the Central Intelligence Agency was losing agency and gaining Congressional oversight, much to the dismay of Helms, and the major aspects of the intelligence agency were in dire need of a rebrand that would allow them to continue operating far beyond the reach of the public sector.

At the start of 1965, Hubbard arrived in Spain’s Canary Islands to begin research and writing on the advanced “OT levels.” In fact, it was during a lecture given on the Canary Islands by Hubbard that the first inkling of OT III was announced –– the level that introduced Xenu to the highest level of Scientology’s initiates. At the end of June 1965, Hubbard gave a lecture titled “The Well-Rounded Auditor,” in which he exclaims that the US government has been “trying to seize Scientology in the United States.” In July 1965, CIA agent E. Howard Hunt is selected by Richard Helms to travel to Spain on behalf of the agency. The month before Helms officially became head of the CIA, Hubbard once again returned to the Canary Islands, in February 1966. According to ABC Spain, Hubbard signed a contract with Helms and the CIA that year, although no direct record of any such contract exists.

Shortly after, in July 1966, the IRS informed the Church they will be recommending the revocation of their tax exemption status. On September 1, 1966, Hubbard officially resigned from all Scientology management positions. Three weeks later, on September 21, 1966, Hunt returns to Washington, D.C. “from a highly secret assignment he has been on in Spain for a little over a year.” Shortly thereafter, Hubbard officially creates the “Sea Project” in a Scientology policy letter dated November 10, 1966. On November 22 of that year, the Hubbard Exploration Company Limited was incorporated in London, and by the end of the year, the primordial “Sea Org” secretly purchased its first ship – the Enchanter.

The Sea Organization was formally established in August 1967 by Hubbard and was initially compromised of three large ships. Sea Org membership was available to only the most devout of the Church, during which training for the highest levels of Scientology were delivered. According to documents shown to a former Scientologist, as documented in Jon Atack’s 1990 biography on Hubbard, A Piece of Blue Sky, the Sea Org believed that “the governments of the world were on the verge of collapse,” and that “the Sea Org would survive and pick up the pieces.”

According to a document supplied by the group to the IRS in 1992, initiates of the Sea Org were asked to pledge a billion-year term of service to Scientology, in alignment with their belief that humans were immortal beings. Former Scientologist and aforementioned author of A Piece of Blue Sky, Jon Atack, stated that the treatment of Sea Org members was a “careful imitation of techniques long-used by the military to obtain unquestioning obedience and immediate compliance to orders, or more simply to break men’s spirits.” According to The Week, a former Sea Org employee claims to have “worked 15-hour days as a teenager,” and was only allowed to “see her parents just twice between ages 12 and 18.” Another stated that “he never earned more than $17 a week for his work,” and “lived in a room so barren it lacked a door knob.”

In 2009, the FBI conducted an investigation of the Church of Scientology, specifically focusing on the Sea Org, due to human trafficking concerns. No charges were ever made as a result of their inquiries, which were conducted under the codename “Operation Overboard.” As for why no charges were filed, the Tampa Bay Times interviewed experts in 2013 who stated that the likely reason was a ruling in August 2010 by a federal judge in a civil case brought by two former Sea Org members. The judge had ruled in part that “the First Amendment’s guarantee of the free exercise of religion prevented the court from delving into whether the church’s discipline methods were reasonable,” and to do so would “entangle the court in the religious doctrine of Scientology and the doctrinally motivated practices of the Sea Org.”

Whatever the reason given by the Church for the formation of a paramilitary fleet of vessels predominantly stationed in international waters, public opinion has coalesced around the concurrent timing of Scientology’s loss of tax exemption status by the IRS earlier that same year. This action led author Stephen Kent to remark in his 2001 book, From Slogans to Mantras: Social Protest and Religious Conversion in the Late Vietnam War Era, that “the less lofty reason behind Hubbard’s establishment of the Sea Org was that he had encountered opposition in the United States from the Food and Drug Administration and the IRS, from the governments of Australia, the United Kingdom, and Rhodesia, and from various media sources around the world, which motivated him to set sail on the high seas and thereby escape the control of any nation-state.”

While the revoking of tax exemption status was surely a plausible forcing function for Hubbard’s personal navy setting sail, Helms, Helliwell, and the CIA were also simultaneously looking for a replacement for their off-the-books, off-shore shadow operation.

According to the CIA, Sea Supply founder Helliwell was “deeply involved” in the financing of “covert forays between 1964 and 1975” against Cuba by “CIA operatives working from Andros Island,” the largest island in the Bahamas. During this time, in April 1966, the US spent $130 million on the Atlantic Undersea Testing and Evaluation Center, an “antisubmarine base” on Andros Island to “experiment with new methods of seeking and destroying enemy submarines” with technology said to “surpase [sic] anything we know of in the entire world.” For known intelligence operatives like Helliwell, who were major players in the international maritime trafficking game, this type of naval research and technology could prove priceless. Further reports from the CIA describe the base as “important” to both the US and the United Kingdom, with another CIA report describing “the unrestricted ability of the US Coast Guard to operate in this area” which the agency notes is “largely taken for granted.” According to Guardian Order 1344 issued by Scientology’s intelligence branch, the Guardian’s Office, the Coast Guard began reporting on Scientology’s Sea Org ships, with reports dated July 1969 stating two of the Church’s ships were conducting “military drills” while “bearing Coast Guard insignia replicas.”

There is some significant evidence, in addition to the timeline provided above, that Hubbard was simultaneously helping fulfill the need of Helms’ CIA of escaping Congressional scrutiny –– creating an off-shore paramilitary intelligence fleet, staffed with fanatical seafarers –– while building the spiritual successor to Helliwell’s Sea Supply.

For starters, one of the vessels making up Hubbard’s fleet –– the Aries –– was previously owned by Scientologist and informant Jerry McDonald, and featured in a sting operation against BEL lawyer Michael Metzger. That operation resulted in the arrest of Nick Sand’s partner and fellow Scientologist, David Mantell. McDonald is mentioned numerous times in files put together by the Church’s Guardian’s Office which were released during the Clearwater, Florida Commission Hearings, including allegations that the Church was trafficking drugs:

“Exhibit XII –

February through July 1970 – JM [Jerry McDonald] is reported as working with Customs and LAPD as an informant of the cycle set up by Milner to remove X-Scientologist drug runners off Scientology lines.

February 1970 – Milner tells JM that US customs believed Scientology was promoting and smuggling drugs because some expelled Scientologists were engaged in drug trafficking. And further that a person had been picked up by customs while smuggling drugs and claimed that he was on a secret mission for the Sea Org.

February 16, 1970 – US Customs official calls JM in Salt Lake City, Utah “to inquire about the Aires and JM’s involvement in Scientology”. He asks questions like – Why is Scientology going back and forth between Mexico and the US, is Scientology running dope? He also indicates that Scientology is under investigation by several gov’t agencies, including customs.

February 17, 1970 – Jack Enoch, US Customs, calls JM and tells him that the Scientology investigation is just local now but should soon be widespread. JM tells Enoch that he is no longer involved in Scientology but that his wife and kids are.” [emphasis added]

Other Guardian Office documents from October 1974 released by the FBI make direct note of McDonald’s ship in relation to the aforementioned Hitchcock-linked BEL, referred to simply as Brotherhood:

“Undated, unsigned note in US Coast Guard files – ‘owned by Scientology group – paramilitary’. McDonald – marijuana smuggling – followers almost military. Arrested couple of them from time to time. Hopkins boarded Makaira. Scientology founded by multi-millionaire who lives – L. Ron Hubbard. Brotherhood at Laguna – marijuana. (Brotherhood was a drug ring.)”

The Makaira was McDonald’s boat at the time, and was boarded in July 1970 by DEA agents, who found few drugs but loads of weapons, including 40 pistols and 10 long arms, onboard. Agents believed that the weapons cache “had been taken in trade for marijuana…from Mexico.” Another report ear-marked the weapons to be worth around $6000 at the time, and speculated many were stolen in recent burglaries targeting pawnshops in Garden Grove, CA. Yet another report quoted state narcotics agent Garrett Van Raam that he believed the Makaira “had entered San Francisco Bay in late May with as much as 2,200 pounds of Mexican pot.” In November 1970, McDonald was reported missing, having failed to report to preliminary hearings regarding charges on “possessing stolen property,” “possessing a tear gas gun” and “a sniper scope,” and “having a concealed weapon in a car.” Despite his failure to appear in court and the multitude of serious criminal allegations, McDonald was cleared of all charges the following month, in December 1970, alluding to suspicions of working on behalf of intelligence, in addition to his known informant position with U.S. customs.

In January 1972, Customs agents made their way upon the Sea Org vessel Asia –– later named Excalibur –– which was anchored in the harbor at Los Angeles, with McDonald being recognized by an agent and served a subpoena. The next month, in February 1972, the same ship was again boarded by Customs and Secret Service agents looking for drugs, confirming law enforcement inquiries into Scientology’s Sea Org as a trafficking enterprise. According to historian Chris Owen, published on author Tony Ortega’s The Underground Bunker, “the UK and US authorities were suspicious of the sealed packages that were regularly being couriered to the Sea Org fleet.”

The arms-for-drugs trade exemplified in McDonald’s work for Scientology was a key pillar in the CIA’s Operation Paper, in which Helliwell’s Sea Supply had played a major role in facilitating. CIA Director Helms commented on these agency’s operations, stating “this was a major operation” that “took specially qualified manpower” due to being “dangerous” and “difficult.” Helms further contended that the CIA did “a superb job.” Further testimony from former Church members alludes to McDonald being “specially qualified manpower,” as it relates to their new, apparent trafficking ring.

Former Sea Org Captain Scott Mayer provided an affidavit in the case of the “Church of Scientology International versus Fishman and Geertz,” in which Mayer spoke upon being given “instructions to kill” alongside McDonald:

“While I was in the Sea Org, I was instructed to kill another human being by the Scientology organization. At the time Scientology had an office on Beacon Avenue in Los Angeles, very close to McArthur Park. I was called in for a briefing by Alex Sibryski. At that time, Scientology had a ranch at Rosarito in Mexico which was being used as a nursery, a place for overflow kids that could not be housed in Los Angeles and a place to grow fruits and vegetables. Mexican bandits were allegedly harassing and hustling the ranch and stealing produce from it. Jerry McDonald and I were asked to put together a mission to go down to Mexico, take some infrared optics and some guns and rifles, wait for the Mexican bandits to attack the ranch again and then take care of them. We were told to kill them if necessary…

Jerry McDonald was widely rumored to have been a former mercenary and a paid assassin in Europe. He was known throughout the Sea Org for taking care of difficult problems. If someone was giving a problem in some area Jerry McDonald would just appear there. Because of his reputation as having been an assassin, if he came on the scene, people would fear for their lives. They believed that he was working totally for Scientology and that he would do anything for Hubbard. Additionally, he was also the kind of guy who would have people over to his house every now and then and would get out his automatic weapons, clean them and put them together in front of people. In this way, he would let people know that he was really conversant with his craft. He carried a 9 mm pistol on him all the time and he was always talking about arms sales and deals that he was doing. As things turned out, he and I were not required to carry out the instructions to kill that we had received. However, if the orders had not been canceled I have no doubt that he could have performed the task.”

Mayer additionally testified that “at various times” he was “responsible for preparing mission orders and briefing couriers that would smuggle money out of the United States.” He was hardly the only former Scientologist who gave testimony about moving large sums of money for the Sea Org. In the 1987 book, Messiah or Madman, former Sea Org member Hana Eltringham stated there was “lots of money aboard,” making note of a time when she helped “courier 7 or 8 million dollars in cash to Switzerland,” and “a later trip” in which “much more than that was couriered.” Eltringham referred to Hubbard as “really like a squirrel with nuts, stashing it,” before revealing that he “stashed gold bullion, too.”

Another Sea Org member, Mary Maren, recalled being given “about £3,000 in high-denomination notes to take out to the ship,” which she hid in her boots. Another Church member, Mike Goldstein –– the Banking Officer aboard the Apollo –– noted there “were drawers full of money everywhere and more than a million dollars in the safe, but no proper accounts.” Goldstein claimed the Sea Org “paid for everything in cash” and “were working with three different currencies –– Spanish, Portuguese and Moroccan.” Goldstein further explained “that if anyone wanted money for something they just asked for it.”

In Messiah or Madman, another ex-Church member under the alias Elena Lorrel described her time spent during the young Sea Org as “James Bond stuff” that was suggestive of intelligence-adjacent work:

“There are some missing chapters in the story of this period that are completely unknown even to many veteran Sea Org members. These missing chapters have enabled lots of myths to develop. They have to do with what the ships were really doing as opposed to what we proclaimed to Scientologists we were doing. What we were doing was James Bond stuff in all these different countries. Some of the missions that we undertook were real intelligence missions: to the U.N., and to the World Federation of Mental Health, for example, as well as to almost every government of the countries we visited. We were infiltrating these groups….trying to covertly back one political candidate versus another. All kinds of political manipulations like you’d never imagine were going on, and it was all being pulled off by very few people. Most Sea Org members were robotic, rigidly following Scientology think. Put under pressure and duress, they would just blab everything. So there was only a very small group of us that had to do it all over a period of 10 or 12 years. We’d been out on scenes where we had to break into presidential palace grounds, con our way past guards, and so on.”

An August 1978 report on the Sea Org hosted on the CIA’s Reading Room alludes to suspicions of the Apollo –– the Sea Org’s flagship vessel –– being associated with intentions that went far-beyond those of a simple religious sect. For starters, the Los Angeles Times article notes a State Department letter that quotes an officer from the Apollo, who stated that the “organization backed by money and friends in high places ‘would cause a nosy vice consul severe problems,’” before threatening “accidents could easily happen to people” inquiring about the Sea Org. The article correctly associated the Apollo with a Panamanian company titled the Operation and Transport Corp, Ltd. –– a Scientology front –– before describing a regular triangular course that Sea Org vessels followed between ports in Spain, Portugal, and Morocco. According to the Times, the Apollo “transmitted coded radio messages to New York and points unknown,” while establishing “land bases in Casablanca and Tangier.” Despite being registered in Panama, the Panamanian Consul General was unable to schedule a meeting with Hubbard, leading to a rather telling comment upon the ship’s “gimmicks”:

“It is possible that Commodore Hubbard and his wife are philanthropists of some kind and/or eccentrics, but if one does not accept this as an explanation, there has to be some other, ‘gimmick’ involved in this operation. What this gimmick might be is unknown here, although people in Casablanca have speculated variously from smuggling to drug traffic to a far-out religious cult.”

The US Consulate in Tangier dispatched a “lengthy cable” to Washington, DC, as noted in the article, including mention of “rumors in town that the Apollo is involved in drug or white slave traffic,” with the former “undoubtedly stem[ming] from the fact that included among the crew of the Apollo are a large number of strikingly beautiful young ladies.” The article concludes with mention of a Trinidad tabloid, The Bomb, that speculated the ship was “linked to the CIA and Sharon Tate murders in Los Angeles.” (Charles Manson, whose followers were linked to the murder of Tate, has long been associated with both the CIA and MK-ULTRA and also listed himself as a Scientologist in July 1961 upon incarceration.)

In October 1974, the Apollo was meant to port in Charleston, South Carolina, when “a welcoming party consisting of agents from the Immigration Office, Drug Enforcement Agency, US Customs, Coast Guard, and US Marshals” was tipped off by the early arrival of the ship’s band, the Apollo All Stars. A Charleston newspaper reported there were “enough U.S. Customs Service agents in Charleston Wednesday to keep each of the crew members of the vessel Apollo under surveillance for possible drug smuggling,” and that “customs agents had gathered here from as far away as California to keep watch on the Apollo” due to suspicions “of carrying large quantities of narcotics.” Hubbard’s Guardian’s Office noticed the gathering of law enforcement, and his wife Mary Sue was able to warn the Apollo, which reversed course back to the Bahamas.

Jane Kember, the Deputy Head of Scientology’s Guardian’s Office, issued Guardian Order (GO) 1344 that same month, which ordered the intelligence branch of the Church to begin a large-scale operation against Customs and the Coast Guard. Specifically, GO 1344 called for “penetration of and theft of documents from the 11th District Coast Guard Intelligence and the National Headquarters of Coast Guard Intelligence, Washington, D.C.” GO 1344 built off the previously issued GO 732 from April 1973, in which Hubbard approved and first described the “Snow White Program.”

The escalation of the Guardian’s Office’s GOs quickly developed into a full-blown paramilitary intrusion of numerous departments of the United States government, in what is now considered the largest infiltration of the government in US history –– Operation Snow White.

Operation Snow White

The policy of Scientology’s Snow White program, now commonly referred to as “Operation Snow White,” simply states “Attack is neccessary [sic] to an effective defence.” The “plan” seemed rather innocuous enough, detailing the Church’s intention “to engage in various litigation in all countries affected so as to expose to view all such derogatory and false reports” against Scientology. This would culminate in efforts “to engage in further litigation in the countries originating such reports” in order to “exhaust resources in those countries.” At first, the Church mostly stuck to legal attempts at upholding Hubbard’s Snow White, including numerous requests made under the Freedom of Information Act (FOIA). By the start of 1974 however, Hubbard and his then-wife, Mary Sue Hubbard, were overheard discussing infiltrating the IRS by Scientologist Kenneth Urquhart, according to Atack’s A Piece of Blue Sky.

Evidence released in the case of The United States of America vs Mary Sue Hubbard et al from October 1979 suggests that Snow White developed into an extensive espionage operation that infiltrated “more than 30 countries” in addition to numerous US government agencies. Charges including “burglary, obstruction of justice, wiretapping, harboring a fugitive and conspiracy” eventually resulted in 11 church leaders, including Mary Sue Hubbard, serving prison terms.

In the summer of 1974, Cindy Raymond –– Collections Officer of the US Information Bureau of the Guardian’s Office –– sent “a directive” to Michael Meisner –– Assistant Guardian for Information, Washington, DC –– to “recruit a loyal Scientologist to be placed as a covert agent at Internal Revenue Service” for “the purpose of taking from that agency all documents which dealt with Scientology,” including “pending litigation initiated by Scientology against the United States Government.” By that September, the Church had found its man –– Gerald Bennett Wolfe –– to infiltrate the IRS on behalf of Scientology. In October 1974, Jane Kember, the aforementioned Head of GO issued Guardian Order 1361 to clarify the “operating targets” to include:

“10. Immediately get an agent into DC IRS to obtain files on LRH, Scientology, etc. in the Chief Council’s [sic] office, the Special Services staff, the intelligence division, Audit Division, and any other areas.

16. Collect data on the Justice Dept. Tax Division for the org board, the current terminals, and the people handling Scientology.

17. When the correct areas are isolated, infiltrate and get the files.

[GO 1361] also called for the placing of “an agent, trustworthy and well grooved in, to infiltrate the IRS LA office” (target 2). That “agent” was “to obtain any files on LRH, Scientology”, etc. from both the Intelligence Division (target 3) and the Audit Division (target 4) of the Los Angeles IRS Office. It also called for the location (target 20) and infiltration (target 22) of the IRS London Office in order to “obtain all documents” (target 22). 12/ Guardian Order 1361 directed that once documents had been obtained clandestinely, the designated bureau and official would create “suitable cover” to disguise the manner in which “the data was obtained” so that they may be released to “PR [Public Relations] for dead agenting,” that is, for possible use in impeaching those perceived as enemies of Scientology.¨

On November 1, 1974, Michell Hermann –– the Guardian’s Office’s Information Branch I Director –– successfully planted a radio transmitting bug in a conference room at the IRS’ Chief Counsel. This was to be the meeting place for a confidential discussion concerning the tax exemption status of Scientology, leading to the entire meeting’s recording and transcriptions being sent to the GO. A few weeks later, Scientologist Gerald Wolfe gained employment at the IRS as a clerk typist. From December 1974 through June 1976, Hermann, Wolfe, and Meisner stole tens of thousands of documents from the IRS in order to realize Mary Sue Hubbard’s “IRS Strategy,” which was described in a letter to Kember as “us[ing] any method at our disposal to win the battle and gain our non-profit status.

By July 1977, 150 FBI agents raided the Scientology headquarters in Washington, DC and Los Angeles. According to a report hosted on the CIA’s Reading Room, the raid revealed “an astounding haul,” including “lock picks, pistols, ammunition, knockout drops, a blackjack, bugging and wiretapping equipment,” and “even a small vial labeled ‘vampire blood.’” Over 23,000 documents were impounded by the FBI, alleged to have been “taken from the private files of federal prosecutors, correspondence between U.S. Cabinet members, and church memoranda on producing false identification papers, tailing people, laundering money and committing blackmail” including documents stolen from “the Federal Trade and Atomic Energy Commissions; the National Security, Defense Intelligence and Central Intelligence Agencies; the Departments of Labor, the Army and the Navy; the U.S. Customs Service; Interpol, and numerous U.S. police departments.”

While a US Judge ruled the raid unconstitutional later that month, eleven Scientologists, including Mary Sue Hubbard, were “convicted of conspiracy and imprisoned for between two and six years.” The Church’s founder and leader, L. Ron Hubbard, then went into hiding in California and stayed hidden until his death in January 1986. It was in his absence that David Miscavige, the Church’s current leader, seized control of Scientology.

During the 1980s, the Church hired former CIA agent and former Chief of Special Operations for the Joint Chiefs of Staff under President Kennedy, L. Fletcher Prouty, to produce an affidavit on the US government’s attacks against Scientology. Notably, Prouty was previously the “Pentagon’s chief briefing officer assigned to the White House during the Eisenhower administration” who “worked closely with CIA Director Allen Dulles in coordinating military support for the clandestine political operations undertaken by the agency.” In his report, Prouty explained that “copies of intelligence messages about Scientology activities throughout the world were frequently routed to the state department, National Security Agency. Army, Navy, and defense department’s Office of Special Operations,” and that specifically “the CIA routinely received 16 copies of each message.” Prouty explained that this was “a very rare order of distribution for messages of this type and indicates a very high classification and security handling of what is otherwise unclassified information,” leading him “to believe that the government is hiding its activities behind a cloak of secrecy.”

According to reporting from the New York Times, records on file at the IRS demonstrate that “the church was earning about $300 million a year” by the early 1990s. In October 1991, now-Scientology leader Miscavige and Marty Rathbun, another senior Scientology official, held an unscheduled meeting with IRS Commissioner, Fred T. Goldberg Jr. Miscavige offered to cease Snow White’s operations and to “drop all the suits against the IRS” if Scientology was once again “given tax exemption.” For reasons unknown, not only did Goldberg agree to the Church’s demands, the IRS went so far as to create “a special five-member working group” in order “to resolve the dispute” –– an “exceptionally unusual arrangement” that bypasses the agency’s exempt organizations division, which normally handles those matters. As part of the settlement, the IRS even “agreed to distribute a fact sheet describing Scientology and Hubbard.” “It is very complete and very accurate,” Miscavige recalled. “Now, how do I know? We wrote it! And the IRS will be sending it out to every government in the world.”

Goldberg left the IRS only a few months after the decision, in January 1992, to join the Treasury department. Goldberg cited privacy laws which “prohibited him from discussing Scientology or his impromptu meeting with Miscavige.” The now-infamous meeting never appeared on Goldberg’s appointment calendar, which was later obtained by The New York Times through the Freedom of Information Act. His predecessor at the IRS, Lawrence B. Gibbs, called it “a very surprising decision.” Gibbs added that “It was even more surprising that the service made the decision without full disclosure, in light of the prior background.”

The War Is Over

While Miscavige and the Church declared “the war is over,” in reality, the battle for Scientology had barely begun. The proliferation of the internet drastically pushed forward the front of the information war. For example, public releases of top-secret Church literature, including the Xenu story present in OT III, was published in a Calgary, Canada newspaper as early as December 1974. But due to the difficulty of distribution innate to physical publications, the Church was able to mostly keep access to such secrets locked-up within the hierarchy of the organization. This all changed with the July 1991 founding of the Usenet newsgroup, alt.religion.scientology, as Scientology secrets –– once costing thousands and thousands of dollars –– were suddenly flooded all over the internet, available to millions of readers for the low price of a monthly subscription to an internet service provider.

Naturally, Scientology’s Office of Special Affairs (OSA) –– the name of the Guardian’s Office since 1983 –– sprung into action, leading to a memo from OSA’s Elaine Siegel that detailed plans to handle both electronic criticism and the proliferation of Church secrets. Ironically, Siegel’s letter was later published “more than a dozen times on Internet,” including the details of the OSA’s newly-formed internet strategy. The memo, dated May 11, 1994, stated that “as a group, we will NO longer put up with our religion being criticized, harassed and denigrated on the Internet,” in addition to “some legal actions, which you will be further briefed on.” She furthered “It will be quite simple, actually,” including plans to have “40-50 Scientologists posting on the Internet every few days,” which would “run the SPs [suppressive persons] right off the system.”

After calling the Church’s critics, “jerks,” Siegel told The Tampa Bay Times that “Scientology is going to get its own link to Internet.”

Founded by second-generation Scientologist Sky Dayton, with funding sourced from Scientologists, and with a management and board of directors featuring Scientologists, the pioneering internet service provider EarthLink was registered on June 6, 1994 –– less than one month after the circulation of Siegel’s memo.

Understanding that the future of Scientology relies heavily on the Church’s ability to surveil dissidents, push back on criticism, censor the publication of copyrighted materials, and spread their teachings across the world to potential initiates, EarthLink’s Dayton quickly set out to gain substantial footholds in the data infrastructure layer of the blossoming internet. The second piece in this two-part series on Unlimited Hangout will investigate EarthLink’s founding and evolution, and further examine Dayton’s impressive portfolio of companies and investments as well as his proximity to political power.

As will be noted in this forthcoming article, in addition to EarthLink, Dayton helped incubate one of the most popular websites of all time, NeoPets; founded Boingo Wireless, the world’s largest WiFi provider, which services the majority of the world’s major airports and US military bases; advised and invested in Swarm Tech, the acquired company behind SpaceX’s world-leading satellite fleet; advised and invested in Ring, the leading home and neighborhood surveillance system later acquired by Amazon; invested and sat on the board of Age of Learning, a government-partnered educational software company featured in over a third of US public libraries and used by 65,000 teachers in North America; founded City Storage Systems, since acquired by disgraced Uber founder Travis Kalanick, which launched the “internet food court” CloudKitchens at the onset of COVID lockdowns; in addition to his current leading Partner position at Craft Ventures, the venture capital firm founded by the current US AI & Crypto Czar, David Sacks.

Dayton’s expansive web of ventures, and his simultaneous devotion to the Church and its data-hoarding pedigree, suggests that Scientology’s intelligence-adjacent operations were anything but neutered by the advent of the internet, and in fact remain more influential and consequential than ever.

To Be Continued

Scientology, The CIA, and MK-ULTRA.

Beginning in late 2023, a series of startling and unsettling allegations against Sean Combs –– a record executive and rapper known over the years by stage names like “Puff Daddy,” “P. Diddy” and presently “Diddy” –– have emerged. As the allegations and lawsuits facing Combs have snowballed, so, too, has public interest in the case. The sheer amount of accusations suggests that Combs, in addition to being very sexually and physically violent, filmed many assault encounters and orgies that occurred at his now notorious “Freak Off” parties, sometimes with hidden or security cameras. He also now stands accused of “operating an empire of sexual crimes,” with federal agents having alleged that several of Combs’ victims were of “barely legal” or “barely illegal” age at the time of their abuse. Combs’ apparent documentation of these events strongly suggests that he was interested in keeping these records for more than his perverse enjoyment, as either a form of a protection or as a means to control those who appeared in these films, i.e. blackmail.

As a result, speculation has grown about who is allegedly on the “list” of people filmed by Combs in this way, prompting comparisons to the alleged “list” of sex trafficker, pedophile and intelligence asset Jeffrey Epstein. The comparisons between Epstein and Combs have only grown, with even the homeland security agents who raided Combs’ Miami home suggesting that Combs was “as bad as Epstein.”

However, as has long been a theme of Unlimited Hangout’s Epstein-related reporting, including the book One Nation Under Blackmail, the Jeffrey Epstein case has been poorly explored by the federal government, mainstream media outlets, and even many independent media outlets. A deeper examination of the Epstein case makes it clear that Epstein was not the sole mastermind or sole beneficiary of the sex trafficking and blackmail operation in which he engaged. Instead, Epstein served as an operator for a larger, monied network of oligarchs with extensive organized crime connections in addition to significant affiliations with intelligence agencies. He was also more than a sex trafficker for this group, having aided this network extensively in arms trafficking, money laundering and other crimes (many financial) that fall outside of the focus on his sex-related offenses.

It should come as no surprise upon closer examination of Sean Combs that, like Epstein, he was operating on behalf of a larger network that he did not ultimately control. Instead, it arguably controlled him. As this three-part series from Unlimited Hangout will endeavor to show, Combs was acting on behalf of an oligarch network that directly overlaps with that of Epstein. However, Combs used to influence a different industry and a different community for the benefit of these intelligence and organized crime-connected oligarchs. 

In Part I of this series, we will examine the often overlooked early years of Combs and his entrance into the music industry. While Combs’ own rise (from birth to the founding of Bad Boy Records in 1993) is certainly chronicled, a major focus of this piece is on the mentors and figures who facilitated his rise into the upper echelons of hip hop celebrity, especially Andre Harrell and Clive Davis, as well as other figures who had a significant influence on Combs’ early career into the music industry, like Russell Simmons. Not only did these figures bring Combs into the music industry, they also stand accused of initiating Combs into the types of activities he is now in prison for, awaiting trial. 

Also explored in this piece are the corporations behind the success of Combs’ mentors and later Combs himself, namely the Music Corporation of America (MCA) and Arista Records. When taken together with other claims from the period, namely about efforts to manipulate hip hop for the benefit of the private prison industry in the early to mid-1990s, it appears that this network’s interest in Combs, as well as his mentors, was part of something much larger that sought to target not just the hip hop industry itself, but the African-American community at large.

Subsequent installments of this series will examine Combs’ activities –– in music, in retail and beyond –– and how the same network detailed in Part I also enabled those activities, which notably parallel Combs’ deeper descent into acts of sexual violence and abuse. Another installment will examine how one close associate of Combs also connects very directly with the sex trafficking activities of Jeffrey Epstein, indicating that the overlap between the two cases is more significant than previous reporting and the current cases against Combs have suggested.

Sean Combs was born in Harlem, NY on November 4, 1969 to a schoolteacher and ex-model named Janice Combs (née Smalls) and Melvin Earl Combs, an Air Force serviceman and sometimes associate of American Gangster heroin kingpin Frank Lucas. Melvin Combs helped make ends meet by running a number of legal and less-than-legal operations; including a cab and limousine chauffeuring company, multiple bars Combs owned, and a portion of Harlem drug traffic.ⁱ A toddler-aged Combs tagged along with Melvin on visits to Lucas’ home, even playing with his daughter. According to an interview prior to his death, the aged gangster alleged that Combs didn’t share his toys.

A Bad Boy from Birth

“I learned early in life that there’s only two ways out of that [lifestyle]: dead or in jail,” explained Combs in 2013, speaking of his father’s lifestyle. “It made me work even harder… I have his hustler’s mentality.” According to contemporaries, Melvin was an immaculate dresser. While less flashy than Lucas, who once attracted the attention of the feds by sitting ringside at a Muhammad Ali –Joe Frazier bout in a $100,000 fur coat, Melvin still pulled out enough stops to be granted the street nickname “Pretty Melvin.”

When Sean Combs was 3 years old, Melvin Combs was gunned down while sitting in a loitering car near Central Park West. Per Susan Traugh, Melvin was shot in the head, likely at point blank range considering he was seated in his Mercedes-Benz—this manner of a hit is consistent with an enforcer killing.ⁱⁱ According to an interview conducted by author Zack O’Malley-Greenburg, someone in Melvin Combs’ circle believed he was about to inform on a sensitive business deal to law enforcement and that this is what precipitated his murder.ⁱⁱⁱ From this, former associates and law enforcement have speculated that Melvin Combs was a federal informant. If allegations from incarcerated contemporaneous label heads like Suge Knight and former bodyguards are to believed, Sean Combs may have done the same, allegedly informing for the FBI over the course of his career.

A recent article from journalist Legs McNeil lays out the Lucas-Combs criminal enterprise in greater detail than previously reported. It also shows that Melvin Combs, in addition to his dealings with Lucas, had an arguably deeper affiliation with the Gambino crime family near the end of his life. The Gambinos may have even put out his hit. McNeil writes:

Melvin Combs, a small-time hustler, was introduced to selling heroin when Lucas fronted him several kilos from his Golden Triangle connection. He joined the crew of Willie Abraham, the 42-year-old owner of the Harlem Gold Lounge and a convicted heroin dealer who’d already spent five years in jail. Unlike Lucas, Abraham was getting his heroin from the Mafia—specifically, the Gambino crime family.

In 1971, Melvin was arrested for possession of heroin and $45,000 in cash. When Abraham’s heroin‐cutting mill was raided later that year, and Abraham was charged with participating in an extensive conspiracy to distribute $5 million a year in heroin at the wholesale level in Harlem, the Bronx, and Westchester County, Melvin was suspected by Alphonse “Funzi” Sisca, head of the Gambinos’ New Jersey crew, of being a rat.

McNeil also noted that “The New York Times reported that the prosecutor in the Abraham case told the judge that law enforcement believed Melvin’s murder ‘might ultimately be traced to members of the heroin‐distributing conspiracy.’” A newspaper clipping from the Saturday, February 24th, 1973 edition of the New York Daily News reveals that the Gambino-backed Willie Abraham crew had plenty or reason to suspect Combs of informing or at least blamed him for the arrests. The article notes that their relationship to Combs appears to have led directly to Abraham and his collaborators’ convictionson conspiracy charges, including Gambino man Alphonso Sisca of New Jersey:

Willie Abraham […] was found guilty in Manhattan Federal Court yesterday of being a kingpin narcotics wholesaler whose ring flooded the metropolitan area with more than 1,000 pounds of drugs in 2 1/2 years.

A task force of federal, state and local cops smashed the ring in a series of raids in December 1971 as the result of information obtained through the court approved wiretaps on another big time narcotics dealer’s phone. The dealer, Melvin Combs, 31, of 1853 Central Ave., Yonkers, was found shot to death in January 1972 on Manhattan’s West Side.

This evidence of a reported “wiretap” supports the claim that Abraham and his Gambino Family backers had Combs murdered because they blamed him for the arrests, regardless of whether Combs had actually been an informant. Throughout this article, connections to the Gambino crime family, as well as the Genovese crime family, are a recurring theme.

In the earliest years of his life, Sean Combs lived in Esplanade Gardens. His mother Janice recognized the performative, attention-hungry character her son possessed early on. This led to Combs’ first advertising gig at the age of 2, when he starred in a Baskin-Robbins TV commercial. Later, Combs modeled alongside The Wiz actress Stephanie Mills in Essence magazine. Following in his mother’s footsteps, these early modeling jobs presaged Combs’ lifelong relationship with the modeling industry, which in comparable fashion to Jeffrey Epstein, would eventually become the hunting grounds which Combs would scour for victims for his orgiastic sexual blackmail parties and pathological predation.^iv

During his middle school years, Combs’ mother Janice relocated the family to Westchester, a middle-class suburb of Mount Vernon. Combs enrolled in the prestigious Mount Saint Michael Academy (MSMA), a Catholic school located in the Bronx, where his popularity eventually soared due to his exploits on the varsity football team, which won a division title during his time there. Combs’ hopes of receiving a scholarship to play D1 in college came crashing down when he broke his leg during his senior year. Yet, it was already too late for his confidence. He was reportedly given the nickname “Puffy” due to the way he strutted around with his chest puffed out.^v

Throughout his middle and high school years, Combs also exhibited an entrepreneurial streak, reportedly selling T-shirts and ties at Macy’s while working multiple newspaper routes simultaneously. This early relationship with Macy’s prefigures both his later merchandising deals with the department store, which saw his fragrance line Sean John stock the shelves nationwide, and the recent lawsuit filed by a John Doe from Ohio who alleges that Combs “orally raped” him in the stockroom of the flagship Macy’s in New York in 2008. His accuser alleges that Macy’s even endeavored to cover up the crime in order to preserve their lucrative business relationship. While speculative, there is a possibility that this may have even been the same Macy’s that had employed Combs as a minor.

Notably, while Combs attended the all-boys Mount Saint Michael’s Academy, a major sex abuse case involving minor victims that led to the indictments of two faculty members was brewing at the institution. Marist Brother Timothy Brady –– the principal of MSMA for the entirety of Combs’ high school career — was arrested, charged, and sentenced to prison in 1988 for the abuse of three minor boys at the Catholic Academy in the Bronx over the course of 1987, Combs’ senior year. Following the ‘86/’87 academic year, Br. Brady was quietly removed from his position and shipped off to a Marist retreat in Arizona. Despite his crimes, Brady was reinstated as a hockey moderator at a separate Marist Brothers institution in the 1990s, once again providing him access to minors, and was listed on the Marist Brothers website until 2010. For some inexplicable reason, the court records pertaining to Brady’s conviction and incarceration remain sealed.

Accusations of sexual impropriety appear to have been a constant in MSMA’s history. In 2011, a former assistant principal received a sweetheart no-jail sentence after pleading guilty to possession of child porn on an electronic device at the school. From 2009 to 2012, a lawsuit filed by Brian Elliott sought monetary damages for the routine abuse and rape he alleges he suffered at the hands of an MSMA employee named Br. Galligan between the ages of 8 and 13 over the years of 1977 through 1983. The case wound its way through various Delaware, New York, and appellate courts. If factual, Elliott’s victimization by Galligan would have ended around the time of Combs’ freshman year in high school, meaning Elliott and Combs were close in age. 

More recently, multiple cases seeking redress of child sexual abuse suffered at the hands of the MSMA faculty have been filed pursuant to New York’s Child Victims Act and the “look-back window” that has enabled past victims previously barred from filing complaints by the statute of limitations to now pursue them. These include a torts CVA complaint filed on behalf of a John Doe suing the Academy & the Marist Brothers of the Schools for having enabled his abuse at the hands of Principal Brady, who allegedly fondled the plaintiff in the nurse’s office in 1985 when Doe was 16. It appears this unnamed potential victim would have been in the same class as Combs. Quoting from the complaint, “Upon information and belief, at all relevant times, Defendants knew that priests and brothers of the Catholic Church and within the Marist Brothers, under their supervision and control, were grooming and sexually molesting children with whom the priests and brothers would have contact in their ministry and pastoral functions.”

Another lawsuit accusing the Marist Brothers of protecting a pedophile faculty member named Brother Lee advanced in the Supreme Court of Bronx County in 2023, surviving multiple motions for dismissal & summary judgment, seemingly indicating that multiple members of the school’s faculty –– including its principal –– were perpetrating sex crimes against minors during Combs’ high school career. And once again, the complainant alleges that he was abused by Brother Lee between the years of 1984 and 1985, when he was 15-16 years of age, conclusively indicating that he also would have been in Combs’ class of 1987. Taking all of this information into account, it appears that sexual abuse was endemic and widespread at MSMA during Combs’ time there. While impossible to confirm, there is a possibility that Combs was groomed or among the victims or else somehow connected to these aforementioned cases. Certainly, those type of experiences early in life are statistically associated with a person offending in similar ways later in life.

Also, as an aside, the FBI and DA’s office appear to have used the fraught climate at MSMA to initiate a COINTELPRO-inspired smear and lawfare campaign against Fr. Bernard Lynch, the first gay married priest and Fordham-trained Irish psychotherapist, who inspired a “witch-hunt” organized by the Vatican, archdiocese, and the FBI in retaliation to his outspoken advocacy for gay rights. More specifically, Lynch had founded Dignity NY, the first gay ministry in New York City in 1982, bringing him to the attention of Mayor Ed Koch, who drafted him onto his AIDS Task Force.^vi

While attending Mount St. Michael’s, a teenage Combs began frequenting several New York nightclubs, which reportedly led to his first encounter with the music industry and famous musicians like Michael Jackson. As detailed in an interview, given in 1994 shortly after launching Bad Boy Records, Combs seemingly claimed he was cast as a background dancer in one of Jackson’s videos as a teen:

“Around the age of 16 or 17, I started dancing, going to the various clubs, and that was during the time when somebody—(if) a big artist like Diana Ross, Fine Young Cannibals, or even Michael Jackson had a video—the directors would come into the clubs and see all the kids that were dancing and pick various dancers to be in the videos. So I got picked to be in some of those videos, and, um, as I was dancing in videos and stuff like that, I would see the behind the scenes. I was about to go to college at Howard University and I didn’t know what I wanted to do. So I saw the people behind the scenes, and I was like, ‘that’s maybe something I wanted to do’, so I started like asking questions and getting information on the music industry…”

Combs’ apparent encounter with Michael Jackson, while still only a teenage dancer on the NY club circuit, presages the significant relationship that later emerged between the music mogul and the King of Pop, which lasted for decades until Jackson’s premature and suspicious death. These interlocks between Combs and Jackson are worth mentioning for a few reasons: both artists have grappled with accusations of sexual abuse; both men have spent years surrounded by Zionist powerbrokers (within and outside of the music industry) who ingratiated themselves into their good graces or insinuated their way into their circles; and both Combs and Jackson cultivated close friendships with billionaire Epstein affiliate and Bill Clinton associate, Ron Burkle. For instance, Burkle, who will be a focus of Part II of this series for his ties to Combs, was close to Jackson and later purchased Jackson’s infamous Neverland Ranch estate for $22 million in 2020. Burkle is also reportedly the godfather to Combs’ children. While developing his ties to both Jackson and Combs, Burkle was a frequent flier on Jeffrey Epstein’s infamous private jet –– the “Lolita Express” –– particularly on flights including former President Bill Clinton, who he employed as an advisor to his firm, the Yucaipa Companies around the same period.

Moving Uptown

Following his graduation from Mount St. Michael Academy, Combs enrolled at the prestigious Howard University in Washington, DC to study business in 1987. He promptly set about further inflating his street cred as he expanded his horizons into a new popularity-maximizing enterprise ––  party planning and promotion. His parties were described by classmates as offering a “once-in-a-lifetime type of vibe” and Combs spared no expense in spreading the word, driving around campus in his convertible to pass out fliers for events. Author Susan Traugh wrote that some of Combs’ collegiate parties attracted thousands of guests.

Comb’s entrance onto the hip hop scene began during his freshman year when Combs scored a side-gig as rapper-beatboxer Doug E. Fresh’s valet, where he “shuttl[ed] Fresh’s clothes to and from the dry cleaner in his Volkswagen Rabbit convertible.”^vii All the while, Combs organized parties in and around the Beltway as well as back home in New York City on the weekends. He was also a background dancer in one of Fresh’s music videos around this time.

While at Howard, the darker, predatory side of Combs’ reputation also began to take shape, with accusations of belligerence, sexual harassment, and domestic violence following in his wake. Contemporaneous accounts provided by sources to Rolling Stone tell of Combs beating a girlfriend with his belt in full view of the public on the Howard quad. Another time, he tapped on the glass window of an English class in session to try and coax a woman into skipping. On another occasion, he non-consensually caressed a woman’s back and asked her if he could introduce her to “one of his friends.”

By age 20, Combs had begun focusing more of his attention on his nascent internship and career at Uptown Records, a job he had first secured in 1990 via his Mount Vernon neighbor, the rapper Heavy D. Combs’ initiative soon saw him become former Def Jam recordman Andre Harrell’s intern. He commuted from Howard to NYC via Amtrak in the mornings, stowing away in the bathroom to avoid paying fare. He also shadowed party promoter Jessica Rosenblum during the planning stages for Heavy D’s platinum-album celebration. Rosenblum “obliged his requests to take him to all the ‘freaky’ nightspots on the Lower East Side.”^viii Rosenblum takes credit for having introduced Combs to some of the biggest names among NY scenesters and club kids — as well as updating his eyewear fashion. Rosenblum graduated from her hip hop party promoter career to become a NYC interior designer wedded to Steve Young, head of global litigation for one of the Big 4 Accounting firms, Ernst & Young.

In the late 1980s, while still a student at Howard, Combs learned that Uptown Records’ A&R (artists and repertoire) executive had vacated the company. Combs took his boss Andre Harrell out to lunch to press for the job and, after a successful schmooze, soon transformed himself into one of the youngest talent scouts in the industry.^ix Combs later told Rolling Stone that, after joining Uptown, “Andre became like my big brother. He bought a mansion, gave me a room [. . .] Not a mansion, a big house. It was a mansion to me, though, and he had gave [sic] me a room in the house.”

Uptown’s Secret to Success: Andre Harrell & MCA 

Prior to his mentorship of Sean Combs, Uptown’s Andre Harrell first broke into the nascent hip hop industry by way of his rap duo Dr. Jekyll & Mr. Hyde, which he and a friend had formed in high school. Harrell withdrew from Lehman College in 1983 to focus on his career as an account executive selling airtime for New York all-news AM station WINS. WINS was previously owned by radio pioneer J. Elroy McCaw, an ex-OSS agent and member of the Advisory Council to the US National Security Council.^x McCaw hired trailblazing disc jockey Allan Freed to man the mic at the station, a deal that was brokered by record executive Morris Levy.^xi 

Per Potash, a US Assistant Attorney later claimed that Levy’s jazz label Roulette Records, boosted by his relationship with WINS’ Freed ––  the most popular DJ in the country in the 1950s and 1960s –– was a “way station for heroin trafficking.” Levy and Roulette were also linked to organized crime, specifically the Genovese crime family. Levy was notably the main financier behind the first hip hop record label, Sugar Hill. The zenith of Freed’s celebrity was exemplified by Paramount Pictures hiring him at a rate of $29,000 per day to make a teen movie in 1957. Shortly thereafter, Freed was targeted by a smear campaign, resulting in him being unceremoniously and inexplicably fired by McCaw in 1958. Freed was singled out by Orrin Hatch’s Congressional committee during the first “payola” scandal involving the bribing of radio stations in return for singles plays. As a result, Freed became the face of the scandal, his career in shambles. As Potash writes regarding Freed’s downfall, “Morris Levy, the source of much of the payola bribe money, was never called to testify.”^xii 

Months after joining WINS, Harrell’s job prospects experienced a dramatic upswing when he met Russell Simmons, co-founder of the Def Jam record label, who would later become very close to Sean Combs. Simmons soon offered Harrell a job with Def Jam. Within two short years (a rapid ascent mirroring Combs’ own), Harrell worked his way up to VP and general manager of the label. Def Jam’s early success was due in part to its 1984 distribution deal with CBS and its subsidiary Columbia Records. At the time, the label was run by Walter Yetnikoff, a close associate and friend of Clive Davis –– the man who would later become Sean Combs’ second mentor after Harrell that is a later focus of this piece. Appointed by Paley, Yetnikoff is heavily implicated in the Payola scandals of the 1980s that involved the “independent promotion” syndicate known as The Network, for which CBS Records was one of the biggest clients.^xiii Yetnikoff went to some ends to protect the established payola system, firing his deputy president Dick Asher in 1983 and, per UPI, even quashing an investigation by the Recording Industry Association of America. By 1986, CBS Records had come under the control of Laurence Tisch, the billionaire head of Loews Corporation and a founding member of the Leslie Wexner and Charles Bronfman-brokered “Mega Group.”

Harrell’s success in management, contrary to music-making, seemed to have clarified things for Harrell, as his short-lived stint as a Profile Records artist came to a close when his high school rap duo with Alonzo Brown split up in 1986. That same year, Harrell struck out on his own to create Uptown.

However, before leaving Def Jam, Harrell was responsible for Def Jam’s hiring of Israeli-American Lyor “Little Lansky” Cohen, who would later force out Def Jam co-founder Rick Rubin in order to co-run the label with Simmons. Years later, upon leaving Def Jam, Cohen would team up with the family who had taken control of Def Jam in the 1990s, the Bronfmans, to become the top executive at Warner Music, an event that will be revisited in Part II of this series.

Not unlike Def Jam, Uptown’s early success (and the furtherance of Harrell’s career in the industry) was due to its distribution deal with a major entertainment conglomerate. In Uptown’s case, the company in question was the Music Corporation of American (MCA), an entertainment giant that dominated the American music and movie industry for many decades. Uptown’s early distribution deal with MCA began in 1987 and soon expanded into a formal partnership with the company a year later in 1988. Their ties grew even deeper in 1992, when MCA offered Uptown a $50 million deal whereby Uptown expanded into film and television.

In a Vanity Fair obituary for Andre Harrell, screenwriter and journalist Barry Michael Cooper describes an anecdote involving Harrell and a bust-up at the MCA Records Conference in Midtown Manhattan that demonstrates how Harrell employed street enforcers and drug dealers at Uptown, and that they even procured him a gun for protection: 

There was a rumor going around the streets of New York that Teddy’s manager, former drug dealer and karate enthusiast Gene Griffin, had smacked Andre in the conference of MCA Records in Midtown Manhattan. Journalist and author Nelson George, gave me Andre’s telephone number, so I could confirm the story. I called Andre and identified myself, and asked him about the confrontation with Griffin. I also asked him about the story of two of his Uptown Record executives—Jimmy “Luv” Jenkins and George Harrell (no relation), two of the most respected street dudes from the Highbridge neighborhood of the Bronx, and 116th Street in Harlem, respectively—giving him a .45 automatic to keep for protection. Andre tried to place the gun in the back of his waistband. However, the .45 slipped through and down his pants, and landed on the floor of the elevator. Andre, Jimmy, and George jumped back, but the gun didn’t discharge. Andre didn’t respond for almost a minute, and then said to me, “Who are you supposed to be? Ed Bradley? Things happen.” We cracked up laughing, and became fast friends after that.

In addition to MCA being critical to Harrell’s career and MCA’s success, Uptown’s relationship with MCA also appears to align with one of Combs’ earliest known sex crimes. For instance, one of the earliest allegations against Combs asserts that Combs sexually assaulted a victim after an MCA event in New York in 1990 or 1991, a time when Combs was still an Uptown employee.

As Strictly Business scriptwriter Nelson George intimated in a Substack post eulogizing his friend Andre Harrell, Harrell was a known “party animal” who frequently threw house parties in the “work space/social club/temporary housing” that served as the nascent Uptown Records’ offices. In fact, one of these parties in 1990 served as the source of inspiration for Strictly Business, the film that George co-wrote with Pam Gibson and which Andre Harrell executive produced for Island World Pictures (a company then affiliated with Polygram, which took a significant stake in Def Jam in 1992). It was Harrell’s role in the film that reportedly led MCA to enter into its $50 million multimedia deal with Uptown in 1992 that saw Harrell’s company expand into film. Strictly Business concerns a young mail room clerk setting up a black middle manager at a real estate firm with a club chick played by the emerging starlet Halle Berry. Bobby the mail clerk is a party boy with aspirations of graduating from the trainee broker program, and so he agrees to help Waymon navigate seducing the attractive woman in return for his higher-up’s sponsorship of his candidacy. While the plot may seem like normal rom-com fare and relatively benign, when viewed within the context of the kinds of sexual quid pro quos that occur within the music industry and Harrell’s close ties to figures like Combs, Simmons, and their broader social networks, it starts to take on a distinctly different slant. Speaking of sexual quid pro quos in the music industry and questionable label romances, Andre Harrell left an indelible influence on Combs’ love life. He hired Uptown R&B singer Al B. Sure’s model girlfriend Kim Porter to work as a receptionist at the label. Combs’ was immediately smitten with her, loving what he couldn’t have. They would go on to have an on-and-off again relationship spanning the years from 1994 to 2018, the time of her mysterious death after contracting a virulent case of lobar pneumonia. We will return to Porter and Combs’ ties to the modeling industry in Part III of this series.

Andre Harrell was also a consultant for the film New Jack City. New Jack City’s screenwriter Barry Michael Cooper recalls how he and producer George Jackson called his close friend Andre Harrell into Robert De Niro’s Tribeca Productions compound to watch the dailies from New Jack City a week before production wrapped. Cooper and Jackson wanted to gauge Andre Harrell’s reaction to New Jack City’s narrative and the depictions of street life as it related to the crack epidemic. Per Cooper’s retelling, apparently Harrell raved and affectionately called the film “The Black Godfather.” 

New Jack City’s narrative revolves around a Harlem gang called the Cash Money Brothers who ascend to the top of the drug-dealing food chain in the borough once crack cocaine is introduced to the streets. The film featured gangster rap mainstay Ice-T in a prominent role and christened the careers of Wesley Snipes and Chris Rock, seeing a healthy return of nearly $50 million on a budget of $8 million. 

The controversial film was developed by Warner Brothers, which was then run by Steve Ross. Ross was able to build up his business empire, Kinney National Company (which later became Warner), largely through his association with New York crime lords Manny Kimmel and Abner “Longy” Zwillman. Zwillman was a close associate of Meyer Lansky and Sam Bronfman. Ross, as a Warner executive, later frequented Robert Maxwell’s yacht in the late 1980s, a time when Maxwell was deeply associated with a litany of organized crime figures across the globe. In addition, top Warner executives close to Ross personally were convicted for their roles in a mob-tied racketeering scheme that was also allegedly involved Ross, though he somehow evaded charges. 

Considering his informal consultation on the film and the fact that Harrell had underwritten “new jack swing” — Uptown’s claim to fame and the genre from which the film took its name, which fused streetwise hip hop beats and melodic R&B for the first time — Harrell’s influence over the New Jack City production is clear. This is an important point, as it relates to mob-linked entertainment companies (in this case Warner Brothers) financing the glorification of drug dealing around 1991, a topic that we will return to in much greater detail near the end of this piece.

MCA: Mob Corporation of America

While MCA undoubtedly dominated much of American entertainment for decades, it was also deeply connected to organized crime and political power. In terms of MCA’s political power, this arguably peaked under the Reagan administration, which boasted extremely close ties to the company. MCA even played a role in covert operations that brought together organized crime interests and intelligence agencies during this period.

The most iconic executive in MCA’s history, Lew Wasserman, joined the company in 1936. By that point, Wasserman had established longstanding, close ties to Jewish mobster and Meyer Lansky-associate Moe Dalitz, having allegedly initiated those ties by having first served as the publicist for the Dalitz-controlled Mayfair Casino. However, some sources contend that Wasserman had joined Dalitz’s Mayfield Road Gang before working at the Mayfair. Wasserman later married the daughter of Dalitz’s long-time lawyer Henry Beckerman, who he had first met through his work at the casino.

Wasserman and MCA were also the forces chiefly responsible for the political career of former president Ronald Reagan. Reagan, previously an actor before becoming a politician, had been represented by MCA since 1940. Soon after, he became Wasserman’s first “million dollar client.” Wasserman later engineered Reagan’s campaign to lead the Screen Actors Guild, where Reagan made significant policy changes designed to give MCA an edge over other entertainment companies. Wasserman and other top MCA executives, such as Taft Schreiber and Jules Stein, played an intimate role in Reagan’s successful gubernatorial bid, as well as financing his later campaign for president of the United States. When Reagan was president, his Attorney General Edwin Meese notably quashed what had been an ongoing investigation into MCA’s organized crime ties. Meese later resigned following his involvement in the Bronx-based Wedtech scandal (see end note vi).

That probe was initiated when evidence was found that MCA was engaged in business relations with the Gambino crime family. More specifically, MCA had hired a high-ranking Gambino associate, Salvatore Pisello, as an official representative of the company, even though Pisello had no experience in the music or movie business. At the time Pisello was doing business with MCA, he was also simultaneously a partner of Morris Levy, the Genovese family-linked record executive behind Roulette Records who financed the early hip hop label Sugar Hill. Levy’s connection to Andre Harrell’s early employer WINS was noted earlier in this article.

MCA kept Pisello around even though they lost money on every deal where Pisello had represented them and continued to work with him after his mob ties became publicly known. This was done at the behest of Wasserman, then chairman of the board of MCA, and Sidney Sheinberg, then president of MCA Inc., despite protests from other board members. One of the main MCA executives that had been closely involved with the company’s Pisello dealings, Irving Azoff, was subsequently promoted to become head of MCA’s Music Entertainment Division, the division that –– shortly thereafter –– entered into a distribution agreement with Andre Harrell’s Uptown Records. Azoff has long publicly praised Harrell and later eulogized him at his 2020 funeral. Irving Azoff was also Combs’ neighbor in the exclusive Beverly Hills enclave known as “Billionaires’ Row” up until Combs put the $60 million estate on the market in September 2024, not long after DHS raided the property.

The shuttered federal investigation into MCA also turned up evidence that the company was tied to the Genovese crime family. As noted earlier, the Genovese crime family had also been linked to Morris Levy (Levy was also involved with some of Pisello’s dealings with MCA). In addition, during this same period, the mob-style murder of retail billionaire Leslie Wexner’s then-tax attorney, Arthur Shapiro, led Columbus police investigators to link both Shapiro’s death and Wexner himself to Genovese criminal interests. Shortly after Shapiro’s death, Jeffrey Epstein entered into Wexner’s inner circle, “tasked with getting [Wexner’s] finances in order.”

MCA also has connections to a significant, yet largely forgotten scandal of the 1980s involving many of the same players from the Iran-Contra network, as well as figures like Robert Maxwell. The scandal, known as the PROMIS software scandal, saw operatives tied to US and Israeli intelligence team up with organized crime elements to both steal and then repurpose PROMIS –– a then-revolutionary software product for data management –– as a back-door surveillance system that was marketed to other intelligence agencies, sensitive government research laboratories, and a litany of banks around the globe. One of MCA’s top executives, Eugene Gianquinto, who then led MCA’s Home Entertainment Division, was intimately involved in major aspects of the scandal and its illegal activities. Gianquinto later took credit for the closure of the Department of Justice’s investigation into MCA’s mob ties. 

More specifically, MCA and Gianquinto were connected to the elements of the PROMIS scandal based within the mob-linked joint venture between the Cabazon Indian Reservation and the Wackenhut Corporation to develop weapon systems –– some of which were intended for the CIA-backed Nicaraguan Contras. Journalist Danny Casolaro, who died in connection with his efforts to expose the network ultimately behind the PROMIS scandal, had stated before his death that he was writing about a network he called “the Octopus,” which –– oddly enough –– was a longstanding nickname for MCA.

Between 1994 and 1995, MCA was acquired by the Bronfman family company, Seagrams. A few years later, the Bronfmans also took control of Def Jam. The Bronfmans, like MCA itself, have an extensive history of organized crime connections, which date back to the mob-brokered bootlegging of American Prohibition in the 1920s. Wasserman, a long-time associate of Edgar Bronfman Sr., got a Seagrams board seat out of the deal and became chairman emeritus of the company. Edgar Bronfman Jr. quickly brought on Hollywood powerbroker Michael Ovitz, who later became president of Disney and a Jeffrey Epstein associate. Bronfman Jr. is also listed in Epstein’s black book and his father’s alleged ties to Epstein’s Bear Stearns career likely played a role in Epstein’s ouster from the bank in 1981. Ovitz, at the time he teamed up with Bronfman Jr., was close to Herbert Allen of Allen & Co, a company with ties to organized crime as well as the aforementioned PROMIS scandal. The Bronfmans, particularly Edgar Bronfman Jr., will feature prominently in Part II of this series, with Bronfman negotiating major deals with Combs in the early 2000s.

In 1991, Edgar Jr.’s uncle, Charles Bronfman, teamed up with Leslie Wexner (then already very intimately tied to Epstein) in 1991 to create the “Study Group” or “Mega Group,” an ostensibly philanthropic organization that was chiefly focused on ethno-philanthropy and philanthropy directed at promoting Zionism and financing aspects of the state of Israel. Yet, this particular group brought together some of the most prominent corporate billionaires in the United States, the majority of whom share ties to organized crime. Wexner, as previously mentioned was tied to Genovese crime interests by Columbus police, while the Bronfmans’ own history with organized crime, specifically the Lansky-co-founded National Crime Syndicate, have been extensively documented. Other early members include other organized crime-linked families like the Crowns of Chicago (via Lester Crown) and Laurence Tisch, owner of CBS including its many influential record labels.

The Tisch family, mentioned throughout this article, has ties to organized crime as well. For instance, Laurence Tisch engaged in a suspicious sale of his shares in the struggling Franklin National Bank to Michele Sindona, the Italian mafia-linked businessman who played a major role in Operation Gladio, which brought together the CIA, Italian Mafia and the Vatican. Sindona was also a member of the infamous Italian freemasonic lodge P2. 

In addition, the Tisch family company, Loews, did extensive business with Resorts International. For instance, Loews was the long-time operator of Resorts International-owned hotel Paradise Island Hotel and Villas in the Bahamas. Senate testimony later linked Paradise Island specifically to Meyer Lansky. Resorts International itself deserves an important mention as well, given that it started as Mary Carter Paint Company, a CIA front company founded by the Dulles brothers with extensive ties to Meyer Lansky and his associates, that focused on developing businesses in the Bahamas. After the death of the company’s long-time, mob-linked head James Crosby in 1986, Donald Trump took over the company, only to lose control of it two years later.

Another member of this exclusive club, the “Mega Group,” was director Steven Spielberg. A protégé of Lew Wasserman and Sidney Sheinberg, Spielberg would later play an unusual role in king-making the future film career of director Brett Ratner, an associate of Russell Simmons, Andre Harrell, and Sean Combs who boasts of his childhood ties to Meyer Lansky and to the alleged heir to Lansky’s criminal enterprises, Al Malnik. Ratner’s significance is a focus of a later section of this piece.

A History of Violence

After becoming the A&R man at Harrell’s Uptown, Combs dropped out of Howard to pursue his dream. He then truly made a name for himself with his handling of the nascent careers of newcomers Mary J. Blige and Jodeci. His reworking of their sounds and re-styling of their images led to both debut records going multi-platinum. Combs’ success at Uptown, however, was marred by his role in planning events and parties that turned violent. In addition, more recent accusations of sexual violence, the filming of rapes and other crimes are alleged to have taken place during Combs’ later years at Uptown, making violence a noticeable and early theme in Combs’ early music industry career.

In December 1991, the tragedy of the Community College of New York celebrity basketball game stampede, which Combs had helped plan, forced him and his mother to lay low, leading to them hiding out in a Manhattan hotel to avoid scrutiny amid rumors of possible criminal charges for Combs. The stampede ultimately left 9 dead. Combs had promoted this game as a charity event intended to raise funds for AIDS relief over the radio and through informal channels. The massive crowd, which had gathered to watch Heavy D (one of Uptown’s main artists) and LL Cool J (one of Def Jam’s first big acts) shoot hoops, ended up breaking into a fatal stampede.

A report commissioned by the New York Mayor’s office condemned “almost all of the individuals involved in the event[, who] demonstrated a lack of responsibility” as well as NYPD officers in the scene, who were accused of “serious lapses in judgment.” The report blamed Combs in particular “for allowing two inexperienced subordinates to handle a potentially perilous event and for deceiving ticket buyers about [the event’s] charitable intent.” “City College is something I deal with every day of my life,” Combs later said in 1998. “But the things that I deal with can in no way measure up to the pain that the families deal with. I just pray for the families and pray for the children who lost their lives every day.”

During this period, when Combs was still at Uptown, his penchant for throwing wild, and allegedly violent, parties continued. However, it soon merged with new scenes, particularly those of the music industry and the New York club scene. In his memoir Notorious C.O.P., the former head of the NYPD Rap Intelligence Unit Derrick Parker (a COINTELPRO legacy program that grew directly out of interagency cooperation & the BOSS unit^xiv) writes of his first introduction to Combs:

“Even before the CCNY disaster, well before he was a tabloid fixture, I became aware of Puffy [i.e. Sean Combs]. He was hard to miss as he gallivanted around early ’90s hip-hop clubs and up the ladder of the music industry, right from the bottom rung. At the time, Puffy was little known outside music biz circles: he wasn’t even a performer yet, but a rising A&R executive at Uptown Records who threw crazy, notoriously raucous parties at a midtown club called Red Zone. I knew about Puffy even then because I’d always kept one foot in the music world. I’d been promoting parties and hitting the clubs, as well as performing and recording demos as an R&B singer.”^xv

Red Zone was a short-lived Midtown club ensconced in a former ABC filming studio at 440 West 54th Street. “Club Kids” like Michael Alig, RuPaul, and others in the late 1980s and early 1990s were known to frequent the establishment.

The establishment was first opened by Maurice Brahms, the uncrowned king of the NYC Club Scene, the former restaurateur and owner-operator of infamous, gay-catering nightlife discotheques such as Bonds, Infinity, & Underground. Brahms entered into business with his South African second cousin John Addison, a gay model who once dated Roy Cohn. Cohn was Donald Trump’s mentor who had close ties to the Reagan administration, as well as organized crime and sexual blackmail operations. Cohn was also closely linked to the Genovese and Gambino crime families, and represented their bosses, Tony Salerno and Paul Castellano, respectively. Maurice Brahms and John Addison’s former regulars, Steve Rubell and Ian Schrager (son of Lansky associate Louis “Max the Jew” Schrager, a Brooklyn gambling boss), went on to open a direct competitor — Studio 54. As fate would have it, John Addison had introduced the pair to Cohn, who would later become Studio 54’s lawyer. 

Addison’s introduction of Rubell and Schrager to Cohn set in motion a series of events that later led to Addison’s and Maurice Brahms’ incarceration. Schrager and Rubell approached Cohn for his help in blocking the opening of Brahms’ and Addison’s new club New York, New York in 1977. Cohn, in turn, enlisted then-Assistant District Attorney Peter Sudler and Special Agent Mark Britt from SDNY in a sting operation. Brahms’ and Addison’s establishment was raided under the auspices of perjured search warrants. This then led to raids at their respective homes. Agents reportedly illegally seized a ledger that showed that the pair had been skimming $1.3 million from the Infinity, the club where the cousins first encountered Schrager and Rubell (who subsequently also served prison time for similar crimes related to their nightclubs). 

Brahms and Addison were ultimately pressured into pleading guilty. Brahms was sentenced to 3 years in prison in NYC. Maurice Brahms’ final club was the aforementioned Red Zone, where Combs hosted his Uptown Record-era mixers. Given Combs’ association with these elements of the New York nightclub scene, the more recent revelation of Combs’ later bisexual “Freak Off” orgies becomes far less shocking.

While his “Freak Off” parties are now notorious, the much earlier Combs-hosted events at Red Zone also developed quite a reputation. For instance, Combs promoted a recurrent party at the Red Zone called “Daddy’s House” that explicitly catered to a hip-hop audience. Apparently violence was so endemic and frequent at these events that Combs routinely had to interrupt the DJs to talk people down and, at one point, even wrote to everyone on his mailing list in an attempt to plead with them to leave the quarrels and weapons at home. Per reports, the violence continued unabated and Red Zone ultimately lost its liquor license following a shooting that occurred outside the venue. A fellow hip hop party promoter named Toi Sojer contradicted Combs’ claims that he was not responsible for any of the violence at these events, stating that, “Puffy’s parties are scary. I was always frightened when I went to Red Zone.”

While throwing “scary” parties at venues with suspect owners, Combs is now alleged to have begun engaging in acts of sexual violence while at Uptown. Recent lawsuits additionally assert that other figures (and companies) tied to Uptown were directly related to those crimes.

On November 23, 2023, just before the expiration of the NY State Adult Survivor’s Act (which created a window free of the statute of limitations during so that adult victims could pursue justice against their abusers), attorneys representing Liza Gardner filed a lawsuit alleging that, in 1990/1991, Combs and singer Aaron Hall took turns raping her and a friend after an MCA Records event in their corporate offices. The victim was allegedly only 16 years old at the time, while Combs was still working as a talent director at Uptown. Aaron Hall, like Combs, had significant ties to the Bronx, having grown up there, and was a member of the Uptown Records-signed band Guy with Teddy Riley, thus considered one of the architects of “new jack swing.” Further illustrating the ties between New Jack City and Uptown Records, Guy had a cameo as themselves in the film. 

Per the lawsuit, the alleged assault began one night when Combs and Hall were flirtatious and handsy with the reported victims at an MCA Records event. After the fete, the pair invited the two girls back to Hall’s apartment, where the men plied them with drinks and drugs before taking turns having sex with both friends. The lawsuit also alleges that Combs visited the home in which she and her friend were staying a few days after the incident. The visit allegedly turned violent, with Combs choking out Jane Doe, physically threatening her so as to impress upon her what might happen if she or her friend chose not to stay silent regarding their experience. It’s been speculated following the announcement of Gardner’s complaint that the lyrics to Aaron Hall’s song “Don’t Be Afraid”, released by MCA as one of the singles for the official soundtrack of Juice, may obliquely refer to the rape of Gardner. It was recently reported in the press that Aaron Hall is suddenly missing. According to Gardner and her attorney Tyrone Blackburn, they have exhausted all options as far as reaching Hall at his past known addresses, and will now have to resort to serving him summons via publication in newspapers of note.

New evidence further suggests a culture of crime at Uptown and the label’s apparent enabling of Gardner’s mistreatment. Gardner recently amended her complaint after a sworn statement by the other woman who was reportedly raped at Hall’s New Jersey apartment (also a minor at the time) was entered. The unnamed woman claimed that DeVanté Swing, a member of the Uptown act Jodeci (whose career Combs was then managing) not only voyeuristically looked on as Gardner was raped by Combs, but that the two girls had been lured from North Carolina and were staying with Swing at his residence in NJ, which was allegedly “subsidized” by Uptown Records at the time. Swing was subsequently added to the lawsuit as a co-defendant. Furthermore, Swing’s alleged voyeurism of Gardner’s rape at the hands of Combs is in keeping with an abiding pattern of Combs’ sexual violence. Namely that, time and again, affiliates either watch his crimes, participate in them directly, or else view video footage of them after the fact.  

In Gardner’s filing, both MCA Records and Geffen Records are also named as co-defendants. David Geffen’s label had just been sold to MCA the same year that the assaults allegedly took place. Both Geffen and the now defunct MCA are owned by Universal Music Group (UMG) today, the major label crafted by the Bronfman family that is now overseen by Lucian Grainge, a former MCA and CBS Records executive. Both Lucian Grainge and UMG were initially named as co-defendants in Rodney Jones’ lawsuit against Sean Combs for enabling his sex trafficking activities. 

Also in November 2023, Joi Dickerson-Neal filed the second of three sexual assault lawsuits that targeted Combs in the span of that week. Dickerson-Neal had graced a music video opposite Combs in 1990. Dickerson-Neal has stated that her proximity to Combs in the video spurred a warning from Sister Soulja, who had told the young woman to keep her distance from Combs. Dickerson-Neal claims that she surrendered to Combs’ constant advances in 1991, reluctantly agreeing to a dinner date. She insisted, however, that they meet at Wells Restaurant in Harlem, her place of employment at the time, due to concerns about Combs, hoping that the presence of coworkers would help her feel more secure. 

In the filing, Dickerson-Neal contends that Combs spiked her beverage while she’d excused herself to the restroom. When they left the premises, she claims he forced her to take a hit from a blunt, and that the combined impacts of the drugging left her legs feeling “rubbery.” She alleges that Combs then drove her to a nearby “studio” (most likely affiliated with either Uptown/MCA) and then raped her at a residence in the neighborhood seemingly owned by an acquaintance of both individuals, during which he filmed her violation. Following these traumatic events, Jodeci singer DeVanté Swing allegedly revealed to the victim that Combs had filmed her rape and was playing the footage for everyone at the “studio” like some kind of perverse trophy. If true, this would mean that myriad Uptown employees saw this video. This is one of the earliest allegations that involves Combs and the non-consensual films of sexual assault and rape crimes. It also alludes to the possible collection of sexual blackmail compiled by Combs –– a pattern that would repeat in subsequent allegations in the lead up to his 2024 incarceration.

Clive Davis: The Hidden Power Behind Combs’ Bad Boy Records

Eventually, Andre Harrell felt Combs was getting too “cocky” in his position at Uptown and fired him in 1993. Nevertheless, the two remained friends, with Harrell becoming the godfather to Combs’ son Justin, who was born later that same year. Combs, shortly after leaving Uptown, created Bad Boy Records with Kirk Burrowes in 1993. Combs’ new label quickly entered into a distribution deal with Arista Records worth $15 million. Davis says he met Combs when Combs was 23 years old and that, soon after meeting, Davis “helped introduce [Combs] to the right music executives who could assist him in ushering in ‘the forthcoming Hip Hop revolution.'”

Bad Boy Records’ prolonged success was ensured by its early deal with Arista (which later expanded into a joint venture) as well as the man who would become Combs’ second record mentor in the music industry, Arista’s founder and president Clive Davis. Davis’ Arista was originally founded as part of Columbia Pictures’ music label portfolio. At the time Arista entered into its joint venture with Combs’ Bad Boys, the label had been sold by Columbia Pictures to BMG, a German media company. However, Davis controlled Arista as if it were his own personal fiefdom until 2000, when he left the label due to BMG’s age restriction policy for executives. Bad Boy Records ended what had then become a joint venture with Arista a few years after Davis’ departure. Shortly thereafter, Bad Boy attached itself to Bronfman-controlled interests in the music industry, which will be revisited in Part II of this series.

Clive Davis grew up in Crown Heights, the son of a middle-class Jewish electrician and salesman. He excelled at Erasmus Hall High School and was a member of the New York City branch of the National Honor Society dubbed Arista, which would later serve as inspiration for the name of his label at Columbia Pictures. His early academic success earned Davis a full scholarship to New York University. He then attended Harvard Law School, from which he graduated in 1956.

Two years following his graduation, Davis joined “…the large, white-shoe firm, Rosenman, Colin, Kaye, Petschek, and Freund. Sam Rosenman was counsel to Franklin Roosevelt and Harry Truman; Ralph Colin’s clients included William Paley and CBS.”^xvi Other notable clients of Rosenman & Colin LLP include two offshore banks owned by Bruce Rappaport that had served as “repositories of illicit funds from several illegal operations,” specifically related to drug trafficking. Rappaport, as noted in One Nation Under Blackmail, boasted close ties to the CIA, particularly via his close friend William Casey, as well as to Israeli intelligence and organized crime. Rappaport was particularly affiliated with organized crime networks that included Semion Mogilevich, an Eastern European mob boss who became a close business associate of Robert Maxwell in the late 1980s.

Clive Davis’ storied career in the music industry began via his earlier career at Rosenman & Colin. While working at the firm (which –– as previously noted –– counted CBS as a client), Davis was hired to become assistant counsel of the CBS subsidiary, Columbia Records. He became the label’s general counsel a year later. Davis had been hired by Harvey Schein, a former colleague of Davis’ at Rosenman & Colin. 

Schien was a protégé of William Paley, the long-time head of CBS and “father of modern broadcasting.” Paley, the son of Ukrainian Jewish immigrants, had worked building up CBS into the main network of radio and main record label in the United States, having a profound effect on mass media and the shaping of Americans’ musical tastes and political perceptions. During World War II, Paley served in the Office of War Information, becoming Chief of Radio of the U.S. military’s Psychological Warfare Division. Paley developed a very close relationship with scions of the Rockefeller dynasty, David and Nelson, as well as others close to the Rockefellers, like former Secretary of State Henry Kissinger. David Rockefeller and Kissinger both later eulogized Paley at his funeral in 1990, with Kissinger also serving as the chairman of Paley’s foundation.

In the mid-1980s, Paley personally ensured that Laurence Tisch would take over CBS (including its record labels). As noted earlier in this piece, Tisch, in 1991, served as a founding member of the so-called “Mega Group” alongside Leslie Wexner, Charles and Edgar Bronfman and Lew Wasserman protégé Steven Spielberg, among others.

Clive Davis’ infamous and undeniably “revolutionary” tenure as President of CBS Records (1967-1973) is most aptly characterized by the transition from the jazz, folk, and pop ethos of the 1950s to the industry-wide embrace of rock in the 1970s. Somewhat akin to the careers of Andre Harrell or Combs, he was a relatively young label executive well-placed to take advantage of shifting cultural trends, effectively making his name synonymous with an emergent genre for a time.

In Davis’s self-hagiographizing, he had an epiphany at the 1967 Monterey Pop Festival and became determined to pivot to rock music. “I sensed change. I don’t know, even now, how I knew”.^xvii Of course, this was an exaggeration, as rock had already been dominating the singles charts for more than a decade. Davis’ legacy in this period as it relates to rock music was essentially ensured after he poached an assembly of Monterey acts from their minor labels along with those who were still languishing in obscurity.^xviii During his tenure at Columbia Records, Davis managed and/or signed Bob Dylan, Janis Joplin, The Electric Flag, Santana, Bruce Springsteen, Billy Joel, Chicago, Loggins & Messina, Aerosmith, Earth Wind & Fire, and the Grateful Dead.

While Davis had been successful at CBS, he left the company under a cloud of scandal. Davis became a focus of an investigation led by the US Attorney’s Office in Newark, a probe that would later become known as Project Sound. As part of the investigation, “allegations began to surface in the press that CBS Records had bribed black radio stations and done business with an organized crime figure.” The scandal ultimately led to Clive Davis’ decision to make a deal in 1971 with two record producers tied to Motown Records, Kenny Gamble and Leon Huff.^xix Davis had sought out Gamble and Huff due to a desire to “conquer the R&B charts.” As part of the negotiations, Davis allowed Gamble’s and Huff’s company to promote the music that, per the deal, was produced and distributed by CBS. 

Perhaps unknown to Davis at the time, Gamble’s and Huff’s company and its promotional efforts engaged in the practice of payola, the illegal practice whereby firms pay radio stations to play singles without disclosing that payments were made. CBS was implicated in the arrangement through David Wynshaw, Clive Davis’ closest aide at CBS.^xx Press reports soon stated that CBS music subsidiaries were being investigated for bribing radio stations, not just with money, but also drugs and sex, in order “to increase use of its products on black-oriented radio stations.”

CBS, in connection with the Project Sound probe, uncovered that Davis had left a “trail of phony invoices” totaling at least $94,000 over six years that were meant to cover up Davis’ use of funds for personal parties and renovations to his properties.^xxi Davis was ultimately fired by CBS as a result.

Soon, the CBS “payola” scandal took on a darker hue. In February 1972, a few days after Davis had been fired from CBS, eight people were indicted in Newark on conspiracy and smuggling charges connected to a “multimillion dollar heroin ring operating in Italy, Canada, and the United States.” 

The connective tissue between CBS and this drug bust soon became apparent. A woman, recently fired from CBS for being “doped up” at work, had been indicted after working for a food stand that doubled as a front for the heroin ring in question. Patsy Falcone, aka Pasquale Falconio, an associate of the Genovese crime family, had also been indicted. Investigators found that Falcone also had a tie to CBS by way of his “friendship” with Davis’ protege David Wynshaw as well as via Frank Campana, a former CBS A&R man with whom Falcone had started a management company. Falcone and Campana’s company managed several acts signed to CBS. Investigators later stated that Davis’ name had been mentioned by Falcone in bugged telephone conversations and that evidence found on Falcone had listed Wynshaw as a “source for prostitutes.”

Documents incriminating Wynshaw were reportedly found on Falcone at the time of his arrest. It was later reported that, “with the help of Dave Wynshaw, Falcone bilked CBS Records. The two men set up sham companies in… New Jersey… CBS unwittingly paid more than $75,000 to these nonexistent operations.”^xxii Wynshaw figured prominently into Davis’ downfall as it was Wynshaw who had both helped facilitate the money funneled to Falcone and who had written up false invoices that obscured the payments that Davis had used for personal enrichment. It was also believed that Wynshaw’s role involved laundering money that was used for “off-the-record” items, like procuring drugs and prostitutes for CBS parties, conferences, & artists, leading him to be colloquially known as “Clive’s pimp” at the label.

As a Rolling Stone article from the period speculated based on industry rumors at the time, Davis’ unceremonious firing by CBS over personal enrichment and embezzlement of funds (of $94,000, then deemed paltry by industry insiders) may have been a strategic attempt to get ahead of the larger “Drugola” scandal and the possibility that federal investigators might pursue charges against Davis, his trusted aide Wynshaw, and others at the company. 

Despite the scandal, Davis quickly found his way back into the industry. A little over a year after having been fired from CBS/Columbia, in the summer of 1974, Davis was hired as a consultant for Bell Records, “a barely profitable subsidiary of Columbia Pictures (no corporate relation to CBS).” According to a 1977 New York Times article, “Davis’s consulting took the form of letting go most of [Bell’s] performers and the executives who had signed them, retaining only a handful as the basis for a renamed company, Arista, with himself in the president’s chair.”

Arista’s formation and success relied heavily on Alan Hirschfield, a major entertainment executive who had recently become CEO of Columbia Pictures. Hirschfield was instrumental in bringing Davis on as a consultant for Bell and who supported Davis’ formation of Arista. Davis, as well as Hirschfield’s family, have framed Hirschfield as having essentially co-founded the label with Davis.

Hirschfield had found himself serving in the top post in Columbia Pictures thanks to the same connection that saw him become at top executive at other entertainment conglomerates, like Fox and Warner Brothers. That connection was to Allen & Company, as Hirschfield’s father Norman was a close friend and associate of Charles and Herbert Allen, the founders of the company. Norman Hirschfield also worked for Allen & Co., particularly in its natural gas division and also in scouting other “business opportunities” for the firm. Later, in the 1970s and 1980s, when Allen & Co. took a stake in a major entertainment firm, Columbia included, they ensured their interests were represented through the installation of Norman’s son, Alan Hirschfield, in a top executive post.

Charles and Herbert Allen and their firm Allen & Co. have documented ties to intelligence-linked figures and scandals, as well as organized crime. As noted in One Nation Under Blackmail, the Allen brothers had significant organized crime connections, particularly via companies based in the Bahamas that were run and developed by close associates of Jewish mobster and co-founder of the National Crime Syndicate, Meyer Lansky. In addition, Allen & Co. was a client of the CIA-linked David Baird Foundation and Charles and Allen and David Baird had several dealings with an associate of mob boss Moe Dalitz and Alexander Guterma, who was a key part of the United Dye scandal that had also ensnared figures like Roy Cohn. Allen & Co. also financed Earl Brian’s efforts to buy out Inslaw Inc. as part of the PROMIS scandal (discussed in greater detail shortly) and had other close business ties to Brian, including being significant shareholders in Brian’s company Hadron.

The Allen brothers also had significant ties to Leslie Wexner’s mentors, Max Fisher and Alfred Taubman. Taubman had been close to the Allens since the 1950s. For Fisher, the connection was forged at the time he was heading up United Brands, the CIA-linked company that Fisher took over the same year that its former top executive, Eli Black, suspiciously fell to his death from the 44^th floor of the Pan Am building in Manhattan. Black was the father of Leon Black, the Drexel Burnham Lambert executive who would later found Apollo Global Management and become a very close and now notorious associate of Jeffrey Epstein. While still at United Brands, Fisher joined Taubman and the Allen brothers in a joint venture that culminated in the takeover of the Irvine Ranch in California.

The overlap doesn’t end there. Columbia Pictures’ Alan Hirschfield was a close associate of lawyer Allen Tessler and served alongside Tessler as a top executive at Data Broadcasting Corporation. Tessler was the family lawyer for the organized crime-linked Gouletas family and their real estate empire. Tessler also later joined the board of Leslie Wexner’s The Limited in 1987. Evangeline Gouletas shared an office space with Epstein during this time, which also coincides with the development of the close-knit relationship between Wexner and Epstein. 

Another key client of Tessler’s was the aforementioned Earl Brian, who had close ties to Allen & Co. and was one of the masterminds of the PROMIS scandal that involved MCA, organized crime, US intelligence and Israeli intelligence (with Robert Maxwell facilitating aspects of the scheme on behalf of Israel). Tessler’s law firm, Shea & Gould, also represented organized crime clients like Carmine de Sapio, a close friend of Roy Cohn’s, and also had significant connections to William Casey, Reagan’s CIA director. Tessler, who was chairman of Wexner’s The Limited’s Finance Committee by 1990, came into direct contact with Epstein some time around this period as well. Tessler appears in Epstein’s infamous “black book” with two addresses and four different phone numbers listed. Among the numbers listed is Tessler’s line at Data Broadcasting, where he and Hirschfield worked side-by-side. The company had been acquired by Earl Brian’s firm Infotechnology in 1987.

In other words, Clive Davis’ ascent to become a major music executive was aided largely by figures tied to same clandestine network composed of intelligence-linked and organized crime elements that also forms the basis for the network that would also later figure prominently in the rise of Jeffrey Epstein. This is also evident in Davis’ close friendship with the family of the Mega Group’s Laurence Tisch, particularly his nephew Jonathan who took over the family business Loews Corp in 1989. This connection later led Davis to donate several million to the Tisch School of the Arts at NYU, producing the Clive Davis Institute of Recorded Music under the Tisch School umbrella. It is also notable that the “drugola” scandal linked to Davis had ties specifically to the Genovese crime family, an organized crime network also linked to MCA, Morris Levy, Roy Cohn and Leslie Wexner, as noted earlier in this piece. 

Mentors in Crime

After the scandal around Combs began to break, Clive Davis, as well as Andre Harrell of Uptown and Russell Simmons of Def Jam/Rush Management, have been accused of propelling Combs into the patterns of criminal behavior for which he is now infamous. For instance, one-time rival (and former friend of Combs) Suge Knight has claimed that Davis, Harrell and Simmons used “alcohol, drugs” – specifically cocaine – to “compromise” Combs’ “manhood.” This is particularly significant in the case of Davis’ ties to the “Drugola” scandal, which involved using sex, drugs and bribes to specifically target “black-oriented radio stations” and music. Claims similar to those made by Knight have since been echoed by Combs’ former bodyguard Gene Deal.

It is worth noting here that Davis’ protégé L.A. Reid, who took over Arista Records from Davis, has also been accused of sexual misconduct and assault. Reid, alongside Combs, were both instrumental in the success of recording artists Justin Bieber and Usher. Knight has argued that Davis, Simmons and Harrell first “compromised” Combs and then Combs went on to use alcohol, drugs, and gay sex to “control” younger artists like Usher and Bieber. Notably, Combs’ entry into the world of Andre Harell, Simmons and, shortly thereafter, Clive Davis, coincides with the development of his obsessive drive to record everything, presumably for blackmail-related purposes. For instance, music video director Cole Bennett asserted that Combs told him that he’d begun recording “footage of everything” in 1992 and even advised Bennett to do the same. 

In addition, Kirk Burrowes, the co-founder of Bad Boy Records with Combs, has claimed that Combs sought to compromise him using this same method. Burrowes has filed a lawsuit against Combs, claiming Combs subjected him to “repeated sexual harassment, physical aggression and forced compliance with degrading sexual acts” throughout the 1990s. Burrowes claims that Combs targeted him with “unwanted sexual advances” including acts of “nudity, sexual overtones, voyeurism and acts of exhibitionism,” some of which allegedly took place during business meetings, and that this was part of a larger “campaign of control.” The outcome of this campaign, per Burrowes, was the use of “physical violence, blackmail, career sabotage and financial extortion” to force Burrowes out of his 25% stake in Bad Boy Records. Though Davis was a key part of the early creation and formation of Bad Boy Records, he is not named in Burrowes’ suit.

However, Combs may have been “controlled” in a similar way by Davis, per some sources. Suge Knight, for instance, has alleged that he was told by the former head of Interscope Records, Jimmy Iovine, that Combs had regularly engaged in sexual acts with Davis, suggesting that his relationship with Davis and Davis’ early, crucial involvement with Bad Boy were built on the back of sexual favors. This is certainly possible given the well-known mechanism within the entertainment industry of sexual favors as a way to secure lucrative roles and deals –– e.g. the Harvey Weinstein scandal. In addition, Davis notably came out publicly as bisexual in a memoir published when he was 80 years old, where he writes that he began to openly engage in sex with the same gender in the 1980s. Combs’ alleged bisexuality has been a major topic of discussion in relation to the scandal leading up to his arrest last year. Knight has also claimed that Russell Simmons and Andre Harrell had also engaged in similar behavior with each other. Notably, the network behind Clive Davis, which overlaps with that behind Epstein, also involved similar “sugar daddy”-style relationships. These include rumors that Epstein and his long-time benefactor Leslie Wexner were intimate, e.g. former State of Ohio Inspector General David Sturtz telling journalist Bob Fitrakis that Epstein was Wexner’s “boyfriend.”

The Rat Pack

Given that Russell Simmons is one of the men alleged to have mentored Combs in this type of criminal behavior, it is worth taking a look also at some of the recent allegations that have been made against Simmons and some of his associates, who – like Simmons – also boasted close ties to Combs.

Beginning in 2017, Russell Simmons was hit with a slew of rape and sexual harassment lawsuits and accusations. One of Simmons’ earliest accusers, model Keri Claussen Khalighi, alleged that Simmons raped her in full view of the director Brett Ratner in 1991. Before the 2017 allegations, police had previously probed Simmons and Ratner for claims of jointly engaging in sexual battery back in 2001. Over a dozen women have since accused Simmons of sexual misconduct or crimes, while Ratner himself has been separately accused of similar crimes, including rape, by at least 10 women. Following the barrage of accusations, Simmons has laid low in Bali, Indonesia, embracing life as a “stateless” US citizen in a bid to evade the court’s jurisdiction. As will be explained in greater detail shortly, Ratner fled to Israel but is now planning a comeback, currying favor with the Trump family to that effect.

Ratner is a long-time close associate of Simmons, with some reports calling Ratner a “protégé” of Simmons. Simmons is credited with helping start Ratner’s career, as the two met while Ratner was still in film school (NYU’s Tisch School) and Ratner began filming music videos for Simmons-managed artists like Public Enemy soon after their meeting. Ratner also filmed a music video for Combs’ longtime associate Heavy D, who had first gotten Combs his internship at Uptown, in 1994. Getty images alone hosts hundreds of photographs of Ratner and Simmons partying together over the years. 

Ratner, like Simmons, was also a very close associate of Combs, bringing Combs as his guest to several premieres of his films. Ratner was also a frequent attendee of numerous Combs-hosted parties as well as charity fundraisers. They also arrived together at prominent award shows and Ratner also filmed music videos for Combs, such as his 2001 single “Diddy.” Combs selected Brett Ratner and Ron Burkle, among others, to be his guests of honor when he delivered a commencement address to his alma mater Howard University in 2014.

Ratner’s close association with both Simmons and Combs is notable for a few reasons. First, there is the fact that Ratner, as previously mentioned, was accused by several actresses of sexual misconduct, resulting in him being dropped from his agency and the “canceling” of his Hollywood career. In addition, Ratner took over directing the X-Men series from Bryan Singer, with whom Ratner is reportedly close. Singer has been accused of pedophilia and sordid affiliations with the Digital Entertainment Network (DEN), which was run by pedophile Marc Collins-Rector and also involved child star turned crypto mogul Brock Piece. (For Unlimited Hangout’s past reporting on DEN and Pierce, see here)

Second, there is the man that Ratner considers his father –– Alvin Malnik. The feeling is apparently mutual, with Malnik referring to Ratner as one of his sons. The close-knit tie is telling as Malnik has very significant organized crime ties, particularly to Meyer Lansky. Not only that, but according to a Forbes investigation cited by the LA Times, Malnik “invented the black art of money-laundering, taking mob money and routing it to legitimate ventures.”

Forbes wrote that:

In the 1960s, Miami lawyer Alvin Malnik set up the Bank of Commerce in the Bahamas. Mob money flowed into its secret numbered accounts by the hundreds of millions–[mob financier Meyer] Lansky money, most of it–and then out again into Tibor Rosenbaum’s International Credit Bank of Switzerland before returning to the United States for investment.

For those familiar with One Nation Under Blackmail, both Lansky and Rosenbaum also had significant ties to the Israeli intelligence apparatus, especially Rosenbaum who helped finance keys aspects of Israeli intelligence, including via the means that Malnik reportedly helped to develop. 

In addition, Malnik’s other ties to Lansky were considerable. For instance, Malnik had previously been banned from working in New Jersey casinos due to state regulators confirming his ties to Lansky and Sam Cohen, another mobster. Malnik had even been named Lansky’s “heir apparent” by Reader’s Digest upon Lansky’s 1983 death, while the Miami News noted that Lansky had wanted Malnik to take over all of his “legitimate enterprises” after this death. That article also cited federal agents that claimed that Malnik also stood to inherit “Lansky’s lucrative gambling, pornography, prostitution, labor racketeering and extortion operations.” Malnik also had a close association with Joel Steinger, a notorious fraud that operated a massive Ponzi scheme targeting the elderly and terminally ill. Steinger, like Malnik, had developed close ties to Lansky personally by the 1970s and married the daughter of a Miami banker alleged to be a close Lansky associate.

In addition, Malnik was involved in strange ways with Michael Jackson in his later years. As noted previously, billionaire Ron Burkle ––- who also cultivated close ties to Bill Clinton and Jeffrey Epstein, along with Combs himself –– had significant connections to Jackson during this same period. The Malnik-Burkle-Jackson connection, as well as Burkle’s significant ties to both Epstein and Combs, will be covered in Part II of this series. 

Malnik’s own “protégé,” his adopted son Brett Ratner, claims to have also fostered a close relationship early on with Meyer Lansky himself. In a 2011 interview, Ratner stated the following:

“I grew up on Miami Beach. I lived on Collins Avenue at the Carriage House on 54th Street. And two doors down was the Imperial House where every day after school I would ride my bike and I would walk down the street with an old man who would walk his dog. We would walk together and everyone at the store would kiss my ass when I was with him. He would take me to this restaurant called the Villa Capri and everybody was always treating me so nice. I didn’t realize it until I was in line at the supermarket with my mom and I opened up Rolling Stone and I saw his picture on the back. It was Meyer Lansky’s obituary. Everybody thought it was weird because he was 80 and I was 12. He was the biggest gangster in the world and he was like my best friend as a kid.” 

While some may discount this claim as fantasy on Ratner’s part, his close ties to Malnik –– Lanksy’s “heir” –– during the same period of his alleged association with Lansky lends the story credence. In addition, it is worth noting that Ratner’s “big break” that allowed him to become a famous director came somewhat unexpectedly in his “mediocre” film school career via Steven Spielberg. As previously noted, Spielberg was a protégé of Wasserman and Schienberg of MCA, a company with significant mob (and intelligence) affiliations, while Wasserman himself was connected to Lansky’s network via his long-time tie to Lansky associate Moe Dalitz. Spielberg is also a reported member of the previously mentioned “Mega Group” that unites Spielberg with organized crime-linked oligarchs like Epstein’s main benefactor Leslie Wexner, among others.

Ratner would later follow the Lansky model of evading charges and scrutiny for illegal activities by immigrating to Israel. After he was accused of extreme sexual misconduct, including alongside Simmons, Ratner fled to Israel. A week before his escape, Ratner had been Benjamin Netanyahu’s special guest, along with former Epstein defense lawyer Alan Dershowitz, at the United Nations. Articles on Ratner’s trip to the UN with Netanyahu noted that Ratner is a former close business associate of Australian media tycoon James Packer, who has been closely linked to Netanyahu. Packer’s business venture with Ratner, RatPac Entertainment was notably partnered for several years with Dune Entertainment, the film business of Trump’s former Treasury Secretary Steve Mnuchin. Mnuchin left the venture shortly after joining the first Trump administration, which coincided with many of the accusations against Ratner being made public, crippling the firm’s once meteoric rise.

Packer, for his part, was a key part of the corruption trial that continues to dog current Israeli Prime Minister Benjamin Netanyahu, but has taken a backseat following the onset of the Israel-Gaza War in October 2023. Packer’s ties to both Netanyahu as well as former Mossad chief Yossi Cohen were deemed so extensive that they were considered a “national risk” in court testimony. Packer also once threatened to “sic” Mossad operatives on businessmen and was seeking to form a cybersecurity venture with Mossad-linked individuals around the same time he created RatPac with Brett Ratner. In addition, Packer was known to have partied with Jeffrey Epstein and Ghislaine Maxwell, including on the yacht of Australian trucking magnate Lindsay Fox in 1995 when Epstein and Maxwell were the “guests of honour” on the cruise. Furthermore, Packer has also come under scrutiny for his ties to Stanley Ho, a casino magnate with ties to Chinese organized crime and to the Clinton-era scandal “Chinagate,” which also involved Epstein. As it relates to Epstein, a star in many of Ratner’s films with close social ties to the director, Chris Tucker, would later find himself on infamous Epstein-brokered plane trips alongside Bill Clinton and Kevin Spacey.

The Combs-Simmons-Ratner clique have a history of cultivating ties to Donald Trump. For instance, one image photographed by Getty shows Ratner on stage with Combs at Russell Simmon’s “Art for Life Palm Beach” event honoring Combs in 2005. The event was hosted at Trump’s Mar-a-Lago and attended by the Trumps. The Trumps also attended some premieres of Ratner’s films. Trump became closely associated with Combs beginning in the 1990s. While those ties will be discussed in detail in Part II of this series, it is worth noting that First Lady Melania Trump has teamed up with the self-exiled Ratner, who is now directing a documentary about her life that is due to launch on Amazon Prime later this year. The First Lady is an executive producer of the film, which began production shortly after her husband’s 2024 election win.

In addition, according to New York magazine, Ratner was recently seen visiting Mar-a-Lago along with the aforementioned James Packer, where they were photographed dining with Trump and Elon Musk earlier this year. A month later, it was reported that Packer bought a Trump-owned property neighboring both Mar-a-Lago’s private club and the Trump estate there. The property was previously used by close Trump associates visiting Mar-a-Lago and by the Secret Service during his first presidential term. Ratner has reportedly been involved in “fanning” the closeness between Trump and Packer that resulted in the property sale. Notably, Packer had previously bought a property neighboring another state leader, Israel’s Benjamin Netanyahu, back in 2016. In addition, Ratner and the Trump family, as well as Russell Simmons, were among the guests invited to the wedding of Al Malnik’s son, Jarod Malnik, in early 2024.

A Conspiracy Hiding in Plain Sight

Ultimately, in tracing the network in which Combs had become deeply enmeshed by the early and mid-1990s, we are left with deep connections to intelligence-linked elements of organized crime. This same network of organized criminals also played a key part in enabling the activities of sex criminal and intelligence asset Jeffrey Epstein, from at least the 1970s onward, as detailed in the book One Nation Under Blackmail. 

With such connections established, the question then becomes –– what did this group seek in someone like Sean Combs, and more broadly, in exerting its influence over the entertainment industry and specifically African-American music? 

While speculative, it appears that various connections leading back to MCA and its influence can help us arrive at one unsettling possibility. During this period, not only was MCA a dominant force in entertainment (and early hip-hop specifically), but Laurence Tisch –– through his 1985 takeover of CBS –– controlled another key branch of the music industry through 1995. With the Bronfmans taking over MCA, and later Def Jam and Warner Music (as will be noted in Part II), the influence of the so-called “Mega Group” billionaires over the music industry became extremely significant during the 1990s. With Combs teaming up with Clive Davis, with significant ties to this same network, to form his own label Bad Boy Records in 1995, this tiny group of billionaires had the ability to shape hip-hop, the cultural engine of the African-American community, in major ways.

The same year that the Bronfman and Tisch clans formally joined forces with Leslie Wexner and others like MCA-linked Steven Spielberg via the “Mega Group,” American record labels had allegedly begun to conspire to promote crime in hip-hop lyrics with the ostensible goal of facilitating the filling of private prisons, as those that ran the record labels were allegedly deeply connected to private prison firms. An account from an anonymous industry insider details how, in 1991, he was invited to a clandestine meeting where he was forced to sign a non-disclosure agreement. He recounted the events of that meeting as follows: 

Quickly after the meeting began, one of my industry colleagues (who shall remain nameless like everyone else) thanked us for attending. He then gave the floor to a man who only introduced himself by his first name and gave no further details about his personal background. I think he was the owner of the residence but it was never confirmed. He briefly praised all of us for the success we had achieved in our industry and congratulated us for being selected as part of this small group of “decision-makers”. At this point, I begin to feel slightly uncomfortable at the strangeness of this gathering.

The subject quickly changed as the speaker went on to tell us that the respective companies we represented had invested in a very profitable industry which could become even more rewarding with our active involvement. He explained that the companies we work for had invested millions into the building of privately owned prisons and that our positions of influence in the music industry would actually impact the profitability of these investments. I remember many of us in the group immediately looking at each other in confusion. At the time, I didn’t know what a private prison was but I wasn’t the only one. Sure enough, someone asked what these prisons were and what any of this had to do with us. We were told that these prisons were built by privately-owned companies that received funding from the government based on the number of inmates. The more inmates, the more money the government would pay these prisons. It was also made clear to us that since these prisons are privately owned, as they become publicly traded, we’d be able to buy shares.

Most of us were taken back by this. Again, a couple of people asked what this had to do with us. At this point, my industry colleague who had first opened the meeting took the floor again and answered our questions. He told us that since our employers had become silent investors in this prison business, it was now in their interest to make sure that these prisons remained filled. Our job would be to help make this happen by marketing music that promotes criminal behavior, rap being the music of choice. He assured us that this would be a great situation for us because rap music was becoming an increasingly profitable market for our companies, and as employees, we’d also be able to buy personal stocks in these prisons. Immediately, silence came over the room. You could have heard a pin drop.

While efforts have been made over the years to dismiss this account as fantasy and/or conspiracy (despite it being deemed credible and promoted by prominent figures in hip-hop), other accounts from this period suggests that it should not be so easily discounted. For instance, Portia Maultsby, Professor Emerita of Folklore and Ethnomusicology at Indiana University, has been quoted as stating that:

In the early 1990s, a former graduate student, then keyboardist for Stevie Wonder, called me upset that some record labels were actively recruiting Black men with criminal records to record rap. He believed that they were encouraging criminal acts among this group.

In addition, prominent rappers have claimed, from the 1990s onward, that the music industry is financially entangled with the private prison industry and encourages “criminal behavior” through hip-hop due to those entanglements.

While some outlets have noted that private prison companies and record labels share major index managers like Vanguard among their top shareholders, the ties between the two industries are significantly deeper and directly involve organizations mentioned throughout this article.

Clinton, not unlike Ronald Reagan, was very “under the thumb” of MCA’s Lew Wasserman. Wasserman began backing Clinton’s presidential campaigns in 1992, but had first met Clinton back when he was governor of Arkansas, where his administration notoriously enabled illicit Iran-Contra-linked activities. Lew Wasserman would later broker the close ties between Clinton and his grandson, Casey Wasserman (who like Clinton, was an Epstein associate). This led to the Wasserman Foundation becoming one of the main donors to the controversial Clinton Foundation. Wasserman, as well as his protégé Steven Spielberg, were major donors to Clinton’s 1996 re-election campaign, so much so that it earned them overnight stays in the White House’s Lincoln bedroom. In addition, other Mega Group figures like Edgar Bronfman were also major donors to Clinton. Bronfman and Wasserman both received the Presidential Medal of Freedom during Clinton’s presidencies. Notably, companies tied to Bronfman and Wasserman, i.e. MCA/Universal, played a major role in lobbying for the passage of the 1996 Telecommunications Act, which Clinton signed into law and which allowed extreme industry consolidation and the formation of de facto monopolies in entertainment and beyond.

A few years earlier, in 1994, Bill Clinton had signed a controversial crime bill which enacted several “funding incentives blamed for driving mass incarceration.” Though mass incarceration existed before the 1994 crime bill (largely beginning in the administration of the MCA-controlled Ronald Reagan), that bill is blamed with exacerbating the crisis, which has disproportionately impacted the African-American community and benefited two companies in particular. Those two companies were the biggest private prison companies in the United States at the time, and they still are today. One was the Corrections Corporation of America (CCA), now known as CoreCivic, while the other was Geo Group, formerly Wackenhut Corrections Corporation (WCC). Notably, WCC’s IPO took place the same year as the passage of the crime bill, 1994, which notably coincides with the account of the 1991 clandestine meeting where it was claimed that the private prison companies would go public once the music industry had began to promote violence and crime in hip-hop lyrics for the benefit of private prison companies like Wackenhut.

WCC was formed in 1984 as a subsidiary of the Wackenhut Corporation. WCC’s parent company, Wackenhut, developed significant ties to MCA during the 1980s. As detailed earlier, Wackenhut had entered into a joint venture with the Cabazon Reservation to covertly develop weapon systems for CIA-backed paramilitaries that also repurposed the PROMIS software for espionage purposes. Top MCA executive Eugene Gianquinto was directly involved with companies that later joined the Cabazon-Wackenhut operation and later took credit for quashing the federal investigation into MCA’s mob ties. In addition, Allen & Company and Earl Brian, who were connected with the PROMIS scandal, were also significantly tied to Alan Hirschfield, who is said to have co-founded Arista Records with Clive Davis, which spawned Combs’ Bad Boy Records in 1993.

Evidence of MCA’s close ties to the CIA, beyond those indicated by the PROMIS scandal, were noted by Lew Wasserman biographer Dennis McDougal. McDougal received a response from the CIA, in response to a FOIA request, “that seventeen separate computer searches revealed MCA did work with the CIA. The CIA refused to release any of its MCA documents on grounds that it might endanger national security.” Melanie Carlson, writing for Covert Action Magazine, also thoroughly detailed MCA’s ties to the mob, the CIA, the PROMIS scandal and the death of journalist Danny Casolaro in a 2024 investigation.

Like MCA, Wackenhut also had ties to the CIA. Between that point and the passage of the 1994 crime bill, figures like Frank Carlucci and Bobby Ray Inman, both former CIA deputy directors, served on Wackenhut’s board. Carlucci also had unusual connections to the network around Robert Booth Nichols, the organized crime-linked figure who had brought together Wackenhut, the Cabazon Indian reservation and MCA as part of the PROMIS scandal. In addition, before becoming Reagan’s CIA director William Casey, one of the October Surprise/Iran-Contra architects, had been Wackenhut’s outside legal counsel. In 1992, two years before the Clinton crime bill was passed, SPY Magazine reported on extensive ties between Wackenhut and the CIA, citing CIA operatives and former Wackenhut executives who noted that Wackenhut allowed the CIA to use its offices as fronts for its activities. The SPY investigation also noted how many of the figures who connected Wackenhut to the CIA were also key cogs in the Iran-Contra affair, which is also indicated by Wackenhut’s role in the PROMIS scandal.

This is significant as some of those same figures tied directly to the CIA-Wackenhut connection, like Richard Secord, were also tied to Leslie Wexner and Jeffrey Epstein’s efforts to relocate the Iran-Contra airline of infamy, the CIA-linked Southern Air transport, to Columbus, OH for the express benefit of Wexner and his clothing empire. After Wexner and Epstein’s efforts were successful, the airline’s main flights were between Columbus and Hong Kong. As noted in One Nation Under Blackmail, that effort, which also coincides with Epstein’s most of his 17 visits to the Clinton White House, was explicitly considered by some Ohio law enforcement officials to be tied to clandestine and criminal activities, most likely arms trafficking given Epstein’s background in covert arms trafficking networks in the 1980s. In addition, Epstein’s main contact at the White House during that time, Mark Middleton, was a central part of the “Chinagate” scandal, one major aspect of which involved the smuggling of cheap Chinese weapons into American urban areas after Chinese gun imports were banned early on in the Clinton administration. Prior to that ban, the US had been China’s top market for guns.

A significant cache of weapons being smuggled by this network into Oakland, CA was intercepted by the FBI in what is now remembered as Operation Dragon Fire, which was – at that point – the largest seizure of illegal automatic assault weapons in US history. The main individuals behind the illicit gun smuggling were tipped off and managed to flee the US prior to the FBI’s planned sting operation. However, the main company involved – China’s Norinco – had notable ties, not just to the “Chinagate” scandal itself, but also to Epstein’s former mentor and weapons dealer, Douglas Leese. The company was also allegedly involved with past arms deals that had involved both Leese and Epstein. In addition, when Clinton was serving as governor of Arkansas, he had significant connections to Iran-Contra-linked arms and drug trafficking, meaning he had a prior, documented history of enabling illicit arms smuggling operations while in public office and just prior to becoming US president. 

At the same time that Wackenhut and CIA-connected figures were apparently helping repurpose Iran-Contra assets for the sake of flooding the US black market with cheap yet illicit weapons, the same network was also littering US urban areas with drugs, specifically crack cocaine. As reported by the late Gary Webb in his iconic Dark Alliance series (and subsequent book of the same name), a massive drug ring in California was peddling crack cocaine specifically to Latino and African-American urban communities during the 1990s, with millions in profits being used to finance CIA-backed paramilitary groups in Nicaragua. It was argued at the time that this represented a continuation of the Iran-Contra nexus that came under scrutiny in the 1980s and the CIA’s clandestine efforts to finance the Nicaraguan “Contras” through illicit means. After Webb’s Dark Alliance series concluded, the outlet that had run it –– the San Jose Mercury News –– published an editorial noting that Webb’s work “can only feed longstanding rumors in black communities that the U.S. government ‘created’ the crack cocaine epidemic to kill and imprison African-Americans and otherwise wreak havoc in inner cities.”

Central to the CIA-Contra-Crack Cocaine nexus were Nicaraguan asset and eventual DEA informant Oscar Danilo Blandón, one of the largest importers and suppliers of cocaine at the height of the crack epidemic, and his one-time business partner Freeway Ricky Ross, who hailed from Compton and who grew to operate an interstate crack ring that helped launder and finance the covert war on the Nicaraguan Sandinistas. In 1991, during one of his prison stints, Freeway Ricky Ross was cellmates with one of the other top crack dealers in Los Angeles, Michael “Harry O” Harris. As investigative researcher John Potash details in The FBI War on Tupac Shakur, Gary Webb asserted that Ross was effectively the national point man for the trafficking operations that were remotely manipulated by former Vice President Bush and CIA Director William Casey in the 1980s.^xxiii His eventual cellmate Harry O was one of his top understudies. Potash writes:

Other findings further support the notion that Death Row Records dually worked as a front company for various U.S. Intelligence operations. Pulitzer Prize-winning writer Gary Webb was the first to link Death Row Records to the CIA from the record company’s inception. Webb quoted the probation officer of national crack trafficker Freeway Ricky Ross. That probation officer cited a silent partner of Death Row, a Michael “Harry-O” Harris, as one of Ross’ two understudies.

New Yorker magazine and other media outlets described how Vice-President George Bush helped run key components of the CIA/Contra/Crack operations with CIA Director William Casey. Webb detailed the CIA cocaine trafficking network that went from Nicaraguan Contras, such as Danilo Blandón, to Freeway Ricky Ross. A CIA Inspector General backed these findings about the CIA trafficking cocaine in 1998. Webb claimed that Ross was their national point man, trafficking “multimillion-dollar cocaine shipments across America.” This would have made Michael Harris and Death Row Records important assets for the intelligence community.

Evidence suggests that Ricky Ross worked closely with CIA-collaborating cocaine traffickers such as Danilo Blandón and Ron Lister in the ’80s. Also, at that time, Lister met regularly with former CIA Covert Operations director Bill Nelson, who had worked under George H. W. Bush at the CIA.^xxiv

Harry O would have become a silent partner in Death Row Records with Suge Knight, Dr. Dre, The D.O.C, and corrupt defense lawyer David Kenner.^xxv This is significant to this story and the Sean “Diddy” Combs investigation at large, as not only was Death Row an intelligence front, but it was also teeming with dirty cops and corrupt informants who’d been assigned to moonlight as security guards at the label for drugs/weapons dealing, informing, and COINTELPRO purposes.^xxvi This includes the intentional sabotage of the Bloods and Crips gang truce (both gangs with which Harry O intimately collaborated in his crack distribution efforts, as well as the Cali Cartel) and the fabrication and exploitation of the East vs. West rap feud that would ultimately lead to the seemingly government-sanctioned murders of both activist rapper Tupac Shakur and Biggie Smalls, operations in which both Sean Combs and Suge Knight seemingly played pivotal roles. In Part II of this series, we will examine the East vs. West rap feud and the deaths of Tupac and Biggie, as well as their relevance to the Sean Combs story, in greater detail. 

More recently, Freeway Ricky Ross — now once again free after he successfully appealed his life imprisonment without the possibility of parole sentence on the grounds that the three strikes law had been misapplied — appeared on the podcast of hip hop journalist DJ Vlad and revealed that not only had he and Death Row silent partner Harry O been cellmates at the time that Michael Harris introduced Suge Knight to attorney David Kenner, but that Ross was initially going to be another “silent partner” in the label. According to Ross, this partnership only dissolved when he was released from prison prior to Harry O and got in contact with Suge Knight. Seemingly in order to protect his own drug-supplying stake in the Death Row enterprise, Michael “Harry O” Harris warned Ross off from working with Suge. Ross, in deference to street codes, declined to go behind Harry O’s back and supply Knight. Per Ross, back in 1991 at the time that Death Row was formed, he used to sit in at the no-contact visit meetings between Knight, Kenner, and Harris while he and Harris were incarcerated together. Once the label was up and running, it quickly turned to cocaine trafficking, arguably a branch or mutation of the same CIA-Contra-Crack Cocaine nexus for which assets like Freeway Ricky Ross and Michael Harris had earlier been burned and for which journalist Gary Webb was excessively attacked (and as some believe, murdered) to cover up.

These music industry, organized crime, intelligence, and federal law enforcement connections are also hugely significant as Death Row ––  in conjunction with Combs’ Bad Boy Records –– was one of the primary Trojan horses by which “gangster rap” was injected into the culture, often at the expense of more radical, activist or outright revolutionary hip hop acts who, if they refused to cater to the whims of certain record executives, would see their commercial prospects suffer. One of the mechanisms for the dissemination of drug and crime glorifying culture was the cruel and deliberate coercion and corruption of conscious rappers (see: Potash’s FBI War regarding Suge Knight’s pushing of drugs on both Dr. Dre, who’d previously preached abstinence, and Tupac).^xxvii 

There is also the case of films like New Jack City, which involved Combs’ mentor Andre Harrell and arguably romanticizes crack dealing. The film was also made by Warner. Warner, as previously noted, was built out of the association of its long-time head, Steve Ross, with Meyer Lansky associates. Ross himself had become close to Robert Maxwell, an intelligence asset tied to organized crime and a key figure in the Epstein network as well as the PROMIS scandal, in the late 1980s and early 1990s, a time when Maxwell was attempting to gain a foothold in New York City. This further suggests that mob-linked or mob-adjacent entertainment companies were working to culturally engineer African-American culture for the benefit of CIA-linked crack dealing and, ultimately, CIA-linked companies like Wackenhut that dominated the private prison industry.

Given the above, all the elements of a perfect storm to perpetuate mass incarceration of African-Americans were put into place along the same timeline and by many of the same actors –– actors deeply tied to the CIA and organized crime. When we add the alleged efforts to stoke violence in hip-hop, as exemplified by Combs’ and his Bad Boy Records after he had become enmeshed in this very network as well as his West Coast rivals, we have yet another component that suggests this network used its influence over the hip-hop industry to socially engineer criminal behavior, while also ensuring that cheap, addictive drugs and cheap guns simultaneously flooded urban African-American communities. 

The MCA and CIA-connected Wackenhut would have reaped mass profits from this apparent operation, as the number of prisoners in its private prisons swelled. However, other major multi-national corporations who utilized inmate labor from these prisoners benefitted as well. A litany of American companies, like WalMart and Microsoft, are among those who have a long history of profiting handsomely from inmate labor. Several of these corporations include companies run by the “Mega Group” billionaires, like Lester Crown’s General Dynamics, a major military contractor, and Leslie Wexner’s Victoria’s Secret (though the lingerie firm claimed to have ended the contract after it became public knowledge in the late 1990s).

This context certainly zooms out significantly from the specific Combs scandal that began to unravel at the end of 2023. However, it also helps us understand the case. Combs appears to have been brought into a network where he was controlled through sex and drugs, and then made a celebrity. As a celebrity, he used his own music, his record label and his influence to control other upcoming rappers and musicians while also helping shape the future of hip-hop toward that allegedly sought by music industry executives and their clandestine partners in the CIA, the mob and the private prison industry. 

Combs, from the early 1990s onward, appears to have been a key frontman for this network and its ambitions. He was likely not the sole mastermind or beneficiary of all of the scandalous parties, sexual violence, public promotion of violence, and alleged blackmail in which he engaged. He was a product of a network and a system that –– in the case of Combs –– was seeking to target and corrupt the broader African-American community in similar ways. Ultimately, Combs, like some other prominent entertainers, was servile to his music industry masters. He worked within a system those masters controlled and attempted to expand his own influence and power within that system, but –– at the end of the day –– he was never in charge.

In the next installment of this series, we will explore Combs’ expanding influence in hip-hop and also in other industries, like retail, again all courtesy of the very same network outlined in this piece. While Combs publicly projected power and success, both of those things were conditional and, like Epstein, now exposed, he is due to take the fall in order to take the heat off of the people behind the curtain.

References: 

i. Zack O’Malley-Greenburg, 3 Kings: Diddy, Dr. Dre, Jay-Z, and Hip-Hop’s Multibillion-Dollar Rise (Little, Brown and Company, 2018), Ch. I

ii. David McGowan, Programmed to Kill: The Politics of Serial Murder (iUniverse, Inc., 2004), p. 101

iii. O’Malley-Greenburg, 3 Kings, Ch. I

iv. O’Malley-Greenburg, 3 Kings, Ch. I

v. O’Malley-Greenburg, 3 Kings, Ch. I

vi. The abuse charges against Fr. Lynch stemmed from an FBI probe launched in July 1987 (the summer prior to Combs departing for college) that was initiated after lay teachers at the academy complained about Lynch’s and Brady’s behavior with students. Fr. Lynch was jointly indicted around the same time as his boss Principal Brady, but was ultimately exonerated by the Hon. Justice Burton Roberts when a letter was produced during cross-examination that showed the FBI coerced student John Schaeffer into falsely accusing his former instructor under the false pretense that he wouldn’t be required to testify. There were also clear contradictions in the dates of the alleged abuse in Schaeffer’s testimony.

Furthermore, as contended by Fr. Lynch’s defenders, the case against him was potentially politically motivated by his activism as well as other on-going corruption investigations in NYC including the Wedtech scandal, which first broke in 1986 and was named after a DOD-contractor based in the Bronx who secured governmental contracts through fraud, bribery, and other illegal means. The numerous scandals that beset New York municipal politics in the late 1980s led to Rudy Giuliani’s successful prosecution of Bronx Democratic Party leader Stanley Friedman on federal corruption charges. Friedman was a law partner of Roy Cohn, a notorious mob lawyer also known for having been Donald Trump’s mentor. Friedman’s protege, Bronx borough president Stanley Simon, resigned amid pending criminal charges stemming from his involvement with Wedtech. In 1988, long serving US Rep. Mario Biaggi of the Bronx was ultimately convicted by Giuliani on bribery, extortion, tax evasion, and obstruction charges in connection to Wedtech, shown to have accepted bribes from the Bronx company in return for the procurement of federal contracts. Bronx congressman Robert Garcia also resigned after Giuliani convicted him on bribery and extortion charges related to Wedtech in 1989—the ruling was later reversed on appeal. Note that the Wedtech and MSMA sex abuse scandals both revolved around the Bronx and that their court proceedings overlapped. While speculative, the FBI and DA office’s willingness to use dirty tricks in pursuit of a conviction of Fr. Lynch may have meant to distract from Wedtech, which was beginning to knock on the door of the Reagan administration, posing a danger to press secretary Lyn Nofziger and ultimately leading to AG Edwin Meese’s resignation in 1988.

vii. O’Malley-Greenburg, 3 Kings, Ch. 2

viii. O’Malley-Greenburg, 3 Kings, Ch. 2

ix. O’Malley-Greenburg, 3 Kings, Ch. 2

x. John Potash, The FBI War on Tupac Shakur: State Repression of Black Leaders From the Civil Rights Era to the 1990s (Microcosm Publishing, 2021), Ch. “CIA & Time Warner’s Grip on the Music Industry”

xi. Frederic Dannen, Hit Men: Powerbrokers and Fast Money Inside the Music Business (Vintage Books, 1990), pp. 37-8, 42-6, 53

xii. John Potash, The FBI War on Tupac Shakur, Ch. “CIA & Time Warner’s Grip on the Music Industry”

xiii. Frederic Dannen, Hit Men, pp. 26-27

xiv. John Potash, The FBI War on Tupac Shakur, Ch. “Tupac’s FBI File, Republican Attacks, Harassment Arrests, & Specious Lawsuits”

xv. Derrick Parker with Matt Diehl, Notorious C.O.P. (St. Martin’s Press, 2006), Ch. “Jacking the Rapper: The ‘Puff Daddy’ Era—Rap Legends Born into Blood”

xvi. Frederic Dannen, Hit Men, p. 67

xvii. Ibid., p. 75

xviii. Ibid. p. 75

xix. Ibid., p. 87

xx. Ibid., p. 91

xxi. Ibid., p. 86

xxii. Ibid., p. 92

xxiii. John Potash, The FBI War on Tupac Shakur, Ch. “Death Row Signs Tupac”

xxiv. Ibid.

xxv. John Potash, The FBI War on Tupac Shakur, Ch. “Death Row Police & Suge Knight Work to End Gang Truce”

xxvi. Ibid.

xxvii. Ibid. 

One Label Under Blackmail: The Early Intersections of Diddy and the Epstein Network.

What did Elon Musk mean when he said he was “dark MAGA?” Exploring this question will certainly take us to a very dark conclusion. Yet, ironically, it is this very conclusion that, once seen in the right light, can liberate us.

This two-part series examines the genuine but misplaced hopes of the millions of US citizens who elected Donald Trump to his second non-consecutive term. Unbeknownst to them, they have voted to live in a Technate administered by what is called “gov-corp.” In so doing, they have taken another step toward a multipolar world order, or “New World Order,” as some have long called it.

Shortly before the November 2024 election, Elon Musk, speaking at a Trump rally in Butler, Pennsylvania, announced, “I’m not just MAGA, I’m dark MAGA.” Only a couple of months earlier Trump had survived an alleged assassination attempt at the same Butler show grounds. Sharing the stage with “bullet-proof” populist hero Trump, an absolute shoe-in for the presidency, Musk seized his moment.

The Make America Great Again (MAGA) acronym is broadly understood. But Musk’s added adjective “dark” is little understood — and implies much more.

Explanations for his “dark MAGA” declaration have ranged from Musk pushing the Dark MAGA meme coin to Musk casting himself as a super-antihero or even an advocate of a violent fascist takeover of the US. None of these claims have addressed his more obvious reference. Musk is one of a cadre of technocrats behind the Trump presidency who promote the ideas encapsulated by the Dark Enlightenment.

Peter Thiel, a co-founder of PayPal along with Musk, is probably the best-known proponent of the Dark Enlightenment while Musk is the best-known proponent of Technocracy. But, as we shall see in this article, these sociopolitical theories have considerable overlap and are mutually reinforcing.

Elon Musk’s Technocratic Heritage

In a 2021 SEC filing, Tesla CEO Elon Musk and Tesla’s then-Chief Financial Officer Zach Kirkhorn officially changed their respective working titles to become the “TechnoKings” of Tesla. This might seem like nothing but irreverent fun—consider that Kirkhorn was also known by the Game of Thrones title of “Master of Coin”—but Musk certainly understands the gravity of Technocracy and the associated term “technocrat.”

Their careful choice of words is an important point emphasized throughout this article. While oligarchs like Musk and Thiel often express ideas in a seemingly flippant manner—or as if the ideas sprang from out of nowhere—these apparent offhand remarks are not meaningless. It is Aesopian language indicative of the core beliefs held by people like Musk, Peter Thiel, Jeff Bezos, and other members of what Council on Foreign Relations think tank member David Rothkopf generously characterizes, in his book on the subject, as the “Superclass“: people who can “influence the lives of millions across borders on a regular basis.”

The “joke” is on us. Or, rather, on those of us who assume it’s all just a joke.

Both Musk and Thiel are members of the “superclass,” though “parasite class” might be a more fitting description for the oligarchy Rothkopf describes. “Insider” Rothkopf’s estimate of around 6,000 individual oligarchs, whose decisions impact the lives of the remaining eight billion of us, seems feasible.

Musk and Thiel are just two among the 6,000 by virtue of being welcomed into the “superclass” by behind-the-scenes oligarchs who do not feature on the published lists of the world’s wealthiest men and women. Musk and Thiel are made men. We are focusing on them because they are prominent accelerationist technocrat supporters of the Trump/Vance administration.

Elon Musk’s maternal grandfather was Joshua N. Haldeman (1902–1974), who hailed from Pequot, Minnesota. In 1906, when Joshua was four, his parents took the family north and settled in the Canadian province of Saskatchewan. In 1936, after 34 years of life on the western plains of the US and Canada, Joshua Haldeman moved to Saskatchewan’s provincial capital, Regina, where he established a successful chiropractic business.

Between 1936 and 1941, Haldeman did more than realign spines. He was also the research director and leader of the Regina branch of an up-and-coming entity known as Technocracy Incorporated, shortened to Technocracy Inc. In 1940, while serving in that post, he was arrested by the Royal Canadian Mounted Police (RCMP) for violating Defence of Canada regulations, under which Technocracy Inc. was deemed an “illegal organisation.” As a result, Haldeman was denied entry into the US, where he had intended to deliver a speech promoting Technocracy. He was then fined and given a suspended sentence for heading up the controversial Technocracy Inc.

Following his 1941 conviction, Haldeman joined the Canadian Social Credit Party (Socred), which had been formed in 1932 by evangelist William Aberhart. Socred sought to implement the “social credit” economic theory of British engineer and economist C. H. Douglas. Like Socred, Technocracy was based upon the “industrial efficiency” ideas of engineer Frederick Winslow Taylor (Taylorism). It also dovetailed with the “conspicuous consumption” economic theories of Thorstein Veblen.

C. H. Douglas presented his theory of social credit to tackle what he saw as the inequality of opportunity created by the centralised control and hoarding of resources and wealth. He identified the “macro-economic gap” between retail price inflation and wage growth. He suggested filling that gap by creating the “National Credit Office”—which would be independent of state control—to issue “debt-free” credit to consumers. Part of this National Credit would be used to lower retail prices. The remainder would be distributed to all citizens, irrespective of their personal financial situation, as a way of creating consumer demand for goods. Douglas’ suggestion was an early model of Universal Basic Income (UBI).

Joshua Haldeman’s family of seven, which included a daughter, Maye Haldeman, left Canada in 1950 to set up base in Pretoria, South Africa. As entrepreneurs and adventurers, they travelled extensively. By her own account, Maye Haldeman was close to her parents and adopted their entrepreneurial spirit, sense of adventure and work ethic. Unavoidably, she was also familiar with her parents’ political ideas. Maye recalled that, as a child, she and her siblings would do their “monthly bulletins and photocopy newsletters, and then put the stamps on the envelopes.”

Maye Haldeman married Errol Musk in 1970. Their son, Elon, was born in Pretoria a year later. He was an infant when his grandfather died in a plane crash. Nonetheless, as he was growing up, Elon learned about and became intimately familiar with his grandfather’s political philosophy.

Though Musk was evidently close to his mother, he elected to stay with his father in Pretoria when his parents divorced in 1979. After Elon’s relationship with his father soured, he encouraged his mother to claim her Canadian passport, according to Maye. Her doing so enabled Elon to quickly secure his own Canadian passport, emigrate from South Africa—which he did at age 17—and thereby avoid compulsory military service in that country.

Elon’s ultimate goal was to live and work in the US. But before that, he decided to head from Montreal to Waldeck, Saskatchewan, where, upon returning to his roots, he worked as a farm hand on his second cousin’s farm. There, he awaited his mother Maye’s arrival from Pretoria. She was followed by Elon’s two siblings, Kimbal and Tosca, who also wanted to be closer to the Haldeman side of the family in Canada.

Musk studied at Queen’s College in Kingston, Ontario, for two years before acting upon his aim of settling in America. He transferred to the University of Pennsylvania, where he earned a bachelor’s degree in physics and economics. Subsequently, he interned in Silicon Valley tech companies before abandoning education to pursue his entrepreneurial ambitions.

Fast Forward to Today

In October 2024, a possible spoof account for Amazon billionaire Jeff Bezos posted on Musk’s “X” platform an alluring statement: “The Network State for Mars is being formed before our eyes.” The real Musk enthusiastically replied, “The Mars Technocracy.” To which the Bezos-like account responded, “Count me in.”

As he continues to dream about colonising Mars, Musk has made it abundantly clear which political system he prefers. In 2019, he wrote: “Accelerating Starship development to build the Martian Technocracy.” Note his use of the word “accelerating.” For Musk “accelerating” doesn’t simply mean an increase in velocity.

Musk has long advocated Universal Basic Income. Here’s one instance of his embrace of UBI: At the World Government Summit in 2017, Musk said, “We will have to have some kind of universal basic income.” Another example: In June 2024, speaking with then-Prime Minister Rishi Sunak at the UK-convened first global “AI Safety Summit,” Musk painted a Utopian vision of an artificial intelligence-dominated society and “an age of abundance” before adding, “We won’t have universal basic income, we’ll have universal high income.” In other words, he was suggesting that the masses would have perfect “lives of abundance” enabled by the ultimate AI-controlled distribution of UBI.

Musk desires Technocracy—and a social credit system—just as his grandfather Joshua Haldeman did. This is evident beyond his personal history and his words. Everything Musk does is completely congruent with these dual pursuits. But when we are invited to discuss Technocracy in reference to Mars, we are of course asked to ignore all the evidence that exposes Musk’s and his fellow oligarchs’ attempts to establish a “Technate”—a system of technocratic, totalitarian continental control—here on Earth.

As is the case with many of his oligarch brethren, Musk’s business acumen and his ethics are highly questionable. It appears he has survived and thereafter thrived in business solely because of his network connections, his considerable state backing, and the largess of his investors. As George Carlin wisely observed, “It’s a big club.”

Musk invested more than a quarter-billion dollars to install Trump in the Oval Office. Naturally, he anticipates a return on his investment. In fact, that ROI is a done deal: Musk already makes billions from US taxpayers through a web of government contracts. For tycoons like Musk, money is simply a means to an end: obtaining power. His wealth has positioned him to start seriously implementing his grand vision of Technocracy.

Musk’s dive into Technocracy is underway through the newly established temporary agency in Washington, D.C., he now chairs. Announced last November by Trump, created on his first day in office, and supposedly set to complete its mission by the summer of 2026, the US Department of Government Efficiency, known as DOGE, appears to be a nascent Technocracy.

Venture capitalist Musk and biotech billionaire Vivek Ramaswamy were handpicked to run DOGE with the help of Cantor Fitzgerald CEO Howard Lutnick. Vivik has since departed to run for Governor of Ohio. Lutnick was Trump’s choice to become the US Secretary of Commerce and was recently confirmed. His appointment raises many concerns. Not least of them is his link to Satellogic, a strategic partner of Peter Thiel’s Palantir Technologies. This link reveals Lutnick’s personal investment in the public-private surveillance state that is governed by US and Israeli intelligence agencies.

Yet Lutnick has an even more significant conflict of interest. He is steering Cantor Fitzgerald to back Tether (USDT), a stablecoin that is increasingly purchasing US Treasurys. As we move toward the era of digital currencies, the US government project to save its debt-laden dollar and its fragile economy is closely tied to stablecoins. Thus, as Secretary of Commerce, Lutnick will be in a position to guide the development of markets toward the new US digital economy. We’ll expand on this angle in Part 2.

Perhaps it’s just a coincidence that “the Doge” was the formal title of the chief administrator (magistrate) of the mercantile Venetian Republic. As we shall also discuss in Part 2, there are many reasons to suspect that today’s DOGE acronym is not a mere coincidence.

The departure of Ramaswamy and Lutnick from the DOGE project appears to leave Musk as its sole “CEO.” A corporate monarchy, led by a CEO “king,” (TechnoKing) is in keeping with the theories underpinning the Dark Enlightenment.

The stated purpose of the DOGE is to restructure the federal government to reduce expenditures and maximise efficiency. That goal is in keeping with Taylorism, a foundation of Technocracy.

One of the leading neoreactionaries (we’ll explain this term shortly), Curtis Yarvin, coined the catchy acronym RAGE. It stands for Retire All Government Employees. The parallels between the stated ambitions of the DOGE and the intention of Yarvin’s RAGE are marked.

Apparently, the DOGE will not be an official executive department but will instead operate as a Federal Presidential Advisory Committee, supposedly outside of government. But make no mistake: The DOGE will be inextricably tied to the political process. Its employees will be housed in the former offices of its predecessor, the United States Digital Service. And its helmsman, Musk, will reportedly have a personal office in the West Wing of the White House.

The efficiency ideas of certain nominated experts, starting with Musk, will be given political clout via a new “DOGE” subcommittee of the House Committee on Oversight and Government Reform. This subpanel is chaired by controversial congresswoman Marjorie Taylor Greene (R-GA)—often referred to as MTG. On the surface, it may look like an oversight subcommittee with authority over the science, engineering, and technology “experts,” but in practice the “experts” will be effectively controlling the related political policy decisions. This concept of policy designed by technical “experts” is central to Technocracy.

J.P. Morgan Chase Chairman and CEO Jamie Dimon is among those who have welcomed the DOGE plan. Certainly, the proposal to radically reduce or even eradicate US government’s financial regulators appeals to bankers like Dimon. The Trump administration is seeking to seize and centralise control of financial regulators such as the Security and Exchange Commssion (SEC) and the antitrust regulator the Federal Communications Commission (FCC). Consequently, the banks are anticipating a much lighter regulatory touch. Speaking at Davos, J.P. Morgan asset wealth fund manager Mary Erdoes—tipped to succeed Dimon as CEO—said the moves had freed US bankers’ “animal spirits” and set investment banks in “go-mode.”

Given that Elon Musk was neither elected by Americans nor authorized by their representatives in Congress, the DOGE represents a formal shift in political power from the public to the private sector. It is fundamentally a private sector-dominated think tank openly empowered to “restructure federal agencies.” If the DOGE proceeds as suggested, it is clear that, as we pointed out above, elected US representatives—MTG among them—and US senators will not have the upper hand. Indeed, we might question if they are even capable of grasping the ulterior motives of those driving the DOGE concept.

Also, given that Musk and other DOGE supporters—Bezos, for example—have long profited from huge government contracts, and given that the likes of Dimon will doubtlessly be asked to “advise” the DOGE, we see a massive conflict of interest at the heart of the DOGE project. That conflict, like everything else about the DOGE, and its supporters like Bezos, are aligned with Technocracy, for it affords pecking-order privileges to the very technocrats who seek to control a Technate.

An In-Depth Look at Technocracy

To appreciate why people like Musk and Bezos are so enthused by the prospect of Technocracy, we must understand the full extent of Technocracy. We must grasp not just what it is superficially portrayed to be, but also recognize its deep, dark, humanity-mutating, society-altering intentions and aims.

Technocracy does not merely call for technocratic governance—that is, a sociopolitical system where qualified experts, or “technocrats,” rather than politicians, set policy.

Technocratic governance came to the fore during the 2020–2023 pseudopandemic. Medical “experts,” notably Anthony Fauci and other members of the White House Coronavirus Task Force, were put in positions very visible to the public. They were widely seen as leading the policy response—namely, mass “vaccinations,” lockdowns, small business shutdowns, and other imposed-from-on-high mandates designed to enforce and measure worldwide compliance.

But the Technocracy that Musk, Bezos, and other tech “experts” seek to establish implies more than an experiment in the effects of mRNA injections, more than a test of controlling and mesmerizing the masses.

Technocracy is based on the belief that there are technological solutions to all social, economic, and political problems. The Elon Musks and Peter Thiels of the planet and many more of their ilk share this single-minded belief.

For example, when, 20 years ago, Thiel co-founded the impact investment platform called the Founders Fund, its mission statement noted that “technology is the fundamental driver of growth in the industrialized world.” It also declared that the Founders Fund exists to solve “difficult scientific or engineering problems.” If the right technology succeeded, the Founders Fund rationalized it to be the “shortest route to social value.”

Technocracy offers a form of policy response—there is no political “policy” as we understand the term in a Technocracy—as technological solutions to social problems. But this is only a limited aspect of Technocracy. (Keep in mind, faith in technological solutions is not found solely in Technocracy.)

Technocracy is truly unique, unlike any of the sociopolitical, philosophical or economic ideologies familiar to most of us.

In 1937, Technocracy Inc.’s in-house magazine, The Technocrat — Vol. 3 No. 4, described Technocracy as:

The science of social engineering, the scientific operation of the entire social mechanism to produce and distribute goods and services to the entire population.

To give that definition context, we’ll go back two decades to 1911, when American mechanical engineer Frederick Winslow Taylor, arguably the world’s first management consultant, published The Principles of Scientific Management. His book came out at the culmination of the Progressive Era in the United States.

The Progressive Era was a historical period marked by the political activism of the US middle class, who sought to address the underlying social problems—as they saw them—of excessive industrialisation, mass immigration, and political corruption. “Taylorism,” which was fixated on the imminent exhaustion of natural resources and the advocacy of efficient scientific management systems, was part of the spirit of the age.

In The Principles of Scientific Management, Taylor wrote:

In the past[,] the man has been first; in the future[,] the system must be first[.] [. . .] The best management is a true science, resting upon clearly defined laws, rules, and principles, as a foundation[.] [. . .] [T]he fundamental principles of scientific management are applicable to all kinds of human activities, from our simplest individual acts to the work of our great corporations.

Taylor’s ideas jibed with the theories of economist and sociologist Thorstein Veblen. Veblen proposed that economic activity isn’t just a function of supply and demand, utility and value, but that it evolves with society and is thus shaped also by psychological, sociological and anthropological influences.

Veblen is perhaps best known for his theory of “conspicuous consumption.” He observed that the wealthy signalled their social status through ostentatious display of their purchasing power: expensive properties, cars, jewels, etc. Within the hierarchical class structure, aspiring classes tried to emulate the conspicuous consumption of the class above them. Veblen contended that the cascade effect of this social climbing created demand for superfluous goods and services and that the net economic impact was therefore hopeless inefficiency and wasted resources.

In The Engineers and the Price System, Veblen suggested that technocratic engineers should undertake a thorough analysis of the institutions that maintained social stability. Once the institutions were understood, those with technological expertise should reform them, improve efficiency, and thereby engineer society to be less wasteful. Shortly, we’ll discuss how this idea was later adapted by the accelerationist neoreactionaries.

Both Taylor and Veblen were focused upon maximising the efficiency of industrial and manufacturing processes. That said, they both recognised that their theories could be extended to a wider social context. It was the more expansive application of their proposals that beguiled the oligarchs of the day.

In 1919, Veblen was one of the founding members of a John D. Rockefeller-funded, New York City-based private research university in New York called The New School for Social Research (later renamed The New School). This progressive educational model soon led to the creation of the Technical Alliance, a small team of scientists and engineers notably including not only Veblen but also Howard Scott, who would come to lead the group.

The Technical Alliance was reformulated in 1933 after an enforced hiatus was prompted by Scott’s exposure as a fraudster. He had falsified some of his credentials—as, apparently, had C. H. Douglas. Post-hiatus, Scott was joined by M. King Hubbert—who would later become globally renowned for his vague and generally inaccurate “peak oil” theory—and others. The members of the Technical Alliance renamed themselves Technocracy Inc.

Technocracy was thoroughly outlined in Technocracy Inc.’s 1933 publication of its Technocracy Study Course. According to the study course’s technical specifications, society should be separated into what the advocates of Technocracy (from now on referred to as “technocrats”) call a “sequence of functions.” In this sequence, society as we know it is removed. Instead, centralised control of all human interactions and behaviour is proposed as part of the “social mechanism.”

An entire “social mechanism” subjected to technocrats is called a Technate. A Technate is designed to work “on a Continental scale”—that is, on each continent, or Technate, whose boundaries are drawn on a map. The Technate of North America map includes Greenland, Canada, the United States, Mexico, parts of Central America, northern South America, Caribbean islands, and the eastern Pacific Ocean.

There are no national governments in Technocracy. Nation-states are abolished in each continental Technate.

Driven by the assumed precepts of efficiency, technocrats deem the centralised control of all resources essential:

Technocracy finds that the production and distribution of an abundance of physical wealth on a Continental scale for the use of all Continental citizens can only be accomplished by a Continental technological control, a governance of function, a Technate.

Each function, or “Functional Sequence,” is categorised as either an industrial sequence, a service sequence, or a special sequence. For example, the “Transportation Functional Sequence” and the “Space Tech Functional Sequence” are both industrial sequences. The “Public Health” and “Education” functional sequences are among the service sequences. The “Special Sequences” are those related to security and defence (Armed Services), scientific and technological development (Continental Research), governance of the population (Social Relations), and the Technate’s relationship with other Technates or nation-states (Foreign Relations).

Administration of an entire Technate—each continent—is further subdivided by “Regional Divisions,” each defined according to their longitude and latitude boundary markers and designated by a corresponding grid-reference number. “Area Control” is an administrative rather than a functional sequence. The Technocracy Study Course specifies what that means:

[An Area Control] is the coordinating body for the various Functional Sequences and social units operating in any one geographical area of one or more Regional Divisions. It operates directly under the Continental Control.

The whole system is overseen by “Continental Control” (shown as the Continental Board above) and ultimately by the “Continental Director”:

The Continental Director, as the name implies, is the chief executive [CEO] of the entire social mechanism. On his immediate staff are the Directors of the Armed Forces, the Foreign Relations, the Continental Research, and the Social Relations and Area Control. [. . .] The Continental Director is chosen from among the members of the Continental Control by the Continental Control. Due to the fact that this Control is composed of only some 100 or so members, all of whom know each other well, there is no one better fitted to make this choice than they.

To be clear: each entire continent—a Technate—is controlled by a self-appointed body which selects its great leader—the Continental Director—from within its own ranks. This self-appointed body controls everything in the Technate.

These early technocrats were supposedly trying to devise a classless system that would provide “lives of abundance” for all. Musk’s words often echo the specific meanings defined by Technocracy Inc. When, for instance, Musk spoke of “an age of abundance,” he was referring to Technocracy. Unfortunately, the original technocrats purported aspirations for a classless society appear to have been inspired either by unimaginable evil or hapless naïveté. Take your pick!

For example, 1930s technocrats viewed all crime simply as a product of the inequality inherent in the capitalist Price System; we’ll cover the “Price System” in a moment. Because technocrats looked upon the “human animal” as little more than a behavioural automaton, they either chose to ignore or didn’t even recognise—let alone account for—other possible motivations for crime besides economic inequality, such as megalomania. Consequently, power-hungry people like the Rockefellers, who recognised that there are other incentives for human behaviour besides practical necessity, viewed Technocracy in terms the technocrats could either barely comprehend or decided to ignore.

The technocrats’ seemingly woeful grasp of the human sciences led them to imagine a Technate that would enable some kind of spontaneous order to emerge—”spontaneous natural priority,” they called it. They rejected the principle that “all men are created equal”—largely, it seems, because they didn’t understand it. In their minds, it had “no basis in biologic fact.”

Upon analysing the behaviour of cow herds and chicken flocks, the technocrats identified a pecking order—from which they derived so-called “peck-rights”—as an explanation to justify the totalitarian, hierarchical social mechanism they were advocating for humans:

Certain individuals dominate, and the others take orders. These dominant ones need not be, and frequently are not, large in stature [referring to cattle and domestic fowl], but they dominate just as effectively as if they were. [. . .] The greatest stability in a social organization would be obtained where the individuals were placed as nearly as possible with respect to other individuals in accordance with ‘peck-rights,’ or priority relationship which they would assume naturally. [. . .] There must be as far as possible no inversion of the natural ‘peck-rights’ among the men.

Regardless of the intentions of technocrats who first designed Technocracy, the appeal of this system for oligarchs is obvious. Technocracy constructs a “social mechanism,” controlled by those who claim “peck-rights,” specifically engineered to facilitate the ultimate form of totalitarianism.

As mentioned above, citizens of the Technate are described as “human animals” and are viewed as programmable machines. The scientific operation of the social mechanism—Technocracy—enables the “service” (labour) of the “human animal” to act as the “human engine” for the efficient operation of the various Functional Sequences.

The technocrats flatly rejected concepts such as the human “mind” and “conscience” and “will.” These constructs, they said, belonged to humanity’s “ignorant, barbarian past.” To them, a human being was nothing more than an “organic machine” that makes a certain variety of “motions and noises,” similar, according to the technocrats, to a dog or a vehicle.

As explained in the Technocracy Study Course, the Technate would maximise the “efficiency” of the Technate by socially engineering—behaviourally controlling—the “human animal”:

Practically all social control is effected through the mechanism of the conditioned reflex. The driver of an automobile, for instance, sees a red light ahead and immediately throws in the clutch and the brake, and stops. [. . .] If they are taken young enough, human beings can be conditioned not to do almost anything under the sun. They can be conditioned not to use certain language, not to eat certain foods on certain days, not to work on certain days, not to mate in the absence of certain ceremonial words spoken over them, not to break into a grocery store for food even though they may not have eaten for days.

Tying this terrifying oppression together was a new monetary system designed to tackle the problems the technocrats saw with the capitalist “Price System.” Much like the proponents of Socred, the technocrats viewed the inequality of wealth and resource distribution as a major problem.

The capitalist “Price System” was thought “wasteful” and therefore unacceptably “inefficient,” largely because the “money” used to measure prices was generated by bank lending (debt). The technocrats referred to fiat currency as a “generalized debt certificate.”

The technocrats therefore determined that the capitalist “Price System” inevitably led to both class inequality and conspicuous consumption as the holders of the debt accrued more wealth than anyone else. Conspicuous consumption, in turn, led to the inefficient allocation of resources into pointless production, expenditure, and vanity projects. So, they proposed a new monetary system based upon the energy cost of production.

Corresponding “Energy Certificates” would better reflect productive work done, as opposed to wasteful credit (debt) consumed, because “energy is measurable in units of work—ergs, joules, or foot-pounds.” Thus, Energy Certificates could be equitably distributed—by the Distribution Sequence—across the Technate, based on the energy required to perform the function.

The technocrats recognised that some functions require more energy than others. The Transportation Sequence construction of a new railroad would require more energy than a single “human animal” working on constructing that railroad. The Distribution Sequence would manage the resultant “fair” allocation of Energy Certificates:

[E]nergy can be allocated according to the uses to which it is to be put. The amount required for new plant, including roads, houses, hospitals, schools, etc., and for local transportation and communication will be deducted from the total as a sort of overhead, and not chargeable to individuals. After all of these deductions are made, [. . .] the remainder will be devoted to the production of goods and services to be consumed by the adult public-at-large. [. . .] Thus, if there be available the means of producing goods and services [. . .] each person would be granted an income[.]

Put another way (with quote marks around Technocracy’s words): “If” there are remaining means, after those with sufficient “peck-rights” have taken the resources they need for their function—”a sort of overhead”—the “remainder” would be allocated “fairly” to the “human animals” and considered sufficient for them to perform their function.

Each issued Energy Certificate would be non-tradable and could be used only for the purchase of resources, goods, and services provided by Continental Control within the Technate.

The Distribution Sequence would record the details of every group or individual to whom the Energy Certificates were allocated and would then monitor how that Energy Certificate was used.

The degree of centralised control inherent in Technocracy is almost beyond imagination:

[O]ne single organization is manning and operating the whole social mechanism. This same organization not only produces but distributes all goods and services. Hence a uniform system of record-keeping exists for the entire social operation, and all records of production and distribution clear to one central headquarters. Tabulation of the information [contained on the Energy Certificates] provides a complete record of distribution, or of the public rate of consumption by commodity, by sex, by regional division, by occupation, and by age group.

With Energy Certificates allocated to the individual and recording all their personal details, the surveillance state is complete. Continental Control will have oversight over every citizen and will be able to monitor and control whatever they buy and wherever they go. In other words, in a Technocracy, all human behaviour is watched and rationed.

Despite their expressed aversion to the capitalist Price System, the technocrats were not antagonistic to the accumulation of wealth. They simply redefined wealth in their own technocratic terms.

In 1933, the authors of the Technocracy Study Course also published their Introduction to Technocracy, in which they wrote:

Technology has introduced a new methodology in the creation of physical wealth. [. . .] Physical income within a continental area under technological control would be the net available energy in ergs, converted into use-forms and services over and above the operation and maintenance of the physical equipment and structures of the area. [. . .] This method of producing physical wealth and measuring its operation precludes the possibility of creating any kind of debt.

Usury—that is, the issuance of nearly all fiat currency as debt repayable with interest—is undoubtedly a key instrument with which today’s oligarchs amass wealth, which they then convert into sociopolitical power. It is useful to note that the word “wealth” means “prosperity in abundance of possessions or riches.” “Riches” implies “an abundance of means.” The etymology of the word “means” defines it as “resources at one’s disposal for accomplishing some object.”

Technocracy places all resources under the command and control of a select few, who are then free to accomplish whatever objective they desire—across an entire continent—by rationing all resources to whomever they choose, whenever they wish, as they see fit. In a Technocracy, the “select few” who have “peck-rights” over and above everyone else do not need monetary wealth. Technocracy promises to deliver the zenith of Aristotelian oligarchy.

To say Technocracy is radical would be a massive understatement. We think in terms of political “isms,” but words like “communism,” “fascism “or “feudalism” don’t come close to describing the extent of the radical tyranny intrinsic to Technocracy.

In 1965, Technocracy Inc. published a written exchange between its founder, Howard Scott, and assistant professor of economics J. Kaye Faulkner. The conversation was later re-released under the title The History and Purpose of Technocracy.

Scott wrote to Faulkner:

Technocracy has always contended that Marxian political philosophy and Marxian economics were never sufficiently radical or revolutionary to handle the problems brought on by the impact of technology in a large size national society of today. [. ..] We have always contended that Marxian communism, so far as this Continent is concerned, is so far to the right that it is bourgeois. It is well here to bear in mind; the technological progression of the next 30 minutes invalidates all the social wisdom of previous history. [. . .] Technology has no ancestors in the social history of man. It creates its own.

As Scott’s words indicate, the technocrats foresaw that the rapid advance in technology would inevitably present both immense opportunities and risks. In an effort to mitigate the risks, the technocrats’ proposed solution was to embrace technology and purpose it to the service of more “efficient” government—i.e., a Technate.

This notion of a technological “singularity” threatening to surpass humanity’s ability to adapt would later inspire the perhaps even more radical political philosophy of the accelerationist neoreactionaries. There are many commonalities between the two sociopolitical theories.

Technocracy, both then and now, is literally inhuman. It elevates technological development above morality. As Taylor made clear, “the system must be first.”

People like Elon Musk and Jeff Bezos want to install a Technocracy and live in it—or at least make us live in it. Why? Do they hope we will all live “lives of abundance” under Technocracy? Or do they envisage themselves as elitist members of Continental Control, with a free hand to socially engineer the rest of us, whom they view as a herd of “human animals”?

What do you think?

The Accelerationist Neoreactionaries

Just as Technocracy is based upon the analysis of the “social mechanism” and the subsequent “efficient management” of “Functional Sequences,” so the Dark Enlightenment—also known as the neoreactionary movement (NRx)—is based upon the deconstruction and redistribution of power held by the real ruling entity. The neoreactionaries called this entity “the Cathedral.”

Once the “administrative, legislative, judicial, media, and academic privileges” of “the Cathedral” are properly understood and quantified, they can be “converted into fungible shares” to be owned and traded by “sovereign corporations”—sovcorps—that will form a “patchwork” of “neostates”—neocameralist-states, to be exact—as a result of “neocameralism.”

Thus, the state can be separated from the “ruling entity”—the Cathedral—and can be run more efficiently as a corporate structure called “gov-corp.” This structure is very similar to the efficient management of the “Functional Sequences” forming the “social mechanism” suggested by Technocracy.

Admittedly, there is quite a lot to unpack here.

Building on the work of Karl Marx, in 1942 the Austrian economist Joseph Schumpeter theorised that capitalist economies constantly evolve due to the cyclical disruption caused by innovations that destroy old markets and create new ones. He popularised the term “creative destruction” to describe this theoretical economic growth process, which, he said, was fundamental to capitalism. Schumpeter emphasised that emergent technology had the potential to disrupt, overturn, and renew the associated socioeconomic and sociopolitical power enjoyed by capitalist monopolies. Therefore, creative destruction also implied a realignment of the social and political order.

During the mid-1990s, a diverse group of iconoclast scholars working out of the Cybernetic Culture Research Unit (CCRU) of Warwick University in the UK and led by the philosophers and cultural theorists Sadie Plant, Mark Fisher, and Nick Land, combined their thoughts about Schumpeter’s creative destruction with their exploration of “deterritorialization.” A product of the critical theory of the Frankfurt School, “deterritorialization” suggested that any sociopolitical “territory”—whatever it may encompass—would ultimately be altered, mutated or destroyed, only to reemerge as something else following the process of “reterritorialization.”

Considering deterritorialization an inevitability and viewing capitalist “creative destruction” as an essential sociopolitical and economic evolution, the CCRU cyberpunks (led by Fisher and Land) noted that the rapid improvements in modern computation—quantum computing, for example—enabled successive forward technological leaps at ever-shorter intervals.

A technological singularity—or simply the singularity—in which technological growth becomes self-perpetuating, was seen as unavoidable. The technological feedback loop meant deterritorialization would be automatic. It would accelerate sharply and outstrip humanity’s ability to intervene or adapt to it, according to the CCRU.

Therefore, the task before society is to either adapt or die. Adapting means that creative destruction of capitalism must be embraced and intensified—not just because it is a socioeconomic phenomenon but because it is a desirable “schema” to implement. The creative destruction of social, economic and political systems is a proposed survival strategy that itself needs to accelerate to keep pace with the inevitable deterritorialization as we speed towards the singularity—or some other apocalypse.

In his 1967 novel Lord of Light, American science fiction writer Roger Zelazny depicted revolutionaries who wanted to rapidly transform their society by enabling greater public access to technology. Zelazny called his fictional revolutionaries “accelerationists.” The term was subsequently popularised by professor of critical theory Benjamin Noys. Note: This was prior to Nick Land labelling his interpretation of Schumpeter’s creative destruction “accelerationism.”

In 2016, Land explained:

Deterritorialization is the only thing accelerationism has ever really talked about. [. . .] In this germinal accelerationist matrix, there is no distinction to be made between the destruction of capitalism and its intensification. The auto-destruction of capitalism is what capitalism is. “Creative destruction” is the whole of it [. . .]. Capital revolutionizes itself more thoroughly than any extrinsic ‘revolution’ possibly could.

Leading CCRU figures Nick Land and Mark Fisher in the UK and, notably, Curtis Yarvin in the US were part of the growing neoreactionary movement (NRx). Neoreactionaries fall on both the left and the right of the traditional political divide, but all neoreactionaries are accelerationists.

The associated term “accelerator” has certainly caught on. In 2011, researchers from the UK business and innovation “charity” Nesta published a discussion paper in which they noted the rapid rise of “accelerator” programmes, starting in the US and subsequently spreading to Europe and beyond:

The number of accelerator programmes has grown rapidly in the US over the past few years and there are signs that more recently, the trend is being replicated in Europe. From one accelerator programme, Y Combinator in 2005, there are now dozens in the US that are funding hundreds of startups per year. There have already been a number of high-profile startup successes from accelerator programmes.

Now 20 years old, Y Combinator (YC) applied the accelerationist approach to venture capitalism. Notable successful start-up ventures followed. Stripe, Coinbase, and Dropbox were among YC’s winners. In 2011, Peter Thiel protégé Sam Altman (who, alongside Thiel, Musk and others, co-founded OpenAI) joined YC and in 2014 became its president.

Besides the US government, the UK government and EU members states have fully embraced accelerationism. The UK government, for example, runs numerous accelerators.

Accelerationism has been conspicuously used to develop defence and surveillance technology. Consider the D3 accelerator which is reportedly “entirely focused on military-related startups.” Initially focusing in Ukraine, the “Dare to Defend Democracy” (D3) accelerator is a public-private partnership that adopts the accelerationist approach to startups focusing exclusively on AI enabled intelligence, cybersecurity, and military technology.

The D3 accelerator’s leading investors include former Google CEO Eric Schmidt. Together with Peter Thiel, Elon Musk, and other investors in AI solutions, they have combined to use the Ukrainian battlefield as a test bed. In addition, Thiel’s Palantir and Musk’s Starlink experimentation collaborated with the Pentagon to develop Project Maven. The project deploys AI to rapidly analyse vast amounts of data to generate automated targetting. Accelerationism’s influence on public-private AI start-ups in the defence sectors on both sides of the Atlantic is already significant. We’ll explore this further in Part 2.

But, for all its winners, the accelerationist approach also creates many losers we never hear about.

[A]ccelerators typically provide services through a highly selective, cohort-based programme of limited duration (usually 3–12 months). Services often include assistance in developing the business plan, investor pitch deck, prototypes, and initial market testing. [Accelerators] base their business model on equity from the startups. This means that they are more growth driven, typically aiming to produce companies that will scale rapidly or fail fast, thus minimising wasted resources.

This selective, high-impact, creative destruction-based model of venture capitalism covers its potential losses by seizing equity from the start. The start-ups that don’t make it are left with nothing. Their investors seek to recoup what they can.

The Cathedral

Writing under the pen name Mencius Moldbug between 2007 and 2014, Curtis Yarvin published a series of essays in which he laid out his various “UNQUALIFIED RESERVATIONS” (a title that runs across the bottom of each essay).

In 2014, Yarvin took a break from writing as Moldbug to focus on his business interests, with Thiel’s assistance. In 2013 he received start-up funding from Thiel for his company Tlön and its Urbit platform, a decentralised peer-to-peer (P2P) network technology company. (Note: Yarvin shifted his focus back to writing in May 2020, issuing an announcement that he was partway through his book, Gray Mirror Of The Nihilist Prince.)

Yarvin (as Moldbug) identified what he called “the Cathedral” as the primary target for creative destruction. Fellow neoreactionary Michael Anissimov described the Cathedral as “the self-organizing consensus of Progressives and Progressive ideology represented by the universities, the media, and the civil service. [. . .] The Cathedral has no central administrator, but represents a consensus acting as a coherent group that condemns other ideologies as evil.” In other words, the Cathedral is not a formal structure of the state but rather the dominant progressive ideology of those exercising a controlling influence over the state.

In essence, the neoreactionaries view “the Cathedral” as the governance effect of the belief system maintained by the Establishment—the ruling class. Yarvin observed that the Cathedral prevails as an informal “institution rather than a person.” Thus, he argued, traditional approaches to political reform were useless. The real ruling entity, he reasoned, existed more as a shared ideology and as a resultant set of agreed-upon objectives held by a dominant class than as an identifiable political structure:

[T]he power structures that bind the Cathedral to the rest of the Apparat [bureaucracy] are not formal. They are mere social networks. [. . .] [T]here is nothing you can do about this structure. You can’t prevent people from emailing each other.

The NRx claims that the Cathedral champions modern, left-leaning progressivism. The fact that there is very little evidence of any Establishment commitment to egalitarian social reform is just one of many glaring errors and woeful assumptions littered throughout neoreactionary political philosophy and accelerationism more broadly. We’ll cover the most egregious errors and assumptions shortly.

While progressive mores are frequently touted by members of the Establishment, this is evidently a perception management tactic and part of social engineering. The Establishment likes to be seen as progressive and certainly prefers that we adopt progressive values, but there is no evidence that the Establishment conducts itself in keeping with progressive ideology. Nonetheless, there is truth to Curtis Yarvin’s observation that the Cathedral, expressed in neoreactionary terms, “does not wish to relinquish power.”

The NRx uses the word “democracy” when referring to “representative democracy.” Yet “democracy” and “representative democracy” are two separate, distinct, and almost diametrically opposed political systems. Representative democracy is based on every sovereign individual devolving all of their decision-making “authority” to a select few elected politicians, whereas “democracy” sees every sovereign human being retaining and exercising their own sovereign authority through the rule of law.

This confusion of definitions is a common NRx error. So common, in fact, one has to wonder if it is simply an “error” or a deliberate obfuscation. Whatever the case, the NRx is right to highlight the near-religious zealotry with which said Cathedral extols so-called “democracy.” By declaring representative democracy righteous, the NRx contends that the Cathedral establishes what is effectively a moral dictatorship.

Yarvin wrote:

The real problem is that, as a political form, democracy is more or less a synonym for theocracy. (Or, in this case, atheocracy.) Under the theory of popular sovereignty, those who control public opinion control the government.

As “democracy” hinders the necessary creative destruction and is propelling humanity like lemmings towards the cliff-edge of the singularity, axiomatically democracy must be destroyed and a better form of government—a kind of corporate monarchy—installed, per Yarvin:

The only way to escape the domination of canting, moralizing apparatchiks [the Cathedral and its acolytes] is to abandon the principle of vox populi, vox dei, and return to a system in which government is immune to the mental fluctuations of the masses.

Cameralism can be described as the science of public administration. It perceives the state as a business that runs a country. Cameralism unfolded in Europe during the 18th and 19th centuries, as large, centralised states emerged. The systematic gathering and analysis of statistical data became increasingly important for state administrators and planners.

Cameralism breaks the function of the state into three parts: (1) public finance (cameral), (2) the administration of order, and (3) oeconomie. The latter determines the relationship between state and society. It is social engineering using economics and other tools. Cameralism, in all its functions, serves the efficiency of the state.

The neocameralism of the NRx applies cameralism to the Cathedral. The envisaged post-neocameral state, in which the government is “immune to the mental fluctuations of the masses,” can best be realised, or so say the neoreactionaries, by converting the state into a corporate structure.

Yarvin explained it this way:

Let’s start with my ideal world — the world of thousands, preferably even tens of thousands, of neocameralist city-states and ministates, or neostates. The organizations which own and operate these neostates are for-profit sovereign corporations, or sovcorps.

The Dark Enlightenment

French philosopher Gilles Deleuze (1925–1995) and French psychoanalyst and political activist Félix Guattari (1930–1992), who wrote a number of works together, argued that while capitalism set free the acquisition and distribution of resources, its architects were highly territorial, tending toward monopoly, which ultimately resulted in capitalism bringing “all its vast powers of repression to bear.” Therefore, they argued, “deterritorialization” was essential. As capitalism was inherently self-destructive, the task, they said, was to “accelerate the process.”

Echoing the “conspicuous consumption” theories of Veblen, French philosopher and sociologist Jean-François Lyotard posited that consumerist workers in modern capitalist societies did not want emancipation. Their materialistic desires meant they enjoyed “swallowing the shit of capital,” Lyotard wrote.

Building on these theories and pushing the concepts presented by Mencius Moldbug (Yarvin) to the maximum, former CCRU leader Nick Land published “The Dark Enlightenment“ in 2012. If Technocracy is inhuman, Dark Enlightenment borders on psychopathic.

Land contended that the postmodern tenets of liberal democracy—by which he meant liberal “representative democracy”—created an inescapable sociopolitical “vector” that would inevitably lead to a “new dark age” as “Malthusian limits” would unavoidably “brutally re-impose themselves.” Only an accelerationist neoreaction could avert the inevitable totalitarian catastrophe.

Land continued:

For the hardcore neoreactionaries, democracy is not merely doomed, it is doom itself. Fleeing its approaches is an ultimate imperative. The subterranean current that propels such anti-politics is recognizably Hobbesian, a coherent dark enlightenment, devoid from its beginning of any Rousseauistic enthusiasm for popular expression.

By agreeing to Rousseau’s “social contract” myth, propagated by the Cathedral, everyone condemned themselves to “democratic politics,” Land argued. The result of “democratization” is a capitalist “sovereign power” that runs the state to everyone’s detriment and to seemingly inescapable corruption:

[T]he dynamics of democratization [are] fundamentally degenerative: systematically consolidating and exacerbating private vices, resentments, and deficiencies until they reach the level of collective criminality and comprehensive social corruption. The democratic politician and the electorate are bound together by a circuit of reciprocal incitement, in which each side drives the other to ever more shameless extremities of hooting, prancing cannibalism, until the only alternative to shouting is being eaten.

Land highlighted the accelerationist view that the Cathedral assumes a postmodern “central dogma” and, as a result, maintains a misplaced “absolute moral confidence.” Unquestioningly accepted by the brainwashed public, the “secularised neo-puritanism of the Cathedral” deifies the “evangelical state.” Consequently, all opposition to it is deemed heresy. Land argued that nothing could be more intolerant of dissenting views or less inclusive.

The problem with the Cathedral, Land declared, was that while technology was capable of “accelerating development,” the “rent-seeking special interests”—the ruling class—who maintained the Cathedral swallowed all the benefits. There were no political solutions to this capitalist conundrum because their neo-puritan faith in so-called liberal democracy rendered populations incapable even of understanding, let alone tackling, the overwhelming power of the Cathedral. Land considers this a societal mental disorder that Yarvin called “demosclerosis”—an intransigent, self-destructive faith in the Cathedral.

The Cathedral had integral morbidity, and post-WWII globalization had spread the sickness. To maintain demosclerosis, the Cathedral’s only solution was to consume ever more to retain the neo-puritanical beliefs of the faithful. Land called this condition “modernity 1.0.” It necessitated the constant expansion into new markets, to the point where Land predicted that the “Eurocentric” model would be abandoned. Anglo-American power would thus be diffused as the Cathedral sought to roll out “modernity 2.0.”

Writing in 2012, Land said:

Modernity 2.0. Global modernization is re-invigorated from a new ethno-geographical core [the East], liberated from the degenerate structures of its Eurocentric predecessor, but no doubt confronting long range trends of an equally mortuary character. This is by far the most encouraging and plausible scenario (from a pro-modernist perspective), and if China remains even approximately on its current track it will be assuredly realized.

The Dark Enlightenment suggests that modernity 2.0 merely postpones the inevitable failure to adapt to the singularity. A true “Western Renaissance” could only be realised with the demise of the extant global Cathedral. Therefore, every crisis should be accelerated and exacerbated in an attempt to break the Cathedral’s hold:

To be reborn it is first necessary to die, so the harder the ‘hard reboot’ the better. Comprehensive crisis and disintegration offers the best odds. [. . .] Because competition is good, a pinch of Western Renaissance would spice things up, even if — as is overwhelmingly probable — Modernity 2.0 is the world’s principal highway to the future. That depends upon the West stopping and reversing pretty much everything it has been doing for over a century, excepting only scientific, technological, and business innovation. [Emphasis added.]

Observe that, from the neoreactionary perspective, “scientific, technological, and business innovation” are the only valuable Cathedral attributes. As neoreactionaries incorrectly think sovereignty implies nothing more than the power to exert authority over another and as the Cathedral possesses the ultimate alleged “sovereignty,” neocameralism can be used to audit Cathedral sovereignty and thereby run the state more effectively.

While the word “sovereignty” certainly implies “superiority,” the libertarian concept of self-ownership, or individual sovereignty, is more than just ignored by the accelerationist NRx. It is wholeheartedly rejected. The proponents of the Dark Enlightenment describe themselves as libertarians, but are using that term in a bizarre sense.

Land at least acknowledged the existence of a ruling class, but the Dark Enlightenment is based on the misconception that oligarchs simply pay for political favours. Once the oligarchs’ path to monetary bribery is removed, they can safely be ignored:

[T]he ruling class must be plausibly identified. [. . .] It is [only] necessary to ask [. . .] who do capitalists pay for political favors, how much these favors are potentially worth, and how the authority to grant them is distributed. This requires, with a minimum of moral irritation, that the entire social landscape of political bribery (‘lobbying’) is exactly mapped, and the administrative, legislative, judicial, media, and academic privileges accessed by such bribes are converted into fungible shares.

Thus, the useful “functions”—or “chambers,” in neocameralist terms—of the Cathedral can be “mapped” and converted into freely transferable shareholdings.

Yarvin suggested breaking nations into neostates run by the shareholders of sovereign corporations—sovcorps. Land, perhaps adopting a more traditional cameralist position, envisaged converting the entire nation into a business enterprise run by gov-corp:

The formalization of political powers [. . .] allows for the possibility of effective government. Once the universe of democratic corruption is converted into a (freely transferable) shareholding in gov-corp, the owners of the state can initiate rational corporate governance, beginning with the appointment of a CEO. As with any business, the interests of the state are now precisely formalized as the maximization of long-term shareholder value.

In a practically identical fashion to Technocracy, the Dark Enlightenment proposes dictatorship. Instead of a Continental Director of Continental Control, it advocates for a CEO of gov-corp. It is still a select few who rule with absolute authority and impunity.

Obviously, there is no democratic accountability of any kind—not even representative democratic accountability—under the totalitarian rule of gov-corp. Indeed, politicians and politics would become obsolete. Nevertheless, like the technocrats, the accelerationist neoreactionaries were, in their own seemingly naïve way, trying to address government corruption and its impacts.

In the Dark Enlightenment, gov-corp would act as a service provider of effective government. Citizens would become its “customers.” They could therefore expect value for their money, and they could make a complaint if they were dissatisfied:

If gov-corp doesn’t deliver acceptable value for its taxes (sovereign rent), they can notify its customer service function, and[,] if necessary[,] take their custom elsewhere. Gov-corp would concentrate upon running an efficient, attractive, vital, clean, and secure country, of a kind that is able to draw customers.

It is difficult to know where to start criticising this absurd idea. Whether they are called “sovereign rents” or “taxes,” no one chooses to pay them. The notion that a customer “buys” a service implies that they are equally free to choose not to buy it. Yet the only choice offered by the NRx’s gov-corp is to either pay up or get out. As Land puts it, absent politics of any kind, “no voice, free exit.” For billions of people this is not remotely possible.

The neoreactionaries’ appreciation of oligarchy is monumentally facile. Land openly acknowledges that the proposed “owners of the state” are those who would have sufficient means to “buy out” the Cathedral’s existing “stakeholders”—that is, its “owners.” So, who does he imagine will run gov-corp but the oligarchs who already “own” the state? Gov-corp does not challenge the “ruling class.” Instead, it hands total control of society and state over to the “ruling class” on a gold platter.

Citizens can already make a complaint to government through a variety of mechanisms, including lobbying, petitions, protest, and other forms of activism. Elections make no difference precisely because government is always corrupted by oligarchs who, while they sometimes squabble, essentially agree on the direction they want humanity to head. To be honest, the other existing routes of complaint don’t really work either, for more or less the same reason.

The Dark Enlightenment solution to this accurately identified problem is to “formalise” every avenue of dissent and sell it off to oligarchs, who are trusted by the neoreactionaries to operate a fair and just “customer service function.” This is not a plausible solution of any kind from humanity’s perspective.

There is every reason to suspect that this so-called solution is an attempt to mollify fools and convince them to buy into the Dark Enlightenment. Frankly, humanity is despised by the neoreactionaries, who wish to see it entirely dispossessed.

The Cathedral would hold nearly all “sovereignty,” but the share of “sovereignty” held by regular humans would be negligible. Rather than address this logical conclusion, however, the Dark Enlightenment treats human beings as practically irrelevant. As Land sees it:

Insofar as voters are worth bribing, there is no need to entirely exclude them from this calculation, although their portion of sovereignty will be estimated with appropriate derision.

Land’s eugenical tendency is obvious when he claims that “people are, on average, not very bright.” Since, in Land’s eyes, the citizenry is worth so little and their share of sovereignty is practically nil, it is best to treat them as the largely clueless customers of gov-corp. In light of looming singularity, the question, according to Land, is how to maximise the useful function of these customers in order extract the appropriate “sovereign rent” from them.

His suggestion is that we should all become “technoplastic beings.” This will make us “susceptible to precise, scientifically informed transformations.”

Land writes:

‘Humanity’ becomes intelligible as it is subsumed into the technosphere, where information processing of the genome — for instance — brings reading and editing into perfect coincidence. To describe this circuit, as it consumes the human species, is to define our bionic horizon: the threshold of conclusive nature-culture fusion at which a population becomes indistinguishable from its technology.

Essentially then, in accordance with the Dark Enlightenment, the accelerationist solution to humanity’s ills is to end humanity.

Once we are “technoplastic beings”—transhuman cyborgs—in a world where “biology and medicine co-evolve,” we will cross the “bionic horizon,” as Land calls it. At that point, we can finally kill God and abandon the “essence of man as a created being.” We will be free to sacrifice our humanity and embark upon our “new evolutionary phase.”

As valued customers who are rendered intelligible only by melding with technology, we can all prostrate ourselves and our children before the sovereignty of gov-corp. Under the watchful eye of our illustrious CEO, we can be programmed as required. The result? Finally, at long last, we will have an effective government. After all, “the system must be first.”

The Accelerationist Left

In 2008, two Canadian left-leaning neoreactionaries, Alex Williams and Nick Srnicek, published the #ACCELERATE MANIFESTO for an Accelerationist Politics. In this treatise, the pair were responding to Mark Fisher’s thoughts on “capitalist realism.” (The following year, Fisher turned those thoughts into a book called Capitalist Realism: Is There No Alternative.) Fisher had observed that, after the Soviet Union collapsed, no viable political-economic alternative to capitalism had been offered. Probably quoting Slavoj Žižek, Fisher had written, “[I]t is easier to imagine an end to the world than an end to capitalism.”

Fisher argued that the left had failed to challenge neoliberalism, which he described as a separate but reinforcing component of modern capitalism. Considering the inequities wrought by neoliberalism, Fisher urged the left to embrace an accelerationist approach to capitalism. He identified neoliberalism, rather than progressivism, as the founding faith binding what Land and Yarvin called “the Cathedral.”

Like his counterparts on the right, Fisher contended that technological growth was unstoppable. He argued that the traditional left’s attempt to recreate a socialist society without accounting for the homogenising effect of modern technology was an act of futility. If the hope was to make meaningful use of progressive political theory, the left needed to embrace capitalist realism and deploy accelerationism to creatively destroy and “deterritorialize” neoliberalism to ensure a progressive, post-capitalist reterritorialization.

In their #ACCELERATE MANIFESTO, Williams and Srnicek accepted capitalist realism and said:

In this project, the material platform of neoliberalism does not need to be destroyed. It needs to be repurposed towards common ends. The existing infrastructure is not a capitalist stage to be smashed, but a springboard to launch towards post-capitalism.

Applying neocameralism to neoliberalism, they added:

[T]he left must take advantage of every technological and scientific advance made possible by capitalist society. We declare that quantification is not an evil to be eliminated, but a tool to be used in the most effective manner possible. Economic modelling is — simply put — a necessity for making intelligible a complex world. [. . .] The tools to be found in social network analysis, agent-based modelling, big data analytics, and non-equilibrium economic models, are necessary cognitive mediators for understanding complex systems like the modern economy. The accelerationist left must become literate in these technical fields.

As accelerationist leftists who are pursuing a progressive future, the co-authors advocate a “sociotechnical hegemony” to ensure that “production, finance, logistics, and consumption” are “reformatted towards post-capitalist ends.” They promote public-private partnership—stakeholder capitalism. And they believe that “governments, institutions, think tanks, unions, or individual benefactors” should work together to create “an ecology of organisations, a pluralism of forces.”

This “ecology” of public and private institutions could, Williams and Srnicek envisioned, create “a new ideology, economic and social models, and a vision of the good” and design new “institutions and material paths to inculcate, embody and spread them.” Working together, this partnership of stakeholders would construct “a positive feedback loop of infrastructural, ideological, social and economic transformation, generating a new complex hegemony, a new post-capitalist technosocial platform.”

It is somewhat humorous that, despite all their talk of a “sociotechnical hegemony,” the accelerationist left has been divided from the neoreactionary right by the same old disagreements—not to mention some degree of animosity. Harshly critical of Land in particular, Williams and Srnicek described Land’s inhuman model of accelerationism as “a simple brain-dead onrush,” whereas their own model promises a more human-centred “navigational” accelerationism.

Any human being who would like to see future generations of humanity thrive would be hard-pressed to choose either the #ACCELERATE MANIFESTO or the Dark Enlightenment. Both are deeply rooted in transhumanism. Instead of being programmed to be good customers of gov-corp, we’d be programmed to be outstanding progressives under sociotechnical hegemony. Of the latter, Williams and Srnicek write:

Any transformation of society must involve economic and social experimentation[,] [. . .] fusing advanced cybernetic technologies [. . .] with sophisticated economic modelling [. . .] and a democratic platform instantiated in the technological infrastructure itself, [. . .] employing cybernetics and linear programming in an attempt to overcome the new problems. [. . .] The left must develop sociotechnical hegemony: both in the sphere of ideas, and in the sphere of material platforms. Platforms are the infrastructure of global society. They establish the basic parameters of what is possible, both behaviourally and ideologically.

In truth, accelerationist neoreaction, on both the left and the right, outlines nothing other than a future technological and sociopolitical dystopia. There is absolutely no reason to imagine that hegemony of any kind is capable of delivering anything but tyranny. Like the technocrats, the accelerationist neoreactionaries seem equally unable to grasp that there will always be megalomaniac oligarchs set on “accomplishing some object,” no matter how deranged their objective may be.

Disillusionment with representative democracy is no reason to hand over totalitarian sociopolitical control systems to oligarchs. Accelerating towards hegemony is not a solution. Unless you are an oligarch, it is a stupid and suicidal proposition.

Neither Technocracy, accelerationism nor the Dark Enlightenment exist within our familiar political paradigms. They are so far outside the Overton window that we can’t even discuss them without either being embroiled in pointless and redundant debates about whether they are communist or fascist or being subjected to eye-rolling scorn.

To be frank, it makes little difference what we hoi polloi believe. The oligarchs who are conversant with these political philosophies are evidently trying to bring them to fruition in our lifetime. We ignore the consequent cultural revolutions and social engineering projects at our peril. Make no mistake: They are already underway.

Consider Land’s darkly enlightened determination that we must reject “any Rousseauistic enthusiasm for popular expression”—the common perception of the “social contract.” We are now seeing his objective transition into [public] policy.

President Trump has come to power backed by technocrats like Elon Musk and neoreactionaries like Peter Thiel. One of Trump’s first acts as president was to announce a $500 billion public-private infrastructure investment project called “Stargate.” The aim is to construct the data centre and power generation capacity needed for the development and rollout of artificial intelligence (AI) systems.

The Stargate public-private consortium brings the US government into a partnership with OpenAI, Oracle, and Softbank. Thiel’s protégé, Sam Altman, is the CEO of OpenAI. Speaking shortly after Trump’s announcement, Altman made a statement thick with Aesopian language. He told reporters:

I think technology does a great deal to lift the world to more abundance and to better prosperity. [. . .] I still expect that there will be some change required to the social contract. [. . .] [T]he whole structure of society itself will be up for some degree of debate and reconfiguration.

Darkly Enlightened Christianity

Irrespective of the various religious rites practiced by different Christian denominations or of the sectarian divisions to which they give rise, the unifying values of all genuine Christians—love, compassion, humility, integrity, and justice—are easy to appreciate and respect.

But right-leaning members of the neoreactionary movement, including Yarvin and Land, take exception to what they consider a progressive translation of those Christian values. Consequently, self-proclaimed Christian neoreactionaries have adopted a warped reinterpretation of the traditional Christian values most of us recognise.

“Universalism” is a Christian theology that preaches the doctrine of universal reconciliation with God. Christian Universalism maintains that anyone—Christian or not, saint or sinner—can find salvation through Jesus Christ. Universalism often holds that there is no permanent damnation to Hell because “the Lord will not cast off forever.”

The theology of Universalism is aligned with Mainline Protestantism, which emphasises social justice and personal salvation and offers more liberal and progressive interpretations of scripture. Yarvin attacks Christian Universalism as an extreme form of Calvinism, which, he says, dictates that “all dogs go to Heaven and there is no Hell.” His objection is to the inference that “everyone is part of the elect.”

The belief that we are all equally deserving of grace is contrary to the dogma of the neoreactionary right. Remember, the NRx proclaims that humanity’s “portion of sovereignty” is worthy only of “derision.”

Consequently, the NRx neologise “Universalism” to mean the synthesis between “the mainline Protestant and secular Nationalist movements.” Yarvin argues that US secular nationalism has become “internationalism”—globalism—and that “nationalism” has consequently become “an inappropriate term.”

The neoreactionaries reference an article published in Time magazine in 1942, titled “Religion: American Malvern” as alleged proof that progressive liberal theology has mutated and merged with progressive, political globalism. This is considered to be to the detriment of both Christian beliefs and nationalism. Though the article links the political corruption of the church in the US with globalists like John Foster Dulles, it does not demonstrate that Christian theology and progressive political ideology are intertwined.

Nonetheless, as the Cathedral is defined as the supposed dominant progressive ideology of the ruling class, Yarvin concludes that political progressivism is a “sect of Christianity”—and not a sect he embraces.

Frankly, this appears to be little more than linguistic trickery. Other than the fact that reform is common to both political progressivism and theological liberalism, the neoreactionaries’ suggested marriage of the two seems tenuous. It is almost impossible to follow Yarvin’s and Land’s reasoning, to the point where many have questioned if there is any.

Yarvin insists that modern Christianity itself has become a core component of the “nontheistic sect” of NRx-defined Universalism—the neo-puritanical faith in the Cathedral. Consequently, according to the NRx, the neoreactionaries who oppose Universalism are viewed as literal heretics by the neo-puritan acolytes of the Cathedral—that is, everyone who is not a neoreactionary.

Yarvin rejects this notion and sees those who embrace liberal theology—progressivism—as the true heretics. It is the NRx, he posits, that seeks to restore the true Christian faith:

If a Christian who believes his or her faith is justified by universal reason is a Universalist, a Christian who believes his or her faith is justified by divine revelation—in other words, a “Christian” as the word is commonly used today—might be called a Revelationist.

For NRx Christians like Peter Thiel, imposing gov-corp and removing the stultifying influence of the progressive Universalism is the Christian thing to do. In their view, the true revelation is that “real” Christians reject liberal theology and hold to a more literal reading of scripture. Combined with his sociopolitical philosophy, this theology has evidently led Thiel, and presumably others who share his faith, to adopt supposed Christian values most of us would struggle to recognise as Christian.

Today, the TechnoKings—such as Y Combinator CEO Garry Tan—and many of the leading lights in the Mainstream Alternative Media (MAM)—are more openly discussing and promoting their Christian faith. Take Russell Brand, for example. Brand’s proselytising is popular on the Thiel-backed Rumble video-sharing platform, where many MAM heavyweights have prospered.

As noted by the UK’s Christian Today, Hulk Hogan, Shia LaBeouf, Rob Schneider, Kat Von D, Candace Owens, and Ayaan Hirsi Ali are also among the many celebrities and “talking heads” to have very conspicuously converted to Christianity (mainly Catholicism) in recent months. Before we assume this indicates a resurgence in Christian values, perhaps we should first look at what those values might be.

It is tempting to see the fashion for openly advocating your Christianity as a marketing strategy, particularly in the US. The “Bible Belt” represents a sizeable demographic and usually a Republican heartland. But there is more to it.

Peter Thiel has been something of a faith leader among the TechnoKing class and has long been open about his own allegedly Christian beliefs. Thiel is also an enthusiast and former student of the philosophy of René Girard (1923–2015). His personal Christian values are evidently heavily influenced by his sociopolitical and philosophical beliefs. They diverge considerably from the Christian values we have discussed to this point.

Girard argued that people’s desire to imitate others—mimesis—led them to covet objects and services, ascribing them corresponding and often irrational value. His mimetic theory is largely consistent with Veblen’s conspicuous consumption.

When humans are driven by mimetic desire, social conflict—and ultimately violence—is inevitable as we compete for resources, Girard proffered. The conflict escalates until it becomes all-consuming and threatens to destroy society. That’s when a scapegoat becomes necessary, he argued.

Via the scapegoat mechanism, an individual or group is blamed, persecuted, and murdered. This “founding murder” unites society and returns it to a more stable condition. But the peace is precarious, for the underlying mimetic desire remains. If we follow Girard’s reasoning and assume the founding murder requires planning, we could describe the othering of the scapegoat as an archetypal psychological operation (psyop).

The founding murder facilitates cultural renewal through the process of sacralization. An accompanying mythology imbues the murdered scapegoat with great power. The scapegoat’s guilt means they had to die for society to be reborn, thereby rendering the murder a sacred act. Subsequent symbolic sacrifices, according to Girard, were reaffirmations of the cultural significance of the founding murder.

Girard converted to Catholicism in 1959 based on what he contended was an empirical philosophical approach to scripture. He identified the story of Christ Jesus’ crucifixion and resurrection as an archetypal example of a “founding murder.” The Lamb of God was the scapegoated slain victim who becomes the miraculous foundation of a new culture.

Girard viewed the resurrection of Jesus—theologically proving he was “not guilty”—as a cultural turning point in human history. It exposed the lie underpinning the scapegoat mechanism. The founding murder of Christ reveals the contradiction at the heart of human society. Its treasured “peace” is only—can only—stem from its own inherent and uncontrollable violence.

In 2003, Thiel wrote an essay titled “The Straussian Moment.” In it, Thiel challenged both the rationality of the Enlightenment and prevailing Christian theology. He argued that the founding murder “is the secret origin of all religious and political institutions.” Therefore, to maintain its Enlightened delusions and its Christian pretensions—in Girardian terms—modern society’s only option is to deceive itself by ignoring the “truth about human nature.”

Thiel criticized Enlightenment philosophers, such as John Locke, for overlooking the mimetic desires of human beings. Determining this “desire” to be a fundamental aspect of human nature, Thiel wrote: “In the place of human nature, Locke leaves us with an unknowable X.”

Thiel argued that human nature—the unknowable X—could be known and accounted for. Thus, like Yarvin, Land, and the broader NRx, Thiel rejected the alleged ambiguity of the Enlightenment:

[T]he Enlightenment undertook a major strategic retreat. If the only way to stop people from killing one another [in the name of religion or conflicting beliefs] involved a world where nobody thought about [human nature] too much, then the intellectual cost of ceasing such thought seemed a small price to pay. The question of human nature was abandoned because it is too perilous a question to debate.

Thiel finds this “lack of understanding of this truth of human culture” to be a fatal flaw. He agrees with Girard’s point that “the modern world contains a powerfully apocalyptic dimension”—mimetic desire. It is fundamentally unstable, prone to revolution, corruption, and collapse and cannot be permanent. Therefore, the Christian imperative is to acknowledge mimetic apocalypse and understand that the truth delivered by the resurrection is the real revelation of the founding murder: humanity is the problem.

In “The Straussian Moment,” Thiel presents this world view by proposing a course of action for Christian politicians who understand the “truth” about the founding murder of Christ. Once understood, violent human nature and the cyclical inevitability of apocalypse can be included in a more cohesive theology, he believes.

Christian politicians should proceed by “determining the correct mixture of violence and peace” they may need to utilise, depending on the circumstances. The task is to manage the “limitless violence of runaway mimesis” with the objective of delivering the “peace of the kingdom of God.”

It is ironic that Thiel criticises what he sees as the vagaries within Enlightenment rationality. There appears to be quite a lot of moral ambiguity in Thiel’s Christian “values.”

Over the last two decades, Thiel’s opinion has changed little. His Girardian view of mimetic apocalypse has presumably combined with his darkly enlightened conceptualisation of the singularity and shaped his personal theology. Speaking to Peter Robinson from the Hoover Institute, Thiel laid out his thoughts about the apocalypse.

Thiel said that human nature has a “limitless violence to it.” Therefore, biblical prophecies of the apocalypse really speak of what “humanity is likely to do in a world of ever more powerful technology.” Thiel agrees with René Girard that violence is not “one of God’s attributes.” Consequently, he rejects the more humanist view of the Enlightenment philosophers that humanity “is not that dangerous.” Again, humanity is the primary risk in Thiel’s theology.

Thiel considers that the world is beset with existential crises. He lists climate change, the threat of nuclear war, the singularity, pandemics and other aspects of the so-called polycrisis. Humanity fears the “apocalyptic specter” but, he contends, it views the solution to be “a one world state that has real teeth, real power. And the biblical term for that is the Antichrist.” Thiel deems centralised global government synonymously as “the Antichrist or Armageddon.” As salvation will only be found when people recognise the truth about the founding murder of Christ, society must confront and be realistic about its own mimetic violence. The problem is, Thiel argues, that humanity is not “apocalyptic enough.”

Continuing his conversation with Robinson, Thiel used the allegory of Odysseus‘ return voyage to Circe’s island, observing how Odysseus carefully navigated the waters between the dangers of the six-headed monster Scylla (the polycrisis – apocalypse) and the whirlpool Charybdis (a one world state – Armageddon or the Antichrist). Comparing himself to Odysseus, Thiel says that he would like to chart “some narrow path between these two where we can avoid both.”

From Thiel’s theological perspective, the mimetic apocalypse is driving the polycrisis and humanity is reacting to it buy embracing the Antichrist—one world government (Armageddon). He posited that humanity is “groomed to the Antichrist solution.” Thiel said he is “not a Calvinist,” that these outcomes were not predetermined and he could envisage a “third way.”

Accepting mimetic apocalypse and the Antichrist Armageddon as the only “two options” is the mistake of the “political atheist,” according to Thiel. Apparently, the third way lies somewhere between. If you take a more Christian view, as the “US is ground zero of globalization” its is also “ground zero of the resistance to bad globalization.” Globalization isn’t unchristian but the wrong kind of globalisation—bad globalisation—is seemingly so.

Speaking as a “Christian” at an event last year organised by the ACTS 17 Collective—a backronym whose full name is Acknowledging Christ in Technology and Society—and held at the home of Garry Tan, Thiel claimed that humanity is “caught up in all these crazy dynamics” and that “[t]here are these bad cycles of imitation, status games that you get wrapped up in.” When considering how his fellow Christians should respond to the inevitable mimetic crisis and future apocalypse, Thiel advised:

[Of] the Ten Commandments, the two most important are the first and last on the list. The first commandment is, you should worship God. The tenth commandment is, you should not covet the things that belong to your neighbor.

According to Thiel, the Christian thing to do, first and foremost, is to avoid mimetic failings and worship God. It seems the other eight Commandments—which extol traditional Christian values of not taking God’s name in vain, not killing, stealing, committing adultery, or bearing false witness, and so on—are less crucial to him. One wonders what the point of worshipping God is if God’s essential message to humanity is of secondary importance to this self-proclaimed Christian.

That said, moral leeway certainly accommodates “Christians” who want to ensure they maintain the “correct mixture of violence and peace.” As we shall see in Part 2, this would seem particularly important for Thiel’s “Christianity,” given his extensive links to the US military-intelligence-industrial complex and his genocidal war profiteering. (It isn’t quite clear how these pursuits fit with any recognisable Christian values.)

ACTS 17 bills itself as a Christian non-profit organisation that is “redefining success for those that define culture.” It seems that “success” and the ability to “define culture” are now Christian values.

This non-profit runs church seminars and workshops instead of food banks or community projects. It reaches out to America’s tech-savvy, TechnoKing wannabes rather than embracing the disenfranchised poor. It was formed by three servants of God: Y Combinator’s Garry Tan, Founders Fund partner (and Anduril co-founder) Trae Stephens, and Trae’s wife Michelle.

ACTS 17’s exploration of Christian values is unusual. It appears to be offering Christianity as an alternative to believing in “whatever.” Michelle Stephens, a PhD and RN who co-founded Oath Care and is its chief nursing officer, explained the philosophy this way to San Francisco Standard reporters:

As humans, we are all made to worship and will worship something if we don’t worship God. [. . .] What are you putting your faith in? What are you worshipping?

Oh well, why not give the Christian God a go then? It’s not as if you have to commit to anything else, other than avoiding mimesis, if you can.

For his part, defense contractor and venture capitalist Trae Stephens is at ease with developing AI weaponry and simultaneously being a “Christian.” In a September 2024 interview with the technology magazine Wired, Stephens declared his belief that “Jesus doesn’t care about classes of people. He cares about people.” He then added:

There’s a lot that venture capitalists do that is directly aligned with abundance—caring about improving humanity. [. . .] [T]he essence of venture capital is creating wealth. It’s not extractive. It’s not zero-sum. It’s the idea that you can make something from nothing, and that is, foundationally, a theological idea.[. . .] The call that I have been trying to make to the tech community is that we have a moral obligation to do things to benefit humanity, to draw us closer to God’s plan for his people.

Accelerationist venture capitalism is thus made a Christian act of mercy. The social consequences of one’s investment strategy are largely immaterial. Generating something—great wealth and the power to kill—from nothing is our moral obligation and the essence of Christianity.

Trae is instrumental in moving warfare into the private sector. Under his guidance—and Thiel’s influence—Anduril’s “Lattice for Mission Autonomy” system uses Anduril’s bespoke Lattice AI software to enable a single human operator to supposedly control hundreds of autonomous weapons systems. This includes Anduril’s AI-run Barracuda cruise missiles.

I am in no position to question anyone’s faith, and I am not doing so here. But it is reasonable for any of us to challenge obvious hypocrisy. When used as an adjective, the word “Christian” means “good, kind, helpful” conduct. These qualities reflect real Christian values and are the least we can expect from someone who describes themselves as “a Christian.”

It is indefensible to profess oneself a Christian while acting in a way that no rational person could ever perceive as Christian. Calling oneself a follower of Christ while founding companies whose mission is normally perceived as unchristian—indeed, is antithetical to the common understanding of what it means to be Christian’. It sounds like moral grandstanding and it is legitimate, if not requisite, to question such duplicity.

This is not to suggest that all the characters in this article do not believe in God or genuinely consider themselves Christian. They well may. But if Thiel and Stephens do, their concept of Christianity is one that the vast majority of us cannot relate to.

Dark Enlightenment Christianity, then, appears to be an intellectual reimagining that is based more upon sociopolitical philosophy than on any cogent theology. Sure, if you claim that Christianity demands a supposedly realistic appraisal of the mimetic violence of human culture; if you believe a more practical approach to conflict is warranted; if you contend that your ultimate objective is to mitigate the human cost of the impending apocalypse and avoid the Armageddon of the Antichrist, then calling your company’s targetted drone strikes “Christian” is not off base. But to the rest of us, such self-justifying talk sounds more like self-deception than an unselfed Christian walk.

As to what the other recent converts to the Thielverse truly believe, who can say. But, if it is anything like Thiel’s version of Christianity, there is no reason to welcome it.

From Ideology to Policy

Political ideology only becomes influential once it shapes government policies and political agendas and, in turn, once those policies and agendas impact society. By way of example, let’s consider stakeholder capitalism.

The United Nations (UN) redefined the role of governments during the 1990s. Its then-Secretary-General Kofi Annan, addressing the World Economic Forum (WEF) in 1998, spoke of a “quiet revolution” at the intergovernmental level:

The United Nations once dealt only with governments. By now we know that peace and prosperity cannot be achieved without partnerships involving governments, international organizations, the business community and civil society.

Annan described the shift to a global public-private partnership (G3P) model of global governance. This “multistakeholder governance” resets and diminishes the role of governments. As mere partners of the private sector and of civil society organisations (CSOs), governments are tasked with creating what is called an “enabling environment“:

An economy’s enabling environment encompasses both formal and informal institutions; utilities and infrastructure such as transport, energy, water and telecommunications; as well as the framework conditions set by monetary and fiscal policy, and more broadly, public finances. [. . .] [T]he quality of a country’s enabling environment will not only have to be assessed on its ability to support growth and productivity, but also on the ability to transform the economy to achieve environmental and shared prosperity targets.

A properly designed and centrally planned enabling environment ensures that multistakeholder partnerships—of which governments are partner members—can set policy and regulations to achieve their shared “targets,” whatever they may be. For example, the UK government has created the necessary enabling environment in order for public-private partnerships to achieve Net Zero prosperity targets. Its policy and regulatory measures include:

• New business models, standards and market arrangements to facilitate uptake of solutions, for example energy as a service and time-of-use tariffs.
• [F]inance options to support new products and services.
• Economic models for new or significantly scaled-up commodities.

It is a mistake to assume enabling environments are components of the kind of centrally planned command economy we might normally associate with communism. Multistakeholder partnerships and enabling environments have emerged not from collectivism but from stakeholder capitalism. First outlined by the current chairman of the WEF’s Board of Trustees Klaus Schwab in the 1970s, stakeholder capitalism has progressed by exploiting the communitarianism proposed by Amitai Etzioni and others. Although the communitarian philosophy is an outgrowth of the ideas espoused by the Utopian socialists, there is nothing socialist about stakeholder capitalism.

A full-blown stakeholder capitalist society would replace representative democracy with a network of so-called citizen assemblies. The propaganda pitch for these assemblies alleges they are designed to improve citizen engagement in policy making. Representative members of the public, private, and “civil society” sectors assemble to deliberate policy with the purported aim of decentralising political power.

But if we look more closely at the stakeholder capitalist assembly model, we see that the public-private partnership retains all the authority and controls the distribution of all resources. What’s more, the public-private partnership sets the agenda for debate. The “civil society” component, largely represented by what investigative journalist Cory Morningstar calls the non-profit industrial complex, is dominated by non-governmental organisations (NGOs), which are beholden to the “philanthropy” of oligarchs like Jeff Bezos.

We’ve already said that stakeholder capitalism suggests a triumvirate power-sharing structure leading to multistakeholder policy-setting. And we’ve said that, in truth, the public-private partnership two-thirds of the triumvirate dominates the civil society one-third. “Citizen assemblies” are merely PR stunts meant to lend the public-private partnership faux democratic legitimacy.

Representative democracy does not afford the people much democratic oversight. If stakeholder capitalism, including its citizen assemblies, were fully implemented, as Klaus Schwab proposes, democratic oversight would be removed completely. Stakeholder capitalism is designed to liberate public-private partnerships—not the people.

Multistakeholder public-private partnerships are ubiquitous. China’s model of stakeholder capitalism, for instance, has fully integrated public-private partnerships within the mechanism of the state. While large, state-run policy research units remain dominant in China, privately funded policy think tanks, such as the National Strategy Institute and the Chongyang Institute for Financial Studies, have been afforded increasing influence.

In the West, the historical relationship between private capital and the state is different from that of, say, China. The US and UK governments, for example, have long favoured policy development suggestions from private think tanks.

Nonetheless, wherever we look, stakeholder capitalism has taken root. Gov-corp represents the complete privatization of the state, and Technocracy offers a blueprint for how the fully privatised state can manage the public “social mechanism.”

The notion of a fully privatised state, that is, a “private” yet “public” state, is a somewhat odd concept for most people to wrap their heads around. Probably the nearest example of a similar governance structure would be Benito Mussolini’s fascist Italy. In the 1935 publication Fascism: Doctrine and Institutions, Mussolini wrote:

The corporate State considers that private enterprise in the sphere of production is the most effective and useful [sic] instrument in the interest of the nation. In view of the fact that private organisation of production is a function of national concern, the organiser of the enterprise is responsible to the State for the direction given to production. [. . .] State intervention in economic production arises only when private initiative is lacking or insufficient, or when the political interests of the State are involved.

That said, stakeholder capitalism is not fascism. It is an inversion of the fascist relationship between the public and private sectors.

The fascist doctrine sets the private sector free to innovate but constrains its authority within the orbit of the political state and its institutions. Stakeholder capitalism ultimately enables private corporations to use the political authority of the state for their own ends through partnership agreements. Stakeholder capitalist ideology has taken hold of government policy everywhere and is a logical step along the road to a gov-corp Technocracy.

Oligarch Upheaval

Highly plausible rumour has it that several Silicon Valley companies run by self-styled “TechnoKings”—among them Thiel at Palantir, the directors of OpenAI, and SpaceX founder Musk (the original “TechnoKing of Tesla”)—are forming a consortium and leading the charge to seize control of the US military-industrial complex. For his part, Musk’s defence and intelligence contracts are the centrepiece of his sprawling commercial empire. His provision of Starlink satellite terminals to Ukraine during the war with Russia is well-known.

Starlink, a SpaceX division, was used by the Ukrainian military for offensive purposes. It would be ridiculous for Starlink representatives to pretend they didn’t know their satellite service would be used to launch attacks, and yet deny it they did. SpaceX President Gwynne Shotwell, for instance, said Starlink was “never intended for offensive purposes.” Ukrainian officials said they found Shotwell’s comments “strange,” since Starlink’s intended military use was glaringly obvious.

It should come as little surprise that practically the first “inefficiency” concern raised with the DOGE came from a defence contractor. CEO Chris Kubasik of L3Harris Technologies, a company that specialises in intelligence, surveillance, and reconnaissance (ISR) as well as signals intelligence systems, told the DOGE that the US defence acquisition system—procurement process—was too slow and bureaucratic to keep pace with the threats posed by Iran and China.

It is clear who will be the beneficiaries of the DOGE drive to make the US military-industrial complex more efficient. In an interview with CNBC, Joe Lonsdale, co-founder of Palantir and a Thiel protégé who invests heavily in Anduril, said:

I have a lot of friends involved in DOGE. [. . .] If you are forced to use your money more efficiently [. . .] that’s when Palantir and Anduril will win. [. . .] Pete Hegseth, our Secretary of Defense, was very clear that he wants to have competition, he wants the best ideas to win. [. . .] And that means companies like Anduril and like Palantir are going to keep growing really fast.

Secretary of Defense Pete Hegseth’s public Venmo profile exposes his close relationship with the Thiel/Musk-linked faction bidding to seize control of Department of Defense (DOD) procurement. It seems Lonsdale’s observation that Hegseth is “our Secretary of Defense” is far more specific than most American voters realise.

We are evidently witnessing a power shift within the globalist oligarchy. The new breed of technocrat neoreactionaries are favoured in the US. Sadly, while American voters have been duped into thinking this offers them an escape from what they perceived as the suffocating “woke” censorship regime of the Biden administration, they are actually being accelerated toward something worse.

Oligarch upheaval never improves our lives, it merely indicates which oligarch faction has primacy. The DOGE attack on USAID—which was extensively infiltrated by US intelligence agencies—is symbolic. While Musk has castigated USAID’s waste and inefficiency, he has failed to mention that USAID previously funnelled funds to finance Starlink’s ventures in Ukraine. Are we supposed to believe Musk would destroy one of his own income streams?

If and when the Thiel/Musk-fronted oligarch network seizes control of DOD budgets, they won’t need the USAID back door. As will be evidenced in Part 2, the new public-private intelligence partnership formed by Palentir, Anduril, ClearviewAI, and others means that the potential for US intelligence agency projects to go even darker has increased, not decreased, with the purported demise of USAID.

Meanwhile, hapless US voters, not to mention numerous MAM pundits around the world, are cheering the end of USAID. While, in many respects, some enthusiasm is understandable, it is hopelessly misplaced. A privatised, darker deep state is certainly not going to benefit humanity, only the oligarchs.

As the DOGE sets about using AI to evaluate the efficiency of the human beings that work in government departments, it is not without justification that some have recognised the “post-human” nature of this new form of technological governance. The technocrats and the accelerationist neoreactionaries are remaking the US state in their own image absent any notable oversight. They are using creative destruction to deterritorialize the extant Cathedral and reterritorializing the US state with an even more rigid and authoritarian Cathedral of their own.

In Part 2, we will look at more examples that reveal how members of the so-called superclass that backs Peter Thiel and Elon Musk are exploiting their relationships with the US state to roll out a government policy agenda aligned with their political ideology. In doing so, they are knowingly laying the groundwork for a US gov-corp Technate fit for a multipolar world order.

Correction: Originally I stated that Jeff Bezos had posted a message on X to which Elon Musk replied. This was an error. That account appears to have been a spoof of Bezos. Though the real Elon Musk replied to it. The article has been updated accordingly.

The Dark MAGA Gov-Corp Technate — Part 1.

For some time, there have been efforts to facelift the Malthusian-transhumanist bent of the Fourth Industrial Revolution with a patina of New Age spirituality through a belief in “conscious evolution,” such as that propagated by futurist Barbara Marx Hubbard. Yet, notwithstanding Hubbard’s lofty invocation of “Christ consciousness,” her faith in conscious evolution holds that, in order to mitigate overpopulation crises, natural resources must be rationed through “sustainable development” economics while human resources must be neo-eugenically culled and biotechnologically engineered into a new transhuman species. In fact, with the blessings of Rockefeller philanthropy, Hubbard, who promoted sustainable development at the United Nations (UN) and collaborated with known Malthusians from groups like the World Economic Forum (WEF) and the Club of Rome, was one of the most radical advocates of population reduction in the name of spiritual evolution.

Across the internet, there has been wide circulation of an excerpt from an unpublished manuscript in which Hubbard declared that “one-fourth” of humanity will need to be culled in order to usher in a utopian New Age Order:

“[o]ut of the full spectrum of human personality, one-fourth is elected to transcend . . . One-fourth is destructive.  . . . They are defective seeds. In the past they were permitted to die a ‘natural death.’  . . .

Now, as we approach the quantum shift from the creature-human to the co-creative human—the human who is an inheritor of god-like powers—the destructive one-fourth must be eliminated from the social body.  . . . 

Fortunately, you are not responsible for this act. We are. We are in charge of God’s selection process for planet Earth. He selects, we destroy. We are the riders of the pale horse, Death.” 

In my previous article in this series on Barbara Marx Hubbard, I had been unable to trace the provenance of the unpublished manuscript. Since then, I conducted some further sleuthing, and I was able to track down a copy of the manuscript in the possession of attorney Constance Cumbey, who is the acclaimed author of the The Hidden Dangers of the Rainbow: The New Age Movement and Our Coming Age of Barbarism. Cumbey purchased several copies of the manuscript on multiple occasions, including once from Hubbard personally and once from Rama Vernon, who orchestrated a series of Soviet-American Citizens Summits that Hubbard attended along with Doug Coe, who was the figurehead of the Christian Fellowship Foundation, and Paul Temple, who funded the Fellowship and founded the Institute of Noetic Sciences where Hubbard preached her Malthusian gospel of “conscious” transhuman evolution. For the full backstory on Cumbey’s exposé of Hubbard’s manuscript, watch the interview Courtenay Turner and I conducted at Cumbey’s estate.

Now that Hubbard’s infamous manuscript has been verified, it deserves an explication in this series. Henceforth, this article will examine how the manuscript, which is titled “The Revelation: Alternative to Armageddon (From the Book of Co-Creation: An Evolutionary Interpretation of the New Testament),” reveals further evidence of Hubbard’s Malthusian-transhumanist vision of the future. Moreover, this article will explicate how Hubbard’s “Alternative to Armageddon” preaches a gospel of Malthusian “crisis” evolution that was inspired by her spiritual idol, Pierre Teilhard de Chardin; shared by her kindred evolutionary, Jonas Salk; and bankrolled by her beloved benefactor, Laurance Rockefeller. Furthermore, this article will show how Hubbard’s gospel of crisis evolution is being resounded by the WEF to push Malthusian policies under the banner of “sustainable development” to further the transhumanist Fourth Industrial Revolution. Additionally, this article will document how the legacies of Salk and Rockefeller continue to propel Malthusian “sustainable development” and transhuman evolution through the Salk Institute, Venrock, the UN, and the World Wildlife Fund. 

In the next and final article in this series, I will reveal how Hubbard’s affiliations with the World Future Society, the Human Potential Movement, and the Foundation for Conscious Evolution were connected to networks of alleged pedophiles and sexual abuse cults.

Baptism by Teilhard de Chardin’s Malthusian-Eugenic Crisis of Noetic Birth

In “Barbara Marx Hubbard: Godmother of Transhumanism and Synthetic Spirituality,” which was the first article in this series, I historicized how Hubbard’s vision of “conscious” transhuman evolution was inspired by Pierre Teilhard de Chardin. A Malthusian-eugenicist and Jesuit priest, Teilhard de Chardin pontificated that overpopulation is fomenting an ecological tipping point culminating in a “crisis of birth,” which will bring about the noetic evolution of human consciousness. According to Teilhard de Chardin, the “noosphere,” or noetic “mind sphere,” of the universe is a cosmic “intelligence,” or “consciousness,” that evolves through human consciousness and, by extension, technology, which is spurred by Malthusian crises.

Not only was Hubbard’s transhumanism rooted in Teilhard de Chardin’s gospel of cosmic “crisis” evolution through the noetic “mind sphere” of the universe. But Hubbard’s Malthusian outlook on population growth and sustainable development, which has influenced UN Agenda 2030 and the WEF’s Great Reset, was likewise inspired by Teilhard de Chardin, who believed human overpopulation should be eugenically culled in order to save the Earth from ecological “crises” that threaten the “birth” of evolutionary progress.

In a 1936 letter that was published in Letters to Léontine Zanta, Teilhard de Chardin asserted that, “at one and the same time there should be official recognition of: 1. The priority/primacy of the earth; 2. The inequality of peoples and races” (298). Similarly, in a posthumously published book titled Toward the Future, he pontificated that the “evolution” of the “noosphere” is predicated upon (1) the global “maintenance . . . of the natural resources available in the continents, which feed man’s individual and social body”; and (2)the “effective control, both in quantity and quality, of reproduction in order to avoid over-population of the earth or its invasion by a less satisfactory ethnic group” (299). In brief, in both his private letters and public writings, Teilhard de Chardin advocated the Malthusian-eugenic control of the world’s natural and human resources through the eugenic control of population quality and the Neo-Malthusian control of population quantity in tandem with Malthusian conservation of limited environmental resources.

In another book titled The Future of Man,Teilhard de Chardin posited that, in order to avert “famine” and other ecological catastrophes from overpopulation, the human species would need to cull its own population down to a “maximum” size while eugenically engineering the appropriate ratios and proportions of a “racial hygienic” caste hierarchy ranked according to “different ethnic types.” In a chapter titled “The Directions and Conditions of the Future,” which resounded the alarm of “Mr. [Henry] Fairfield Osborn [Jr.’s]” Malthusian treatise, Our Plundered Planet,Teilhard de Chardin postulated how: 

“earth’s population began to shoot up in an alarming fashion.  . . . Now we suddenly see the saturation point ahead of us, and approaching at a dizzying speed. How are we to prevent this compression of Mankind on the closed surface of the planet . . . from passing that critical point beyond which any increase in numbers will mean famine and suffocation? Above all, how are we to assure that the maximum population, when it is reached, shall be composed only of elements harmonious in themselves and blended as harmoniously as possible together? Individual eugenics (breeding and education designed to produce only the best individual types) and racial eugenics (the grouping or intermixing of different ethnic types being not left to chance but effected as a controlled process in the proportions most beneficial to humanity as a whole) both, as I well know, come up against apparently insuperable difficulties, from the point of view of technical organisation and from that of psychological resistance. But this does not alter the fact that the problem of building a healthy Mankind already stares us in the face and is growing more acute every day” (295).

To put it another way, for Teilhard de Chardin, the collective noetic evolution of the planetary ecosystem and the human species requires that the Earth’s limited resources be stewarded by a eugenically engineered elite who must enforce Malthusian birth control policies aimed at culling “unprogressive ethnical groups” from the human population so that those “unfit” races do not squander the planet’s natural resources. 

In yet another book titled Human Energy, Teilhard de Chardin professed, “[n]ow eugenics does not confine itself to a simple control of births. All sorts of related questions . . . are attached to it. What fundamental attitude, for example, should the advancing wing of humanity take to fixed or definitely unprogressive ethnical groups? The earth is a closed and limited surface. To what extent should it tolerate, racially or nationally, areas of lesser activity?” These rhetorical questions insinuate that “unprogressive,” or “lesser,” races should be the primary targets of population control in order to prevent such “unfit” races from consuming the eugenic elite’s share of the Earth’s limited natural resources. In The Future of Man, Teilhard de Chardin indicated that the “unprogressive” hominids, who are essentially synonymous with the “unfit,” are those who balk at the “super-humanisation” and “planetisation of Mankind” which is necessary to consciously plan the collective noetic evolution of the human species and planet Earth.

To be sure, Hubbard did not overtly avow “race hygiene” eugenics. Nevertheless, echoing Teilhard de Chardin, Hubbard did envision that human population would need to be culled, and that the expendable populations would inevitably be those who are not spiritually “fit” to “progress,” or “evolve,” their consciousnesses toward noetic transhumanization and collective sustainable development. In “The Revelation: Alternative to Armageddon,” Hubbard referred to “one-fourth of humanity” who are “defective seeds” and therefore “must be eliminated from the social body.” Hubbard declared that “[i]t is a case of the destruction of the whole planet, or the elimination of the ego-driven, godless one-fourth who, at this time of planetary birth, can, if allowed to live on to reproduce their defective disconnection, destroy forever the opportunity of Homo sapiens to become Homo universalis, heirs of God.” In brief, although Hubbard did not explicitly espouse old school “race hygiene” eugenics, she did believe in the cosmic necessity of a “spiritual,” or “conscious,” Malthusian-eugenics that decrees the culling of a quarter of the population in order to save the planet and harness the noetic transhuman evolution of homo universalis.  

In the official publication of The Revelation: Our Crisis Is a Birth,Hubbard, like Teilhard de Chardin, postulated the Malthusian crisis of the “limits to growth” crisis and the “population crisis” as a “crisis of our planetary birth” [1]. Similarly, in Human Energy, Teilhard de Chardin declared, 

“[t]oo much iron, too much wheat, too many automobiles . . . and even too many children.  . . . [W]e must ask what this excess production means. Is the world condemned, as it grows, to automatic death by stifling beneath its own excessive weight? Not at all, we would answer. It is in course of gathering to itself a new higher body. At this crisis of birth, everything depends on the prompt emergence of a soul which by merely appearing will come to organize, lighten, and vitalize this mass of stagnant and confused matter.  . . . The resources at our disposal today, the powers that we have released, could not possibly be absorbed by the narrow system of individual or national units which the architects of the human earth have hitherto used.  . . . The age of nations has passed. Now, unless we wish to perish we must shake off our old prejudices and build the earth.“

In short, Teilhard de Chardin believed that the overpopulation of the human species and the over-commoditization of the Earth’s natural resources are triggering a Malthusian “crisis” that will spark the “birth” of a newly evolved system of global governance over all the environmental resources across “the human earth.” 

Mirroring Teilhard de Chardin in her 1998 Conscious Evolution: Awakening the Power of Our Social Potential, Hubbard warned that there is an urgent “crisis” which can only be averted by the “birth” of a “planetary system” designed to control human population growth, natural resource consumption, and environmental pollution [2]. In a chapter titled “Our Crisis Is a Birth,” which is also the subtitle to the official publication of The Revelation [1], Hubbard asserted that: 

“[w]e must shift to renewable, nonpolluting sources of energy. We feel the pangs of hunger increasing as population escalates and more and more of us are hungry. All around us our old life-support systems are breaking down. What worked before has become destructive. We do not have much time to change.  . . . 

Yet, despite our fear and ignorance, we are learning to manage a planetary system.  . . .

Our crisis is a birth. We are one living system and we have come to the limit of one phase of natural growth on a finite planet.  . . .

[W]e may see ourselves as planetary midwives helping to deliver ourselves as a planetary system toward our next stage of life.” [2]

Similarly, in her 2012 book, Birth 2012 and Beyond, Hubbard professed that Malthusian ecological calamities resulting from overpopulation, overconsumption, and pollution are catalyzing a global “birthing crisis”: “[i]f you look at planet Earth as a whole system, it’s obvious that we’re overpopulating, [sic] we’re polluting, and we’re running out of resources. Like an infant that is reaching the ‘due date’ of its birth, we’re overgrowing ‘the womb’ of the Earth. Our ‘birthing’ crisis is inflicting pain and suffering for millions, as well as the possible destruction of our life support system” [3]. 

According to Hubbard, this “crisis” will “birth” the collective-conscious evolution of a new transhuman: species in tandem with a new world order: 

“The urgency of our global crisis is causing people to wake up all over the planet.  . . . What is now being born is transforming the old situation with the prospect of new solutions; and . . . it is helping to create a new world . . . 

And so, I believe . . . our crisis is potentially the birth of a more co-evolving, cocreative [sic] humanity.  . . .

[A] new type of human is emerging in the face of our shared global crisis. I call these pioneers ‘universal humans’ . . . This new person is moving toward cosmic consciousness and an ever-deepening spirituality.” [3]

In “Alternative to Armageddon,” alluding to the Club of Rome’s Malthusian treatise, Limits to Growth, Hubbard described this global “crisis of birth” as a Malthusian “meta-crisis of limits” that is midwifing the human species through a noetic “birth canal,” which will beget a “born again” transhuman species that can circumvent the “limits to growth” through evolutionary technologies, including “cybernetics,” “robotics,” and genetic engineering:

“[w]e entered the ‘birth canal.’ The meta-crisis of limits began. Resource shortage, over-population, pollution, alienation, confusion, malaise about the future, disconnection with the past. Experts with a womb-perspective advocated a ‘return’ to the simpler past, an adaptation to limits, a program of maximum conservation, and no growth. Futurists wrote of a paradigm shift from self-centered to whole-centered. Evolutionaries evangelized the extended gospel of Christ-capacities for all. Simultaneously these capacities turned on. These were the ‘post-natal’ technologies, developed within the womb of Earth for use after birth in the universal environment beyond the biospheric womb of Earth: astronautics, genetics, longevity, cybernetics, robotics.”

It is keen to note here that, in “Alternative to Armageddon,” Hubbard professed that the “universal woman,” or homo universalis, “gives birth to the first natural Christ,” and that “[t]his first natural Christ is transhuman, supra-human.” In other words, according to Hubbard, “Christ-capacities,” which are “turned on” through “‘post-natal’ technologies,” are “transhuman” capacities that are noetically “birthed” through the “meta-crisis of limits” to population growth and resource consumption.

To sum up, Hubbard carried the torch for Teilhard de Chardin’s Malthusian-eugenic “crisis” gospel as she prophesied that Malthusian “crises” would give “birth” to a noetic “Christ consciousness” which would technocratically engineer the sustainable evolution of a new transhuman species. Today, the WEF has adopted a “crisis of birth” ethos to drive the Great Reset by exploiting the COVID-19 “crisis” as an opportunity to accelerate the “birth” of a sustainable transhumanist Fourth Industrial Revolution. In a WEF “Sustainable Development” article published in 2020 and titled, “Now Is the Time for a ‘Great Reset,'” WEF Founder and Chairman, Klaus Schwab, proclaimed that “[t]he COVID-19 crisis is affecting every facet of people’s lives in every corner of the world.  . . . [T]he pandemic represents a rare but narrow window of opportunity to reflect, reimagine, and reset our world to create a healthier, more equitable, and more prosperous future” by “Harnessing the Fourth Industrial Revolution.”

Hubbard and Salk: Kindred Consciousnesses, Malthusian Evolutionaries

Hubbard’s Malthusian-eugenic crisis cosmogeny was also shared by her “kindred spirit,” Jonas Salk [1], who was also influenced by Teilhard de Chardin. Best known as the acclaimed virologist who developed the first widely administered polio vaccine, Salk, who was hired by the UN to compile a report on overpopulation, advocated for Malthusian population control as a necessary condition of conscious evolution. Salk’s legacy continues on through the Salk Institute for Biological Studies, which was formed with the help of Hubbard. Today, the Salk Institute, which has ties to the WEF, is promoting aspects of the “sustainable development” agenda, while also advancing conscious transhuman evolution through research and development projects specializing in genetic engineering and artificial intelligence (AI) for “computational neurobiology.” 

In 1964, Hubbard met Jacob Bronowski, who informed her that he was working with Jonas Salk to establish the Salk Institute for Biological Studies. According to Hubbard’s autobiography, she became excited about the prospects of the Salk Institute, and Bronowski put her in touch with the publisher of the Scientific American, Gerry Piel, who “was forming a society for the [Salk] institute” [4]. In turn, Hubbard proposed to Piel that the Salk Institute establish a “‘Theatre for Humanity’ to dramatize emerging values based on our knowledge of the evolution of life” [4]. These “emerging values” would serve as a cultural medium that could steer the evolution of human consciousness toward compatibility with the technological evolution of human biology and human civilization.

Piel prompted her to write up her proposal, which she drafted into a letter that she sent to the Salk Institute where Jonas himself read it. In the Book of Co-Creation: Our Crisis Is a Birth, Hubbard recalls how Salk telephoned her back to say, “You have expressed my dream . . . You have stated my vision far more clearly than I could . . . [W]e must be two peas in the same pod! May I take you out to lunch?” Immediately thereafter, according to Hubbard’s autobiography, she and Salk referred to each other as “kindred spirits” [1].

Accompanied by Warren Weaver, who was the Chairman of the Board of the Salk Institute, Jonas rendezvoused with Hubbard. In The Hunger of Eve: One Woman’s Odyssey Toward the Future, Hubbard compared this experience to “Eve stepping out of the garden” and “eating of the Tree of Life. It meant learning how to become a conscious participant in the designing process of life, discovering the laws of the universe, . . . and learning to cooperate with ‘the gods’—or the process of evolution” [4]. During this encounter, Hubbard asked, “Jonas, so you believe Teilhard was right about humankind uniting into one body, a new organism progressing toward an unknown future?” [4]. Salk responded, “Yes, of course, that’s natural” [4].

Later that same day, Hubbard professed, “Jonas, I want to help bring forth in the arts a new image of humanity commensurate with our capacity to shape the future” [4]. Salk replied: 

“Barbara, . . . You and I are scooped out of the same genetic material.  . . . We’re psychological mutants . . . Every now and then evolution produces precisely the right type of person for the needs of the time. You’re such a person: a bearer of evolution. It’s all in you. You’ve got the script inside, the attraction for the future, the desire to be responsible for the whole, your willingness to learn, to connect separate disciplines and people. You’re a bi-valent bonding mechanism. You’ve got hooks at both ends!” [4].

In Conscious Evolution, Hubbard narrates how she asked Salk “what was ‘wrong’ with me — my love of the future and my desire to connect with everything. He smiled and said, ‘Barbara, these are not faults, [sic] these are exactly the characteristics needed by evolution. You are a mutant’” [2].

According to Hubbard’s biography, she would later meet up at the Salk Institute with Jonas, “Jerry Hardy, the publisher of LIFE,” and “another ‘scoop’ of the same genetic material, Al Rosenfeld, science editor of LIFE magazine” [4]. Hubbard relays that “Jonas wanted to bring the finest molecular biologists from the world to the institute to do research into the basic knowledge of life; then the humanists and the artists were to follow. But he had not finished the buildings, and already I was designing the first play on the stage of the Theatre of Humanity. I was ahead of what could be done” [4].

This impasse would end Hubbard’s involvement with the Salk Institute, but she and Salk would continue to share common commitments to spreading the “emerging values” of conscious evolution. In three books, Man Unfolding, Survival of the Wisest, and Population and Human Values, Salk, like Hubbard, propagated Malthusian praxis as a cultural primer for conscious evolution.

In his 1972 book, Man Unfolding, Salk advocated that humankind must “unlearn” its traditional “philosophies” while “consciously” evolving “new” systems of “values” and “rules” that will “bring about a measure of control over growth both of population and of greed in man, excesses of each of which might be thought of as cancers of man.” In a chapter titled “Health as Wholeness,” Salk posited that, in order to avert ecological “damage that may be irreparable,” the cancers of overpopulation and overconsumption must be excised by pushing the human species to “move consciously to form an organism of mankind as part of an eco-system related to a purpose.  . . . [T]he kind of exclusiveness and competitiveness that have pre-vailed, which tend to exhaust rather than conserve resources, . . . will, in time and of necessity, have to be abated.” Stated differently, Salk postulated that Malthusian ecological catastrophes can be prevented through the superorganic evolution of collective-conscious “values” and “rules” for controlling overpopulation and sustaining “limited resources.”

To consciously evolve a Malthusian culture of population control and proto-sustainable development, according to Salk, the “genetic-somatic” evolution of human biology must be augmented by the “culture-induced evolution” of human consciousness. Salk hypothesized that human evolution is driven by the dialectical “mechanisms” of ecology, biology, and consciousness, including the dialectics “of organism and environment, of genes and soma, and of intuition and intellect,” respectively. In turn, Salk resolved that the “new man,” whom Hubbard referred to as “homo universalis,” or the “universal human,” must harness conscious evolution to steer the ecological dialectic between the human organism and the natural environment by applying his “intellect” and “intuition” to progressively invent new technological and cultural methods of stewarding natural and human resources. As a result, the “new man,” according to Salk, will consciously “bring about consonance between his outer environment and his inner self.” 

In “Alternative to Armageddon,” Hubbard mirrors Salk’s call for Malthusian population control as an essential element of collective-conscious evolution:

“[t]hey had reached a limit to growth: pollution, stagnation, over-population.  . . . 

In the late period of the biosphere, human beings have reached a point where they can no longer continue to reproduce themselves. You have reached a limit to growth on planet Earth. To reproduce yourselves you are transcending yourselves. You have discovered the pattern of synergistic self-organization. Synergizing humans working to overcome limits become the pattern in which the co-creative human emerges.”

Hubbard added that “[t]he advance through nature means the conscious evolution of yourselves as a god-like species, stewarding this Earth and all life on it.” Stated differently, Hubbard, like Salk, believed that Malthusian limits to population growth would catalyze the conscious evolution of a new “co-creative human,” which would synergistically steward the planet’s natural and human resources.

In his 1973 Survival of the Wisest,Salk expanded on his theory of how Malthusian overpopulation crises instigate the genesis of evolutionary epochs during which consciousness and genetics coevolve. Borrowing from Lamarckean epigenetics and Maslow’s psychology of being, Salk postulated that conscious evolution, which steers biological evolution, is driven by the dialectic between “BEING” and “EGO,” while biological evolution is fueled by the dialectic between genetics and somatics. 

According to Salk, as the bioevolutionary drive of genetic reproduction culminates in overpopulation, ecological crises threaten the survival of BEING, which is the teleological kernel with which consciousness is endowed by the “Cosmos.” Consequently, these ecological crises spark a revolution in consciousness that redirects EGO, which functions as the cognitive intermediary between the consciousness of BEING and the natural environment, toward collectively regulating population growth and resource consumption by scientifically and technologically reorganizing sociocultural and political-economic systems. It is worth noting here that Salk’s notion of BEING as consciousness is an invocation of Abraham Maslow’s transhumanist “psychology of being” [5]. Maslow, who was Hubbard’s mentor, set up the Eupsychian Network where Hubbard collaborated with figureheads of the Esalen Institute and the Human Potential Movement along with other conscious “transhumanistic” evolutionaries dedicated to pastoring “all societies and all peoples . . . toward becoming one world and one species” [5].

To illustrate Salk’s Malthusian theory of conscious evolution, Survival of the Wisest examined charts that quantify the overpopulation predictions of Paul Ehrlich, who wrote the Population Bomband Ecoscience: Population, Resources, Environment, both of which consider sterilization, abortion, and food rationing policies as bulwarks against ecological catastrophes caused by overpopulation. In Survival of the Wisest, Salk compared the Malthusian forecasts projected by Ehrlich with population data calculated by eugenicist Raymond Pearl. Funded by the Rockefeller Foundation, Pearl, who was a participant in the League of Nations World Population Conference, charted fruit fly population growth, which was graphed as sigmoid curve data. Salk analyzed Pearl’s fruit fly population curve in contrast with lemming and human population curves in order to estimate whether the population growth curve of the human species, which is hitting its Malthusian inflection point, will prove to mirror the fruit fly sigmoid curve, which levels out, or the lemming curve, which cycles through “periodic catastrophe . . . with enormous loss of life.” In brief, Salk posed the question: will humanity consciously stop itself from bringing about overpopulation catastrophes, or will the dire predictions of Ehrlich’s Population Bomb come true? The answer to this question, according to Salk, depends on whether human consciousness can “metabiologically” evolve new “values” that cultivate Malthusian control of population growth and resource consumption.

Although Salk speculated that the “future population growth in Man will tend to stabilize at an optimal level described by an S-shaped curve,” he nonetheless warned that “[a] major threat to the species is attributed to the increasing size of the human population” and that the “diagrams” explicated in Survival of the Wisest “also show that former attitudes in respect to growth in population can no longer continue. Now self-imposed restrictions of freedom in this respect will be necessary not only to preserve other freedoms but to keep the quality of life from falling to a level that would soon become intolerable.” To be sure, Salk postulated that “the sigmoid curve of population growth . . . reveals that survival depends upon the development of means for the adjustment of the behavior of individuals appropriate to protection from autodestruction.” In order to “protect” the human species from “autodestruction,” Salk posited that imperative “self-imposed restrictions” must include “controlling births.”

According to Salk, as the human population growth curve hits its potential sigmoid “inflection point,” there is a shift from “Epoch A” to “Epoch B.” During Epoch B, the human species will either be decimated as a result of ecological catastrophes, or humankind will consciously evolve new cultural “attitudes and values” into a new “set of principles of metabiology” that will “guide the development of the BEING and EGO of Man” through Malthusian policies, including population control and resource conservation, which will “bring Man’s agenda and Nature’s agenda into closer harmony.” Similarly, in “Alternative to Armageddon,” Hubbard forecasted that humankind must consciously evolve “along with planetary shifts which are occurring at a metasystem level” in order to harness “co-creative technologies” that can save “a closed-system Earth” from the ecological “breakdown” of “growing population” and “pollution.” 

Eight years after the publication of Survival of the Wisest, the sigmoid curve data and the “epochal change” theory in that book were rehashed in another book, Population and Human Values: A New Reality, which was co-authored in 1981 by Salk and his son, who were commissioned by the UN Fund for Population Activities (UNFPA) to compose the book as “a report” analyzing UN “projections of population growth.” In compiling Population and Human Values,the Salks collaborated with the UN Chief of the Estimates and Projections Division, Shunichi Inoue. The Salks also consulted with “Rafael Salas, Tarzie Vittachi, and T. N. Krishnan of the UNFPA” along with Carl Haub of the Malthusian-eugenic Population Reference Bureau. It is worth noting here that Hubbard also collaborated with the UN where she gave a speech promoting the UN Sustainable Development Goals (SDGs), which affirm the Neo-Malthusian population policies of the UN International Conference on Population and Development. 

In Population and Human Values, the Salks analyzed “demographic data [that] provide a basis on which to discuss the relationship between changes in population growth patterns and changes in human attitudes, values, and behavior.” Based on the data, the Salks estimated that “we can expect the human population growth curve to follow a sigmoid pattern. The level of the plateau [of the sigmoid curve] is still uncertain, however, and is subject to human influence. In the years to come, we face the challenge of understanding and facilitating a slowing of human population growth and, ultimately, of adapting to the conditions associated with a relatively constant population size.” Nevertheless, the Salks asserted that, “[a]lthough we have turned a corner and the rate of world population growth is presently decreasing, world population size is still rapidly increasing and will continue to do so for many decades to come. The further slowing of growth will require expansion of family planning programs and a general increase in availability of social, health, and educational services.” Failing to institute such population control policies, according to the Salks, could lead to “a total collapse of the human population.” 

Echoing the Salks’ “epochal change” theory of conscious Malthusian evolution, Hubbard envisioned “a time of quantum transformation” when overpopulation and resource depletion would be offset by family planning and euthanasia policies while, at the same time, “advanced medical technologies” would be harnessed to “extend life” and “build new bodies” for the new “universal life” of a transhuman homo universalis. In a passage from “The Revelation: Alternative to Armageddon,” which is reprinted almost verbatim in The Revelation: Our Crisis Is a Birth [1], Hubbard wrote: 

“at a time of quantum transformation, . . . ‘[b]e fruitful and multiply’ goes too far and becomes over-population. ‘Preserve all life’ goes too far and results in undesirable technological prolongation of animal/human existence. ‘Give food and shelter to the people’ becomes the over-industrialization, pollution, inflation, and resource depletion by the developed world.  . . .

The feedback from the environment is rapidly informing you to stop doing in the future what was necessary in the past.

‘Be fruitful and multiply’ becomes ‘consciously conceive chosen children who will be given the opportunity of optimum development.’ 

‘Preserve all life’ becomes ‘the opportunity for chosen death, and chosen extended life.’ Thanatology and gerontology enter the scene. Death can be chosen by those who have finished their work on Earth. The purpose of advanced medical technologies is not to maintain animal/human bodies in a semi-vegetative state. It is to be used by the minds motivated to do new work in the new environments of outer space, to extend life, change bodies, and eventually build new bodies accustomed to the new conditions of universal life.”

Today, Hubbard’s futurist prescriptions for Malthusian population control and conscious transhuman evolution are being advanced by the Salk Institute. Even though Hubbard parted ways with the Salk Institute during its incubation period, her Malthusian vision of conscious transhuman evolution, which was shared by Salk, is reflected in the research and development projects of the Salk Institute, which has been contributing to sustainable development while engineering the building blocks for the new transhuman bodies of the Fourth Industrial Revolution. 

In fact, the Salk Institute, which experimented with “RNA-targeting CRISPR-Cas technology to destroy the SARS-CoV-2 virus’ RNA” in 2020, has conducted extensive research advancing “genetic engineering,” including “CRISPR-Cas9 genome editing,” “gene editing-based stem cell therapies,” and “a new Salk tool, called CasRx,” which can “target . . . RNA.” At the same time, members of the Salk Institute’s Computational Neurobiology Laboratory and the Salk Institute’s Systems Neurobiology Laboratory, with the help of the United States Office of Naval Research and the Defense Advanced Research Project Agency (DARPA), have been enhancing transhuman AI consciousness by “teaching artificial intelligence to . . . ‘think’ like humans” through “computational model[s]” that “simulate . . . how the brain’s prefrontal cortex . . .  control[s] the flow of information between different areas of neurons.” It is worth noting here that Nicola Allen, who is an Associate Professor of Molecular Neurobiology at the Salk Institute, is a member of the WEF, which is one of the key groups at the helm of pushing transhumanism and Malthusian sustainable development as the cornerstones of the Fourth Industrial Revolution and the Great Reset.

Hubbard and the Sustainable-Malthusian Globalism of the Rockefeller Dynasty

Hubbard’s Malthusian outlook toward conscious evolution was shared not only by Salk, but also by her “beloved patron,” Laurance S. Rockefeller [2], who bankrolled her Foundation for Conscious Evolution, which calls for “radical evolutionary technologies” to be bolstered as remedies for “a complex series of crises, most especially environmental . . . crises, [which] are acting as evolutionary drivers pressuring us to innovate and transform.” Rockefeller, whose Venrock venture capital firm has bankrolled transhumanist science and technologies, including biotech, nanotech, and AI, is praised by Hubbard in five of her books over a span of 22 years between 1993 and 2015 [1] [2] [6] [7] [8]. Not only did the transhumanist interests of Rockefeller and Hubbard converge, but they also shared the common belief that Malthusian ecological crises must be met with global “sustainable development” policies entailing human population control and environmental conservation.  

According to a biography titled Laurance S. Rockefeller: Catalyst for Conservation, Laurance championed the Malthusian ecological philosophy of “his brother JDR [John D. Rockefeller] 3rd, whose interest in population control he shared.” The Malthusian philanthropies of Laurance and John D. III, the latter of whom was the chairman of the US Commission on Population Growth and the American Future, were inspired by their father, John D. Rockefeller Jr., who funded Nazi eugenics programs through the Kaiser Wilhelm Institute for Anthropology, Human Heredity, and Eugenics. The Malthusianism of Laurance and John D. III was also inspired by John D. Jr.’s crony, Henry Fairfield Osborn Jr. The son of Henry Fairfield Osborn Sr., who was a co-founder of the American Eugenics Society (AES), Osborn Jr. was also the cousin of Frederick Osborn, who was both a director of the AES and a co-founder of John D. III’s Population Council. It was Frederick Osborn who professed that eugenic goals could be more effectively attained through “crypto-eugenics” under the guise of “family planning” and Malthusian ecology, the latter of which is a pillar of Hubbard’s transhumanist schema for “conscious evolution.” 

In Laurance S. Rockefeller: Catalyst for Conservation, Laurance’s biographer records how “the young LSR [Laurance S. Rockefeller] learned from him [Henry Fairfield Osborn Jr.] quite early about the world’s growing problem with overpopulation — an interest shared with JDR 3rd . . . Above all, LSR recalled, Osborn helped him to understand ‘participating in doing,’ not simply . . . in passive philanthropy, but in playing an active role within his philanthropic interests.” Laurance was so inspired by Osborn Jr. that he beamed about how he “felt they shared an ‘interrelated energy field’; years after they met, Osborn recognized the younger man’s similar curiosity, sending him a portrait inscribed, ‘from one rogue to another.’” Not only was Osborn Jr. a muse for Laurance’s Malthusian ecological philanthropy, but “[o]ver the years Osborn and LSR worked together on many projects, from the goals of Save-the-Redwoods to the development of the Bronx Zoo into a Wildlife Conservation Society.” In 1972, honoring the legacy of his deceased Malthusian mentor, Laurance wrote a Reader’s Digest article on “The Most Unforgettable Person I Ever Met,” which lauded “Osborn’s dynamism, . . . his writings on the post-war population explosion, and his sense of global responsibility.'”

About a decade after Laurance’s death, he was similarly eulogized by Hubbard in the dedication to her 2015 Evolutionary Testament of Co-Creation [7]. As I document in “Barbara Malthusian Hubbard: From Limits to Growth to Agenda 2030,” out of the five books in which Hubbard lauds Rockefeller, four of them advance Hubbard’s calls for population control and sustainable development in order to avert Malthusian crises [1] [2] [6] [8]. In addition to spreading Hubbard’s Malthusian crisis gospel by bankrolling her books, Laurance also financed a Rockefeller Brothers Fund “Environmental Program” that “conduct[ed] scientific anticipatory analysis” of “the way in which population, resources, food, capital, pollution, and values interact.”

On top of funding Malthusian crisis propaganda and Malthusian environmental programs, Hubbard’s Rockefeller benefactor founded the Conservation Foundation, which was later merged with the World Wildlife Fund (WWF). The WWF had been set up by Prince Bernhard of the Netherlands; Prince Philip, Duke of Edinburgh; and Julian Huxley:

• A former Nazi storm trooper, Prince Bernhard, who was also a founder of the Bilderberg Group, was the “honorary sponsor” of the Third Annual Meeting of the WEF. At this 1973 Annual Meeting, Club of Rome co-founder, Aurelio Peccei, who met personally with Hubbard in 1972, preached the Malthusian gospel of Limits to Growth, which would lay the groundwork for the sustainable development initiatives of UN Agenda 2030 and the WEF’s Great Reset. The Limits to Growth thesis was resounded by Hubbard in several of her books, including Conscious Evolution[2]; Birth 2012 and Beyond[3]; Emergence: The Shift from Ego to Essence[8],and the published and unpublished versions of the “Book of Co-Creation” [1] [6].

• Prince Philip, who was kin to Prince Bernhard and several other members of Hitler’s Nazi Party, was the father of the current King of the United Kingdom, Charles III, who launched the WEF’s Great Reset and the Terra Carta mandate of the Sustainable Markets Initiative. In an anthology titled If I Were an Animal, which donated sales royalties to the WWF, Prince Philip confessed that he was “tempted to ask for reincarnation as a particularly deadly virus” to cull the “population explosion” of the “human species” and, in turn, protect “endangered species.”

• The president of the British Eugenics Society and the first Director-General of the UN Educational, Scientific, and Cultural Organization (UNESCO), Julian Huxley coined the term “transhumanism” in his 1957 book, New Bottles for New Wine. In UNESCO’s 1946 mission statement, UNESCO: Its Purpose and Its Philosophy, Huxleycalled for a global eugenics program and a global population control policy:

“[t]he recognition of the idea of an optimum population-size [sic] (of course relative to technological and social conditions) is an indispensable first step towards that planned control of populations which is necessary if man’s blind reproductive urges are not to wreck his ideals and his plans for material and spiritual betterment. The recognition of the fact that the wild life [sic] of the world is irreplaceable, but that it is being rapidly destroyed, is necessary if we are to realise in time that areas must be set aside where, in the ultimate interests of mankind as a whole, the spread of man must take second place to the conservation of other species.”

Not only was the World Wildlife Fund set up by these prominent Malthusians with the help of Russell E. Train, who was a Rockefeller Brothers Fund trustee. But the WWF, which advances UN Agenda 2030 through the UN High-Level Political Forum on Sustainable Development, has explicitly advocated for Malthusian family planning programs. In brief, for the WWF, wildlife conservation and human population control are interlinked elements of sustainable Malthusian development. It is worth noting here that, in a 2020 WWF video, Sir David Attenborough, who is a WEF member, called for “stabilis[ing] the human population as low as we fairly can.” It is also worth noting that numerous other WEF members are also WWF officials, including Shi Wang, David Dao, Andreas Follér, Jim Sano, David Miller, Emilio Tenuta, Yuan Jiakai, Julia Novy, Carter Roberts, Mei Dewen, William Smith Stubbs, Rasmus Helveg Petersen, David Hoyle, Victoria Fuentes, Oscar Soria, Razan Al Mubarak, Jayesh Ranjan, Frances Seymour, Erin Simon, and Bubba Cook.

Wildlife conservation and population control are similarly hitched together by Hubbard in “Alternative to Armageddon,” which asserts that, in order to save “animals” from “killers,” a planetary “tribulation” must ensue so that “[t]he killers must not survive to become universal humans”:

“[h]uman history has been a difficult and as yet incomplete effort to overcome the mammalian defect programmed in our genes—killing animals and each other. We are heading toward the birth canal with this defect uncorrected . . . [H]undreds of millions are still killing animals and each other. 

This is why tribulations must be so severe on your planet. The killers must not survive to become universal humans.”

Ironically, Hubbard’s remedy for the killing of wildlife is the selective culling of human beings. It can be inferred that the “killers” who “must not survive” belong to the “one-fourth” of the “defective seeds” who must be “destroyed” in order to midwife humankind through its cosmic Malthusian birth crisis into a new transhuman species. Notice here that this passage reinvokes Hubbard’s “birth crisis” eschatology through the imagery of “heading toward the birth canal.” Notice also that this passage echoes Huxley’s decree that “man must take second place to the conservation of other species.” 

Hubbard also collaborated with WWF trustee Maurice Strong, who served alongside her on the Global Advisory Board of the World Future Society. According to Laurance S. Rockefeller: Catalyst for Conservation, Laurance had “conversations with and high regard for such individuals as Maurice Strong from the United Nations.” In fact, Laurance was a member of the US delegation to the 1972 UN Conference on the Human Environment, which was led by Strong, who later set up the 1992 UN Earth Summit Conference where the Millennium Development Goals (MDGs) of UN Agenda 21 were established as the precursors to the SDGs of UN Agenda 2030. Meanwhile, Laurance financed a battery of “sustainable development” projects as trustee of the Rockefeller Brothers Fund. It is keen to note here that SDG 5.6 affirms the Neo-Malthusian “family planning” tenets of the Program of Action of the UN’s 1994 International Conference on Population and Development. 

The godfather of the SDGs, Strong was a WEF Foundation Board member who also crossed paths with Hubbard at the State of the World Forum (SWF), which was orchestrated by the first and only president of the Soviet Union: Mikhail Gorbachev, who was also a member of the Malthusian Club of Rome. The SWF also brought together an array of Hubbard’s New Age “allies” along with key WWF officials, including the WWF Senior Program Officer, Jaime Cavelier, and the WWF Chair, Ruud Lubbers, who was also the Prime Minister of the Netherlands. At the same time, the SWF also included several members of the WEF and the Club of Rome along with Laurance’s nephew, Steven C. Rockefeller, who was the Chair of the International Drafting Committee of Earth Charter, which Gorbachev co-created with Strong as a UN Agenda 21 proxy through a merger of Gorbachev’s Green Cross International and Strong’s Earth Council. According to the Rockefeller Brothers Fund website, Steven Rockefeller “became an RBF trustee in 1977 and joined Laurance and several like-minded cousins in embracing spiritually grounded approaches to a new ecological ethos.”

It is worth noting here that the Rockefeller dynasty not only purchased and donated the land upon which the UN headquarters were built. But the house of Rockefeller also financed some of the UN World and International Population Conferences that paved the way for the Neo-Malthusian population policies that are embedded into the SDGs of UN Agenda 2030, which Hubbard endorsed during her 2016 address to the UN High-Level Forum on the Culture of Peace. It is also worth noting that Laurance’s Rockefeller Brothers Fund and his venture capital firm, Venrock, have financed “sustainable development” technologies since 1980, and they continue to invest in “sustainability” enterprises today.

In sum, Laurance Rockefeller and Barbara Marx Hubbard shared a common Malthusian vision of conscious transhuman evolution. Through collaborations with the UN, both Laurance and Barbara advanced the Malthusian population policies that undergird the SDGs of Agenda 2030, which was spawned by their mutual comrade, Maurice Strong. By proxy, Gorbachev’s SWF brought together Strong, Hubbard, and Laurance’s nephew along with top officials from the UN, the WEF, the Club of Rome, and the WWF, all of which are pivotal institutions driving the Malthusian SDG initiatives of the Great Reset and the Fourth Industrial Revolution. In short, Hubbard’s liaison with Laurance Rockefeller intersected through momentous positions at the Malthusian nexus of world governance institutions, such as the UN; globalist Round Table NGOs, such as the WEF, the SWF, and the Club of Rome; and non-profit environmentalist foundations, such as the WWF.

Crisis, Reaction, Solution

Altogether, Hubbard’s gospel of Malthusian-transhumanist crisis evolution was inspired by her noetic muse, Tielhard de Chardin, shared by her “kindred spirit,” Jonas Salk [1], and bankrolled by her “beloved patron,” Laurance Rockefeller [2]. While Salk compiled Malthusian population reports for the UN, Rockefeller helped shape the formation of the WWF and participated in Maurice Strong’s UN Conference on the Human Environment, which laid the groundwork for Agenda 2030 and the Neo-Malthusian SDGs that Hubbard endorsed at the UN High-Level Forum on the Culture of Peace. Today, Jonas’s Salk Institute and Laurance’s Venrock, along with his Rockefeller Brothers Fund, are advancing “sustainable development” initiatives and transhumanist biotechnologies that align with their previously stated views. Meanwhile, as the Great Reset is barreling forward, Hubbard’s crisis collectivism has been assimilated by the WEF, which has been stoking fears of environmental crises and public health crises in an effort to goad populations into submitting to the biotech mandates and “sustainable development” overhauls of the transhumanist Fourth Industrial Revolution. 

Ostensibly, these alarms of global crises could be tabulated as evidence validating Hubbard’s evolutionary crisis prophecy. Nonetheless, these crises could be contrived, exaggerated, or intentionally mismanaged in order to foment the ostensive emergencies necessary to coerce people into capitulating to the “sustainable” transhumanist technocracy of the Great Reset and the Fourth Industrial Revolution. At a 1975 Lindisfarne Fellows conference titled “Conscious Evolution and the Evolution of Consciousness,” Salk gave a presentation that was contextualized within the prospects of a technocratic elite manipulating Malthusian crises in order to impose draconian systems of totalitarian control under the pretense of “crisis management.” William Irwin Thompson, the founder of the Lindisfarne Association, which was funded by Laurance Rockefeller, prefaced Salk’s lecture with the premise that “we are living in one of the greatest historical crises” which could pose “absolutely no other future ahead of us but a kind of authoritarian convergence of the military-industrial complex and the multinational corporations creating a form of crisis management by which a kind of new elite, possibly a computer scientist elite, will use the crises to gain new controls and manage society to take over.”  

Whether organic or astroturfed, environmental crises and public health crises are being leveraged by the technocratic globalist elites of the WEF and the UN in order to accelerate the sustainable transhumanist development overhauls of the Great Reset and the Fourth Industrial Revolution. It is perhaps moot to quibble over whether the global elite sincerely intend to save the planet and evolve the human species, or whether they surreptitiously intend to “take over” the world. In either case, it remains incumbent upon conscientious free thinkers to balk when globalist elite technocrats, such as Klaus Schwab, or New Age gurus, such as Barbara Marx Hubbard, offer Malthusian-transhumanist “solutions” that are arguably worse than the crises themselves.

In the next and final article in this series, I finally will unveil how Hubbard’s affiliations with the World Future Society, the Human Potential Movement, and the Foundation for Conscious Evolution were connected to networks of alleged pedophiles and sexual abuse cults.

References:

[1]  Barbara Marx Hubbard, The Revelation: Our Crisis Is a Birth (The Book of Co-Creation) (Sonoma, CA: Foundation for Conscious Evolution, 1993).

[2]  Barbara Marx Hubbard, Conscious Evolution: Awakening the Power of Our Social Potential, (Novato, CA: New World Library, 1998).

[3]  Barbara Marx Hubbard and The Welcoming Committee, Birth 2012 and Beyond: Humanity’s Great Shift to the Age of Conscious Evolution (USA: Shift Books, 2012).

[4]  Barbara Marx Hubbard, The Hunger of Eve: One Woman’s Odyssey Toward the Future (Eastsound, WA: Island Pacific NW, 1989).

[5]  Abraham Maslow, Toward a Psychology of Being, 2^nd ed. (New York, NY: D. Van Nostrand Co., 1968).

[6]  Barbara Marx Hubbard, The Revelation: A Message of Hope for the New Millennium (Mill Valley, CA: Nataraj Publishing, 1995).

[7]  Barbara Marx Hubbard, The Evolutionary Testament of Co-Creation: The Promise Will Be Kept (Los Angeles, CA: Muse Harbor, 2015).

[8]  Barbara Marx Hubbard, Emergence: The Shift from Ego to Essence (10 Steps to the Universal Human) (Charlottesville, VA: Walsch Books, 2001).

Barbara Marx Hubbard and the Malthusian-Transhumanist Riders of the Pale Horse.

Months of research and 82,000 words later, The Chain series has concluded – at least in its current online form. What began as a simple investigation into the stablecoin issuer Tether quickly unraveled into a decades-long web of figures, companies, investors, and technological mechanisms that conspire to build what is referred to as “The Bitcoin-Dollar” system. This financial instrument consists of two main components; the first being Bitcoin itself, a distributed digital asset boasting deflationary monetary policy and trustless settlement on a transparent ledger; while the second is privately-issued tokenized government debt that operates on public blockchains, known as dollar stablecoins.

These two elements could not be further separated in regards to the publicly-stated ethos of their champions. Bitcoin will circumnavigate the government, and separate money from the State, while stablecoins aim to strengthen the dollar as the world’s reserve currency, provide much needed demand for government-issued debt reserves, and further perpetuate the U.S. dollar as the de facto medium of exchange to the unbanked citizens of the globe. At the surface, Bitcoin and the digital dollar appear as if oil and water, unable to co-exist in the same space, and molecularly opposed.

And yet, collectively, the dollar and Bitcoin are to form the backbone for an entirely new financial system, a yin and yang construction that allows an entirely new commodity class to co-exist with a hyper-dollarized world. It was my opinion before embarking on this research vein – see 2021’s The Birth of The Bitcoin-Dollar – that the coincidence of this structure emerging at the onset of the U.S. government’s greatest-yet threat of a debt crisis was likely not an accident. Upon further investigation of the primordial Bitcoin community, and the ensuing class of stablecoin issuers – not to mention the cross-section of these parties – I must unfortunately now conclude that the emergence of this system immediately after the 2008 financial crisis, and the subsequent phase-shifting adoption of Bitcoin by the institutional authors and beneficiaries of the pandemic’s financial stimulus, was the work of a modern intelligence community that has merged with the Silicon Valley technology meridian since at least the 1980s, but unabashedly since the formation of the CIA’s venture firm In-Q-Tel just before the turn of the millennium.

While not a popular opinion in many circles, the patterns are visible of the now-merged intelligence, organized crime, bankers, venture firms, and technologists within the story of The Chain, and thus the formative incubation of Bitcoin itself. Take for example, Brock Pierce, an early pioneer of virtual assets who worked with Goldman Sachs’ Steve Bannon and modern economists to trial monetary policy experiments in online video games, and whose fellow co-founders of the Digital Entertainment Network – Marc Collins-Rector and Chad Shackley – were both found to be sexual criminals with large stashes of underage pornography. As an early Bitcoin evangelist with his hands in the venture pie of nearly every important exchange and software company within the early blockchain space, the former Disney star Pierce reeks of a private-sector, blackmailed agent of the currency speculator stalwarts that have run the public sector in the shadows. Pierce tellingly commented that “if the government were knocking off people in this field, I would know,” upon the drowning of stablecoin developer Nikolai Mushegian just days after Mushegian stated that the CIA, the Mossad, and the “pedo elite” were going to kill him.

Operation Underworld, one of the earliest unions between organized crime and the early U.S. intelligence apparatus (dominated by Wall Street bankers and lawyers), demonstrated the need for the intelligence state to partner with mob affiliates for better data on ports of the U.S.’ east coast during the second World War, and thus this merger – as outlined eloquently and prudently at the onset of Whitney Webb’s One Nation Under Blackmail – perfectly exemplifies the reasoning for the mafia and the State to work together – networks, information, and money. In the 1940s, the networks were smaller and slower, the information lossy and hard to transmit, and the money was greenbacks – paper bills that, while serialized, were quite hard to track.

Interestingly enough, it was likely the emergence of more advanced surveillance techniques by the Treasury, the IRS, and their law enforcement partners, that led to the arrest of many figureheads of the 20^th century crime syndicate. But these arrests did little to stop the flow of goods from drug runners, bootleggers, and human traffickers, among the many other trades of the blackmarket. In fact, it appears that the intelligence apparatus simply stepped into the void left from the controlled take down of the mob, leading to further consolidation within the centralization of the off-shore dollar market. Off-shore markets are essential to the modern intelligence state, which fights to service the budgets of its black-book operations using clever accounting schemes to launder payments, while also investing via private-brokers into private companies built to privatize projects that were once fully-siloed within the national security state’s jurisdiction.

Take, for example, Peter Thiel’s Palantir, a CIA-cut out that developed as the private-sector iteration of DARPA’s TIA, or Total Information Awareness, which was founded after advisement from the CIA’s Alan Wade and the architect of TIA, John Poindexter. Today, Palantir feeds off of billions in government contracts to satisfy the brokering of data needs of both the public and private sectors. Their first customer was the CIA, who also provided the seed money for the founding of the firm, and they were subsequently funded by the CIA’s In-Q-Tel. They even accept Bitcoin. But before Palantir was officially incorporated, it began as the anti-fraud algorithm at PayPal, known as “Igor.” PayPal’s first institutional investor was the California tech incubator Idealab, whose founder Bill Gross would later go on to start Near Intelligence Holdings, the “world’s largest source of intelligence on people, places and products.” Gross’ GoTo.com/Overture holds the patent that upholds Google’s AdWords – the backbone of Google’s monetization, which remains critical to the U.S. economy. Palantir itself holds 160 patents for their global surveillance network that all reference patents held by Gross.

Even PayPal’s first board member Scott Banister was a Vice President at Gross’ Idealab, who lent his Palo Alto couch to PayPal’s cryptographer and CTO Max Levchin the week he first met Peter Thiel. The aforementioned Brock Pierce ran the Clearstone Global Gaming Fund formed out of the Idealab facility Clearstone Ventures, which was co-founded by Bill Elkus, a trustee of Jeffrey Epstein’s J. Epstein Foundation. Steve Bannon, Pierce’s “right hand man,” filmed Epstein for 15 hours as part of a failed effort to rebrand Epstein after arrests for sex crimes, and Howard Lutnick – the CEO of Cantor Fitzgerald which holds the Treasuries backing Tether’s USDT stablecoin – bought the home neighboring Epstein’s own (which was previously owned by Epstein) for “$10 and other valuable consideration.” Lutnick, the current co-chair of Trump’s transition team, also sits on the board of the Tether-funded, Earth observation satellite firm Satellogic alongside former Treasury Secretary Steve Mnuchin, which aims to provide anyone with the funds to gather human movement data and commodity surveillance from their fleet of cameras orbiting the planet.

All this is to say, it can be hard to know where the lines between the mob and the intelligence state are drawn. But make no mistake, The Chain‘s construction was not intended to be as transparent as the blockchains they manage. Nor was it built in a day. Ironically, it was likely our government’s own want to circumnavigate their own legislation that pushed the intelligence state firmly into the private sector.

When bureaucratic red tape – see: The Constitution – prevents the acquisition of certain personal data of citizens from government-funded data brokers, the private sector becomes available as an enabling environment for otherwise unconstitutional surveillance. Many of the defenders of the free market, which are certainly rooted in well-read intentions, miss that the regulation and deregulation via the public sector leads to a further lack of competition in the formation of king-made networks and market monopolies, which often lead to further customer restrictions on speech, all within the framework of supposed free markets. The internet and Bitcoin’s blockchain take a similar misdirection dialectic, but via a differing philosophy – decentralization. Bitcoin is less decentralized in nature than it is distributed, with its consensus mechanism standing across rungs of infrastructure that uphold our internet, and the panopticon leviathan living inside its fiber optic cables. No longer will the Federal Reserve’s 12 regional Fed banks decide monetary policy or limit reserve settlement to those within their regulatory regime, but the energy generators, the chip manufacturers, and the internet service providers – at both the software and hardware level – become the new industries of consensus. The neo-banks, likely to emerge from FinTech-integrated social networks – an industry pioneered by Peter Thiel at PayPal and Facebook– are ready to embrace the oncoming regulation presumed to be imposed at the onset of Trump’s second term.

There were millions in campaign financing waiting for a candidate to so brazenly champion the blockchain industry, and thus Trump’s campaign pivot on Bitcoin should be of no surprise. It his affinity for stablecoins however – no better exemplified than his appointment of Howard Lutnick as co-chair of his transition team, whose firm Cantor Fitzgerald holds billions in government debt for Brock Pierce’s Tether (not to mention hundreds of millions in Bitcoin) – that offer a quiet-part-out-loud insight into his plans to service our ballooning debt via the sale of securities to the blossoming stablecoin industry.

Trump would even go on to announce his own blockchain project, World Liberty Financial, with a stated mission to extend dollar hegemony via tokenized dollars, with the co-founder of Paxos, Bill Teo, chosen to lead its stablecoin component. Paxos was the former partner of Facebook’s stablecoin project, Libra/Diem, and currently issues PayPal’s own dollar stablecoin, PYUSD. While these stablecoin issuers might offer a way out of massively irresponsible fiscal policy, and certainly remain mission critical to the “tether”-ing of Bitcoin’s price appreciation to the U.S. dollar system, luckily they do not retain any direct control over Bitcoin’s blockchain. Yet, with the proliferation of investment into Bitcoin mining firms and computation farms, and an amassed fortune of Bitcoin the asset, those surrounding the neo-money printers of the Digital Federal Reserve are set to capture any ground the Bitcoin community cedes in their supposed fight with the State.

It is, of course, important to note that who made Bitcoin is significantly less important than who stands to benefit from it, in no small part due to its distributed and decentralized nature limiting any singular body from perverting its monetary policy and diluting the capped supply. This is a state change of money, and demands an honest introspective investigation of the net benefits of a capped monetary supply in neutering the State’s ability to debt pardon en masse. It is only upon a deep distilling of the commentary coming out of the mouths and think pieces from the affiliates of The Chain that one can begin to visualize the mechanisms being built to allow the United States government to, in fact, use Bitcoin and stablecoins to debt pardon – at least, crucially, one more time. Regardless of the success of the Bitcoin Strategic Reserve now being proposed by Senators adjacent to the incoming second Trump administration, the freedom derived from blockchain-native assets likely remains strictly economic for a select few, while the programmability and surveillability downsides of privately-issued stablecoins on public blockchains remain as fear-worthy as the CBDCs we have learned to reject.

So what solutions are available to combat the effects of the careful, discrete construction of The Chain system? For starters, the rejection of all dollar instruments native to the Bitcoin blockchain itself. Bitcoiners should learn from the dollarization of Ethereum, and how the proliferation of stablecoins centralized consensus and opened entirely new cans of regulatory concerns. In addition to the simple prohibition of tokenized government debt on chain, Bitcoiners would be smart to optimize consensus today to encourage and enable self-custody and transactional settlement for not only the many billions of world citizens that do not current hold bitcoin the asset, but also the billions not yet born. Stablecoins are not an appropriate scaling mechanism for a new financial system – it is simply a worse implementation of the current debt-based monetary system, with privacy, programmability and surveillance concerns. The beauty left in Bitcoin is that, while its monetary policy can never be perverted, its consensus remains malleable by nature of being software, and thus can be enhanced to service a global economy of those wanting to opt out of the current system. This lever should be explored at great length and with great haste by the technologists and dissidents still active in the Bitcoin industry.

The main flaw in the thesis presented in The Chain, according to its author, is why exactly would the PayPal Mafia and its ilk perpetuate tokenized dollars pegged directly to U.S. government debt, while simultaneously building tools to privatize monetary issuance, allowing real world assets to back exchangeable digital twin counterparts on blockchains? This question poses many follow-up threads for discussion, but perhaps can be answered by a need for U.S.-based stalwarts – cartels, for lack of a better word – to preserve the public-sector as a legislative body and regulatory regime due to its role as an enabling environment for their de facto monopolies. As Thiel said, due to know-your-customer regulation that appeared after the events of September 11, 2001, perhaps a company like PayPal could not have virally grown in the manner that it did prior to that world-altering event.

The power structures of the United States government actually prevent newcomers from gaining serious marketshare over their king-made platforms, such as Facebook and PayPal, via the enforcement of copyright and patent law, not to mention domestic and international sanctions. Want to play ball in the largest buyer economy in the world? You best respect the IRS, the SEC, the CFTC and the regulations and executive orders they strive to uphold. Unfortunately, as we have seen with the current stablecoin bill referencing the controlled collapse of FTX and Terra-LUNA, the games – crimes, for lack of a better word – of the private sector can have serious implications on the language of legislation, and purposefully be used to king-make their chosen companies and Neo-financial institutions.

The critics of the warnings outlined in The Chain are quick to point to the Trojan Horse meme, which proposes that the synergy between the monetary policy of the State with Bitcoin’s decentralized nature will progressively diminish the State’s control over our lives, limiting the manipulation of interest rates and the issuance of money itself. The intention of The Chain was never to dissuade participation in what remains a very alive game, nor was it to express doubts upon Bitcoin’s imminent appreciation. In fact, upon deeper examination, it is quite the opposite, and Bitcoin must appreciate greatly for this debt swap to play out favorable for the United States. There is clearly plenty of opportunity within the Bitcoin-Dollar’s birth – an opportunity we hope many builders and problem solvers take. The risk we broach is not of whether or not monetization occurs, but instead the issues that arise from that exact occurrence, from Bitcoin’s appreciation itself – mainly, the extension of U.S. empire and the “boon for surveillance” provided by public blockchains as described by a former CIA Director.

Bitcoin, like money itself, is simply a technological tool. This tool has many differing properties depending on whether it is wielded by an individual or the State itself. Ultimately, it is simply irrelevant if the State or cypherpunks published the Bitcoin software. However, if the proliferation of tokenized government debt settled on public blockchains occurs alongside the adoption of an increasingly difficult-to-spend digital commodity like Bitcoin – especially when held in large quantities by government-affiliated entities – and these strange bedfellows become the determining factor in the fate of our country’s debt problem, then maybe the cypherpunks have inadvertently solved the largest empire’s most pressing problem.

Or perhaps it was us, the dissident economists and technologists, that were tricked, and the United States has once again kicked the world reserve currency can down the road another thousand years, conveniently at the onset of the deflationary age they most likely dawned.

Breaking (Down) The Chain: An Investigation Post-mortem.

Key Takeaways

• A monetary network’s success is dependent on the size and volume of its active user base.
• The former lead of Facebook’s Libra project, David Marcus, is the former President of PayPal. PayPal’s founding mission, and subsequent T-shirt motto, was to create “A New World Currency.”
• Marcus built Facebook’s stablecoin project after concluding that Bitcoin lacked the qualities to be a successful medium of exchange.
• In order to appear decentralized, Libra formed the Libra Association, but included many very inter-connected businesses and people, as noted elsewhere in The Chain series.
• Government regulators, fearing Facebook’s immense active user base, quickly called the Libra team to testify before Congress, and eventually pressed the project to fold before launching.
• Libra had previously stated in their S-1 filings that regulatory pressure and uncertainty could lead the project to never launch. Other evidence suggests the entire goal of Libra was to perfect the public-private partnership for the future implementation of the U.S. government’s preferred digital currency project.
• Jared Kushner sent an email to Steve Mnuchin in May 2019 regarding a Sam Altman post on stablecoins titled “US Digital Currency.”
• Mnuchin’s Treasury then held a March 2020 meeting after inviting many figures mentioned in The Chain series, including Wences Casares and Peter Thiel.
• Libra announced partnerships with Fireblocks, Silvergate Bank, and Paxos in order to expedite their stablecoin project, but none materialized.
• After being shutdown by regulators, Libra sold off its assets to Silvergate Bank in January 2022.
• Silvergate facilitated Bitcoin-collateralized loans with MicroStrategy and Marathon Digital, and were partially owned by Block.One, BlackRock, State Street and Citadel Securites.
• Silvergate Bank, whose SEN product serviced a substantial amount of firms mentioned in The Chain series, was then liquidated by regulators in March 2023.
• Silicon Valley Bank (SVB), which failed two days after Silvergate, banked a significant amount of the companies and venture capital in the cryptocurrency industry.
• The day before the SVB collapse, Peter Thiel’s Founders Fund pulled out funds, and advised clients to do the same, triggering deposit flight.
• 10 customers alone had $13 billion in deposits at SVB, and $42 billion left the bank in 6 hours. In other words, SVB collapsed due to an acute liquidity crisis that was spawned by very few people.
• The Trump administration’s deregulation of the banking industry in 2018 loosened capital and reporting requirements, leading to many of the issues seen in the banking crisis in 2023.
• Circle’s USDC stablecoin, which had $3.3 billion of reserves at SVB, would “depeg” to 86 cents during the crisis.
• Six months after the banking crisis, and two weeks after the U.S. House Financial Services committee advanced their first stablecoin bill, Paxos and PayPal launched PYUSD.
• The Gillibrand-Lummis Stablecoin Bill was directly influenced by the Terra-LUNA collapse, which resembles more of a controlled demolition than an organic collapse. As a result, the bill bans algorithmic alternatives in pursuit of preserving the dual banking system. Both Senator Gillibrand and Senator Lummis have significant donor ties to many of the firms mentioned in The Chain series.
• Large lobbying groups, such as Coin Center and the Digital Chamber of Commerce, were formed to help guide legislation as it relates to stablecoins and digital assets. Both of these lobbying groups have advisory ties to stablecoin issuers and many firms and people mentioned thus far in The Chain series.
• Multiple parties mentioned in this piece, from the Libra team to lobbyists, have echoed the sentiment that USD stablecoins can help retain the U.S. dollar as the world’s reserve currency.
• Many of the companies formed after the dissolving of Libra carry on the work of building a new financial system based on stablecoins and public blockchains.
• According to national security state members, Bitcoin and stablecoins can provide a “boon for surveillance” in addition to helping grow the economy.
• The Bitcoin-Dollar system, as described in The Chain series, is the actualization of PayPal’s founding intention to create a “new world currency”, and it was carefully constructed to appear as an organic phenomenon when it is not.

The initial trio of pieces in The Chain series have focused on the three essential pillars for creating a new digital monetary system. The first, The Chain of Custody, examined the construction of novel custodial infrastructure to enable the secure holding of billions of dollars worth of digital assets after the proliferation of Bitcoin as a new financial class. The second, The Chain of Issuance, investigated the primordial roots of digital payments fortifying data brokers and information bankers within the global surveillance network. It also noted how stablecoin issuers are the modern day analogue to the influence that the major infrastructural titans of the Industrial Age had on the formation of The Federal Reserve in the first half of the 20^th century. The third, The Chain of Consensus, focused on the currency speculators and intelligence-connected developers behind the monetary policy and consensus infrastructure of privately-issued money and the blockchain revolution during the infancy of the Deflationary Age brought about by Bitcoin and the subsequent, dollarized iterations of its underlying database technology.

In summary, a new financial system cannot be built without the ability to custody assets, issue new assets, and uphold the settlement and monetary policy of said assets via a governing consensus. Yet, even with the successful formation of this necessary trifecta, the construction of a monetary network is simply fruitless without the acquisition of the last remaining pillar: a network of active users. This concept is well understood by both the private sector companies that have been mentioned throughout this series, in addition to the public sector that currently acts as the enabling environment for the rules and regulations of nation-state monetary systems upheld by central banks across the world. None of these public issuers of money, however, have the global impact of the U.S. Federal Reserve and the U.S. Treasury system, which provides immense privileges that come downstream from their issuance of the notes and reserves backing the world reserve currency, the U.S. dollar. With 66 countries worldwide listing the dollar as an official currency, the vast number of users utilizing these instruments makes the dollar system the largest financial network in the world.

Even within this monopoly, there is a fractured set of settlement networks, such as PayPal, and private banks, such as J.P. Morgan, issuing said dollars in users’ checking accounts. This balkanization presents a unique opportunity for further consolidation and, with that consolidation, the ability to acquire even more users. For example, PayPal acquired millions of global users via their purchases of Venmo and Xoom, while J.P. Morgan assumed the deposits of the failed First Republic Bank after the onset of the regional banking crisis in 2023.

Money itself is but a technology that enables agreeable and predictable outcomes between two bartering parties. This axiom requires money that simultaneously acts as a unit of account, a store of value, and a medium of exchange. While all of these properties can be met by a multitude of currently circulating currencies – and even commodities – their usefulness for settlement across both time and space is determined nearly entirely by the number of users within their respective networks. The dollar system is the most liquid monetary network in the world, and has held this position for nearly a century. Historically, the world’s reserve currency has held its dominant status for roughly this same duration of time. With U.S. debt levels now growing at uncontrollable and exponential rates, the formation of proposed alternatives to the dollar’s monopoly are popping up across the globe. The world economy is a finite pie consisting of finite users, and with the dollar network appearing truly weak for the first time in decades, competitors are posturing for a piece. However, with the global broadband internet dissolving some of the control that nation states have over their own citizens’ monetary choices, the world is actually dollarizing faster than ever.

As the internet age enters its third decade, the stakes for creating the internet of money have never been higher. For now, the proliferation of dollarized blockchains seemingly aims to fortify the dollar’s hold over global finance, not dissolve it. Regardless of the dollar’s domination of denomination, the upstart issuers of these tokenized assets have hemorrhaged away enough users that it now threatens many of the privileges the legacy system once enjoyed, mainly the available profits found by selling their data and leveraging their deposits.

The understanding that social networks are communication platforms, and that money itself is just a ledger upholding the communicative expression between users, led the social media giant Facebook to experiment with adding financial instruments to their vastly popular Messenger app. While Bitcoin and alternatives had been around for nearly a decade before Facebook’s Libra was proposed, this was “the shot heard ’round the world” for central bankers and regulators to sit up straight and take a novel payments system proposed by the world’s largest social network seriously.

Yet, as Facebook soon found out, if you come at the king, you best not miss. Or at least this was the story that was told to the world: The U.S. regulatory system said “No” and that was that. However, this concluding piece to The Chain series, The Chain of Command, postulates that Libra was never intended to actually go to market as designed, but rather was meant to set the stage for clear regulation via legislation that would become the enabling environment for a decades-long attempt at creating a new world currency by the very same parties covered thus far in this series.

Libra, Diem and Facebook’s Stablecoin

Sitting on a Caribbean beach during the winter of 2017, David Marcus was struck with the idea of creating a global digital currency to run on Facebook’s Messenger. Marcus, who had sold his mobile payment provider Zong to PayPal for $240 million in 2011, and who had been introduced to Bitcoin in 2009, was certainly no spring chicken to the rapidly evolving FinTech and digital payments space. Within nine month of Zong’s acquisition by PayPal, Marcus was named PayPal’s president in April 2012. Then, in June 2014, Marcus was recruited by Facebook’s Mark Zuckerberg to run their Messenger app. By the time the idea that would become Libra began to germinate during his 2017 vacation in the Dominican Republic, the social network’s messenger app boasted over 1.3 billion active users.

Prior to his experience with PayPal and Facebook, Marcus had founded GTN Telecom, noted as being the “first to break Switzerland’s telecommunications monopoly” in 1996. GTN Telecom was backed by the UK’s 3i, a venture capital firm founded in 1945 by the Bank of England and “a syndicate of British banks,” and was later sold in 2000 to WorldCom’s World Access just two years before WorldCom would file for Chapter 11 bankruptcy after excessive accounting fraud. Marcus went on to found Echovox, a “mobile monetization company focused on monetizing web and traditional media audiences” via “transaction-enabled mobile services,” shortly after the October 2000 sale of GTN. Zong was later spun off from Echovox. Bertrand Perez and Kurt Hemecker, two executives at Zong, would become part of the founding team at Libra alongside Marcus.

“In late 2009 when I first stumbled upon Bitcoin and read the white paper, I tried to play with it, but it was so cumbersome even for a geek like me. I just couldn’t get it. So I kind of put it aside, brushed it aside, and then came back to it in 2012 when a good friend of mine who’s often referred to as a Patient Zero in Silicon Valley for Bitcoin, [Xapo’s] Wences Casares, basically started telling me more about it and telling me ‘you have to actually spend time and understand this thing.’ And so I did. And then I just couldn’t stop thinking about it. I just couldn’t stop thinking about this idea that you could actually be your own self-sovereign for digital value and you could move it around without any intermediary in between…

Then in 2013 at PayPal, that’s after Zong got acquired by PayPal and I was running it, I remember that Argentina asked us to actually stop the flow of money going out of the country from PayPal accounts located in Argentina. And I remember us having to comply because we were regulated entity, and seeing the price of Bitcoin rise the same day. And it was really clear that a lot of Argentines at the time were actually moving their funds into Bitcoin so that they would have control over their hard-earned money.”

David Marcus, The Block, June 27, 2023

According to reporting from Financial Times, Marcus, a close confidant of Zuckerberg, apparently “texted Zuckerberg to outline his ruminations” and after successfully convincing Facebook’s CEO, he was given a “blessing to explore the idea further.” Marcus quickly outlined his idea in an internal memo, highlighting that “Facebook’s more than two-billion-strong user base” empowered with crypto “could offer a convenient and cheap way to move money around the world,” in addition to providing “a treasure trove of data about what people spend their money on.”

For the social network, the “possible multi-billion-dollar commercial opportunities were clear,” including “user transaction data,” “more engagement,” “more e-commerce,” and “a slice of fees from transactions.” According to an unnamed regulatory official, this “was always their advantage.” Libra would “create tremendous opportunity and a lot of money for them. But if Facebook was going to be the reason it was very successful, they were also going to be the reason it would fail.”

During the months right after Libra’s announcement, Marcus updated his thoughts on Bitcoin, stating “For me, now, it’s clearer that Bitcoin serves a purpose of being digital gold, not a good medium of exchange.” It was this axiom that led Marcus to express that “this was the right time for us to start thinking about how we could address the very things that blockchain and cryptocurrency were meant to do” and that “we had real solutions to bring to the fore.” Marcus later explained his motivations for bringing publicly-issued money via tokenized dollars to the Libra experiment in an August 2023 conversation with Bankless:

“I don’t think that I’m in the camp of people who want to fully separate money from State. I feel like my own personal objective is to actually make the underlying rails really efficient, really open, really interoperable, and enable more people to have access to them. I think that the world where actually good governments cannot control their own monetary policy, etc., this world where it doesn’t exist, would be chaos.”

It is perhaps this affinity for State-controlled monetary policy that led Marcus to announce Libra to the world within the confines of The Old San Francisco Mint in June 2019. However, the project itself was started both in earnest and in secrecy by Facebook in early 2018, when Morgan Beller, a former partner of Andreessen Horowitz, joined Marcus in plotting to bring both payments and a novel currency construction to Facebook’s Messenger product. According to reporting from the Financial Times, the pair first worked “in a small, empty room” with “walls adorned with whiteboards” within “Facebook’s main campus in Menlo Park.” Shortly after, the duo “moved to a larger, more secluded building” positioned “on the outskirts of the company’s headquarters” that limited access to “only employees with particular passes” consisting of “the crypto experts, engineers and economists.” The project was codenamed Libra, and Beller was quoted as saying that the team was “paranoid about leaks” and operated “like a secret Swat operation.”

In addition to Beller, Marcus was quickly joined by Christian Catalini, a research scientist at MIT who had founded the MIT Cryptoeconomics Lab. While there, Catalini designed the MIT Digital Currency Research Study, which “gave access to Bitcoin to all MIT undergraduate students.” In 2013, Catalini became a member of the Technology Advisory Committee of The Commodity Futures Trading Commission (CFTC) alongside his advisory board appointments to Coinbase, Algorand, Chainlink and Hivemind Capital. Catalini became essential to the development of Libra, and is noted as being a co-creator of Libra and Chief Economist of the Diem Association after Libra rebranded to Diem, in addition to his title of Head Economist at Meta FinTech.

Catalini, alongside Jai Massari – a partner in the Financial Institutions Group of Davis Polk & Wardwell LLP and an outside counsel to Diem – wrote a piece titled “Stablecoins and the Future of Money” which proposes that “through a sensible regulatory approach, true stablecoins can fulfill their promise without introducing new risks.” Their theory on the next evolution of money, which was demonstrated throughout the multitude of iterations of Libra, is excerpted below:

“Modern money is a combination of public and private money. Public money includes central banks-issued cash and digital claims against central banks. Private money includes deposit claims against commercial banks. While the public sector protects the stability of money, up to 95% of money in developed economies is private. Stablecoins are a form of private money. This is not a new concept — the idea of separating monetary and credit functions traces back 80 years. By lowering the cost of digital verification, blockchain technology can expand the role of both the public and private sector in the provision of money. While the public sector could attempt to connect with consumers and businesses directly, the private sector is likely to be more efficient in meeting the public’s needs and increasing choice.

Succeeding in this transformation will require the right balance between the public and private sectors. Countries that overemphasize the public approach will likely end up falling short in speed to market, competition, and innovation…The public sector may also struggle with serving citizens and businesses effectively. Given the incredibly high bar in terms of resilience and security, it will likely take years for a CBDC to be developed and adopted…This is where CBDCs and stablecoins are strong complements, not substitutes. The public sector could focus on issuing digital coins and delivering on sound money, while the private sector could build rails and applications. Competition with legacy networks would further ensure a higher degree of resilience and innovation…

The question for central banks and regulators then becomes which combination of the three approaches [“true” stablecoins, deposit coins, and CBDCs] can also improve competition, lower cost, and increase access to the financial system…A much stronger combination would be the public sector focusing on regulation of stablecoins first, and then on CBDC issuance on multiple rails later to complement potential shortcomings…Public sector guidance and standard setting can be incredibly useful in promoting the right solutions in these areas…In the case of money, the public and private sectors can play to their relative strengths, solidify their public-private partnership, and improve societal outcomes in the process.”

Catalini, Massari, and Marcus would all go on to form LightSpark – an institutional payments company focused on Bitcoin and the Lightning Network – after the dissolution of the Libra project. The pivot back towards Bitcoin and specifically the Lightning Network is perhaps best exemplified by the regulatory realities within the United States. As Marcus stated to The Block: “I just want to state that I feel like it’s a shame that we’re in this current state of uncertainty from a regulatory standpoint as a country… I think you know the reason Bitcoin is so special is because, first of all, it is the only asset out there that has been clearly defined as not a security by the SEC in the U.S.” In fact, the Libra team actually met with Lightning Labs at the onset of the project while still in the process of determining the best course of action to build Facebook’s digital currency. According to Marcus during a discussion with Bankless, “In early 2018,” the Libra team “went to see Lightning Labs team in SF and we looked at Lightning as one of the ways to actually do this.” In this interview, he further articulated his position on Lightning, bringing stablecoins to Bitcoin, and even algorithmic stablecoins:

“I’m actually all for stablecoins on top of Lightning when that becomes a thing and there are a number of work streams that are out there to make that happen. I think my problem is actually if you’re dependent on one stablecoin, or one asset, to be the native core settlement asset of a payment network, then you have a problem because the algorithmic stablecoins don’t work in my opinion. I really believe that it’ll never work and so stablecoins need to have a reserve and someone controls that reserve and if someone controls that reserve, then it’s the single point of failure of your entire payment network if you’re solely dependent on it.”

Despite the team’s interest in Bitcoin, Marcus stated that “unfortunately the tech just wasn’t ready for prime time and certainly not for scaling to the type of scale that Meta had with its Messaging apps.” This realization led Marcus and his team to “actually go build new tech and that’s what we did.”

After the Libra project was announced to the world in 2019, there were a few organizational strategies employed in order to mitigate the appearance of centralization, including the establishment of the Libra Council, the Libra Association, and the board of directors. All three of these groupings were formed during the inaugural meeting held in October 2019 in Geneva, Switzerland. The first batch of organizations that signed on as members included: “Anchorage, Andreessen Horowitz, Bison Trails Co., Breakthrough Initiatives, L.P., Novi Financial [initially known as Calibra, the company responsible for building the wallet software for Libra], Coinbase, Inc., Creative Destruction Lab, Farfetch UK Limited, Iliad, Kiva Microfunds, Lyft, Inc., Mercy Corps, PayU, Ribbit Capital, Spotify AB, Thrive Capital, Uber Technologies, Inc., Union Square Ventures, Vodafone, Women’s World Banking, [and] Xapo Holdings Limited.”

Many of the companies listed here have appeared within The Chain series, including the only OCC-chartered crypto bank Anchorage Digital, Marc Andreessen’s Andreeseen Horowitz, Coinbase, the PayPal- and Omidyar -affiliated Kiva, Meyer Malka’s Ribbit Capital, Fred Wilson’s Union Square Ventures, and Wences Casares’ Xapo. Others that have not been previously discussed in this series also boast ties to this same network. For instance, Thrive Capital, the venture capital firm of Joshua Kushner (Jared Kushner’s brother), raised $40 million in 2011 from investors including Peter Thiel, the Wellcome Trust, and Princeton University, while it later took an estimated $120 million from Goldman Sachs in 2021 via their Petershill Partners affiliate. The firm is advised by Twitter founder Jack Dorsey and holds a “good percentage” of the online payment juggernaut, Stripe, which in 2023 raised nearly $6.5 billion from Andreessen Horowitz, Thiel’s Founders Fund and Goldman Sachs. In October 2024, Stripe would spend $1.1 billion to acquire stablecoin issuer Bridge, leading Stripe CEO Patrick Collison to refer to stablecoins as “room-temperature superconductors for financial services.”

Another example is Breakthrough Initiatives, which was formed by DST Global founder and Xapo investor Yuri Milner. Milner is perhaps best known for creating The Breakthrough Prize with Mark Zuckerberg and Anne Wojcicki, the ex-wife of Google’s Sergey Brin and current CEO of 23andMe. The Creative Destruction Lab is a non-profit that has partnered with XPRIZE, a foundation started by Singularity University’s Peter Diamandis with a board featuring Google’s Larry Page, Elon Musk, film director James Cameron, and Google’s Ray Kurzweil, who sponsored the Singularity Summit in 2006 alongside Thiel and the Machine Intelligence Research Institute, the latter was advised by Thiel and blockchain pioneer Jed McCaleb. McCaleb is best known for founding the first significant Bitcoin exchange, Mt.Gox, in addition to Ripple Labs and Stellar, the latter of which raised funds from “Stripe and PayPal executives” and features the PayPal Mafia’s Keith Rabois, Thiel-protégé Sam Altman, Stripe CEO Patrick Collison, and the Idealab– and Thiel–affiliated Naval Ravikant as advisors.

In addition to the Libra Association, a technical steering committee was formed in December 2019. Five members were elected including Anchorage Digital co-founder Diogo Mónica, Calibra core product lead George Cabrera III, Bison Trails founder Joe Lallouz, Union Square Ventures partner Nick Grossman, and Mercy Corps emerging technology director Ric Shreves. The Libra Council also appointed a board of directors, which included Matthew Davie of Kiva Microfunds; Patrick Ellis of PayU; Katie Haun of Andreessen Horowitz; David Marcus of Novi Financial; and Wences Casares of Xapo Holdings Limited. The Libra board, once established, voted on and appointed the initial Libra Association staff, including Bertrand Perez as Chief Operating Officer and Interim Managing Director; Dante Disparte as Head of Policy and Communications; and Kurt Hemecker as Head of Business Development. In addition to other Libra team members not mentioned in the early press releases, Laura Morgan Walsh, a 13-year veteran of PayPal, was named Head of Operations.

Katie Haun, in addition to her role at Andreessen Horowitz, is the Founder and CEO of Haun Ventures, alongside Libra steering committee member Diogo Mónica. Haun, a lifetime member of the Council of Foreign Relations (CFR), and a Coinbase board member from 2017 until 2024, began her career with a decade long stint as a federal prosecutor serving the SEC, the FBI and the Treasury, responsible for creating the U.S. government’s first cryptocurrency task force that helped lead investigations into the Mt.Gox hack and the Silk Road prosecution. Haun went to Stanford Law School, and studied with Sam Bankman-Fried’s parents, meeting the now infamous and disgraced head of FTX when he was only a child. Casares, featured in The Chain of Custody, is a long-time friend of Marcus, and joined the PayPal board in 2016, in addition to being on the board of Kiva and the executive chairman and founder of the cryptocurrency lobbying group, Coin Center.

In addition to the initial 21 companies that signed on to the Libra Association, payment stalwarts Visa, PayPal, Mastercard, Stripe and Mercado Pago all expressed interest in the project, before promptly dropping out, alongside PayPal-acquirer eBay, after pressure from U.S. regulators. Senator Brian Schatz (D-HI) and Senator Sherrod Brown (D-OH) sent letters to Visa CEO Alfred Kelly, Jr., Stripe CEO Patrick Collinson, and Mastercard CEO Ajaypal Banga “over the firms’ participation in the developing network.” “It is chilling to think what could happen if Facebook combines encrypted messaging with embedded anonymous global payments via Libra.” Schatz and Brown also suggested that participating firms “such as Visa, Stripe, and Mastercard” may see “heightened regulatory scrutiny overall” as a result of Libra Association membership when they wrote: “If you take this on, you can expect a high level of scrutiny from regulators not only on Libra-related payment activities, but on all payment activities.”

This sentiment was first initiated by Maxine Waters, the Californian congresswoman who sat as the Chair of the House Financial Services Committee during the Libra hearings, in a letter dated July 2, 2019:

“We write to request that Facebook and its partners immediately agree to a moratorium on any movement forward on Libra—its proposed cryptocurrency and Calibra—its proposed digital wallet. It appears that these products may lend themselves to an entirely new global financial system that is based out of Switzerland and intended to rival U.S. monetary policy and the dollar. This raises serious privacy, trading, national security, and monetary policy concerns for not only Facebook’s over 2 billion users, but also for investors, consumers, and the broader global economy.

On June 18, 2019, Facebook announced its plans to develop a new cryptocurrency, called Libra, and a digital wallet to store this cryptocurrency, known as Calibra…While Facebook has published a “white paper” on these projects, the scant information provided about the intent, roles, potential use, and security of the Libra and Calibra exposes the massive scale of the risks and the lack of clear regulatory protections. If products and services like these are left improperly regulated and without sufficient oversight, they could pose systemic risks that endanger U.S. and global financial stability. These vulnerabilities could be exploited and obscured by bad actors, as other cryptocurrencies, exchanges, and wallets have been in the past. Indeed, regulators around the globe have already expressed similar concerns, illustrating the need for robust oversight…

These risks are even more glaring in light of Facebook’s troubled past, where it did not always keep its users’ information safe. For example, Cambridge Analytica, a political consulting firm hired by the 2016 Trump campaign, had access to more than 50 million Facebook users’ private data which it used to influence voting behavior. As a result, Facebook expects to pay fines up to $5 billion to the Federal Trade Commission (FTC), and remains under a consent order from FTC for deceiving consumers and failing to keep consumer data private…

Because Facebook is already in the hands of a over quarter of the world’s population, it is imperative that Facebook and its partners immediately cease implementation plans until regulators and Congress have an opportunity to examine these issues and take action. During this moratorium, we intend to hold public hearings on the risks and benefits of cryptocurrency-based activities and explore legislative solutions. Failure to cease implementation before we can do so, risks a new Swiss-based financial system that is too big to fail.”

Representative Waters furthered this apprehension in a letter penned the next month, August 2019, in which she stated that her “concerns remain with allowing a large tech company to create a privately controlled, alternative global currency.” David Gerard, the author of Libra Shrugged: How Facebook Tried to Take Over the Money, made note that “The attacks were absolutely bipartisan because both sides agree: you don’t mess with the money…This is what happens when the dreams of bitcoin bros meet reality.” In agreement with Gerard’s comment, both Waters and the Trump-nominated Federal Reserve Chair Jerome Powell expressed issues regarding Libra during Powell’s testimony before the House Committee on Financial Services in July 2019. Waters reiterated her concerns at the onset of the hearing, articulating that she “believe[s] that what Facebook is planning raises serious privacy, trading, national security and monetary policy concerns for consumers, investors, the US economy, and the global economy,” and further noted that “Facebook’s foray into this field should signal to all of us that our current system of regulation lacks adequate coordination safeguards and attention to crypto.” Waters even called upon Powell to “be a leader on this issue,” and that the Fed chair “should not take a wait-and-see approach when it comes to examining a financial system involving 2.4 billion people.” Powell seemed to be in agreement that Facebook’s large active user base presented problems for regulators not yet seen in other cryptocurrency experiments:

“Due to the to the possibility of quite broad adoption, Facebook has a couple billion plus users, so you have, I think, for the first time, the possibility of a very broad adoption. And if there were problems there associated with money laundering, terrorist financing – any of the things that we’re all focused on, including the company, they would immediately arise to systemically important levels just because of the mere size of the Facebook network.”

Jerome Powell, July 10, 2019, U.S. House of Representatives

Then-Treasury Secretary Steve Mnuchin, who initially recommended Powell to President Trump for the Fed Chair position, took a slightly more optimistic approach in commenting on Facebook’s currency plans, stating that “I’m fine if Facebook wants to create a digital currency, but they need to be fully compliant,” and “in no way can this be used for terrorist financing.” While on the topic of issuing digital currency, Mnuchin revealed that “Powell and I have discussed this – we both agree that in the near future, in the next five years, we see no need for the Fed to issue a digital currency.” In addition to discussions within the Trump administration, Powell had also confirmed that his team had “met with Facebook representatives in the months ahead of the Libra announcement,” in “part of the tech company’s global tour of meetings with financial authorities.”

According to reporting from Wired, many regulators “left those meetings unsatisfied,” and that “regulators in the UK, Japan, and Singapore have called for greater scrutiny of Libra in recent weeks.” At the time, the Bank of England expressed that “Facebook has made rounds with regulators around the world to discuss its plans [Libra], including us. There are benefits…but also risks we’re watching, and echo the statement [Bank of England] Governor Carney issued.” Then-BoE governor Mark Carney said he was “open-minded about Facebook’s Libra token,” but “warned mass adoption would force it” to “be subject to the highest standards of regulation.” Mu Changchun, the deputy director of the People’s Bank of China’s payment department told Bloomberg it “won’t be sustainable without the support and supervision of central banks.” France even set up a task force within the Group of Seven (G7) nations to discuss Libra, leading France’s finance minister Bruno Le Maire to state “It is out of question” that Libra be allowed to “become a sovereign currency,” and that “it can’t and it must not happen.”

In addition to these meetings by global financial regulators, President Trump himself held a dinner with Zuckerberg and Facebook board member Peter Thiel at the White House in October 2019 after the Facebook CEO testified to Congress regarding Libra. It was the second time Zuckerberg had met with Trump that Fall after a September 2019 meeting in the Oval Office. A few months before, Trump’s son-in-law and special adviser, Jared Kushner, had emailed Mnuchin in May 2019 regarding a blog post by Peter Thiel protégé Sam Altman titled “US Digital Currency,” in which Altman expressed a novel method for the country to attempt to adopt rather than attempt to stop cryptocurrency:

“I am pretty sure cryptocurrency is here to stay in some form (at least as a store of value, which is the only use case we have seen work at scale so far). There was possibly a time when governments could have totally stopped it, but it feels like that’s in the rearview mirror.

However, I think it’s very possible that the dominant cryptocurrency hasn’t been created yet (Google was years late to the search engine party, and Facebook came long after most people assumed the social network wars were won). And from the perspective of a nation, there are real problems with current systems, especially around pseudo-anonymity, ability to function as an actual currency, and taxability.

Although I don’t think the US government can stop cryptocurrency, I do think it could create the winner–let’s call it “USDC” for US Digital Currency–and fix some challenges that governments currently face with cryptocurrency. I think the first superpower government to do something like this will have an enviable position in the future of the world, and some power over a worldwide currency. The US government could decide to treat USDC as a second legal currency, which would be hugely powerful.”

Kushner asked Mnuchin his thoughts on a U.S. Digital Currency, and even suggested putting together a focus group to discuss: “Steven – Would you be open to me bringing a small group of people to have a brainstorm about this topic?” Kushner wrote. “My sense is it could make sense… and also be something that could ultimately change the way we pay out entitlements as well saving us a ton in waste fraud and also in transaction costs.” This email was revealed in “The Mnuchin Files,” which were obtained by CoinDesk via a FOIA request at the start of 2022. Within these files was the revelation that the Treasury had held a handful of meetings with regulators and private-sector payment companies involved in blockchain. One of these meetings was a March 2, 2020 “crypto summit” that featured prominent figures from The Chain series, including; Meyer Malka of Ribbit Capital, Joey Garcia of Isolas (in addition to positions at Xapo and RSK), Jack Dorsey of Twitter, Jerry Brito of Coin Center, Brian Armstrong of Coinbase, Peter Briger of Fortress (in addition to stints at Goldman Sachs, the Council of Foreign Relations, and PayPal’s Digital Advisory Board), Michael Gronager of the CIA-funded Chainalysis, Wences Casares of Xapo, and Jeffrey Yass of Susquehanna. Thiel was invited to this meeting, but was unable to attend. In addition to these private sector stalwarts, “high-ranking government officials from the Treasury, FinCEN, the FBI and other agencies” were also present.

Coinbase’s Chief Financial Officer, Alesia Haas “has a personal friendship with Secretary Mnuchin,” according to an email sent to the Treasury department. According to commentary from CoinDesk, Haas was previously CFO at OneWest, the bank Mnuchin ran during the 2008 financial crisis, that also employed former Coinbase executive Brian Brooks, who was made Acting Comptroller of the Currency in May 2020 via Mnuchin’s designation. While only at the OCC for a year, Brooks introduced “regulatory initiatives that provided banks with the green light to offer cryptocurrency custody services and stablecoin payment systems,” before leaving to re-join the private sector, including a three-month stint as CEO of Binance.US. The same month of Brooks appointment, May 2020, Haas was present during a Treasury conference call with Coinbase CEO Armstrong. Brooks allowed Anchorage Digital, a Libra Association member advised by PayPal co-founder Max Levchin, to secure a national trust charter and become the nation’s first and only approved “digital asset bank,” just days before he stepped down from his role in January 2021.

Republican Senator Mike Rounds of South Dakota penned a favorable letter to Anchorage in October 2019, becoming the first elected official to “endorse” the Libra project, stating: “Technologies like Libra … have the potential to help unbanked and underbanked consumers right here at home… It would be unfortunate to shun a new solution that could connect more of the most vulnerable Americans to our financial services system… Given the length of time it will take for the Fed to finish FedNow, the Libra Association should not wait to see if recent conversations about a Fed-run digital currency come to fruition.” While Senator Rounds endorsed Facebook’s project, few members of the regulatory arms of the U.S. seemed to share these sentiments.

Facebook, facing social and political prosecution for their involvement in what is now known as the Cambridge Analytica data scandal, was dealing with a crisis of confidence from their users and regulators as the Libra project began. Notably, Cambridge Analytica involved not just one but two companies closely connected to Peter Thiel: Facebook and CIA contractor Palantir. In addition, two prominent figures in the Cambridge Analytica data scandal, which was key to the successful campaign of President Trump, were Steve Bannon and Brittany Nicole Kaiser, with Bannon being referred to as Tether-cofounder Brock Pierce’s “right hand man,” and Kaiser having been the campaign manager for Pierce’s failed 2020 presidential campaign. Pierce would also “pop up” in campaign finance reports as a “Trump campaign megadonor,” who once spent $100,000 for “dinner and access” to Trump and Mnuchin. Zuckerberg himself acknowledged the impact of the scandal on Facebook’s crypto prospects when he told lawmakers in 2019, “I understand we’re not the ideal messenger right now . . . I’m sure people wish it was anyone but Facebook putting this idea forward.”

This self-acknowledged affliction on Facebook’s image led the company to make choice selections while building out the second iteration of Libra’s team. In May 2020, Facebook appointed Stuart Levey – the former Under Secretary for Terrorism and Financial Intelligence at the Treasury Department under President Bush and President Obama, senior staff at the Department of Justice, Chief Legal Officer of HSBC, and a senior fellow at the Council of Foreign Relations – as the CEO of Libra. After the shuttering of Libra/Diem, Levey joined CIA-front Oracle as an Executive Vice President and Chief Legal Officer. Libra would similarly hire Steve Bunnell – former Chief of the Criminal Division at the U.S. Attorney’s office, general counsel for the Department of Homeland Security, and Fellow of the Trilateral Commission – to become its Chief Legal Officer. “The people were really extraordinary, some of the very best,” stated Ari Redbord, who was the Senior Adviser to the Treasury Deputy Secretary and the Under-Secretary for Terrorism and Financial Intelligence. “They basically put together the team that regulators would want to hear from when they are looking [at] how you’re going to build out a compliance programme.”

In an attempt to sway regulators, Libra also brought on former HSBC executive James Emmet as a managing director; Sterling Daines as Libra’s Chief Compliance Officer who previously worked at Credit Suisse, Goldman Sachs, and Deloitte in addition to consulting for the DOJ and the Financial Crimes Enforcement Network (FinCEN); Saumya Bhavsar as General Counsel after experience at Credit Suisse, UBS, Euroclear, and the OCC, in addition to the European Commission and British Parliament; and former aide to the Chairman of the U.S. Senate Banking Committee Susan Zook from Mason Street Consulting to lobby on behalf of Libra.

In addition to Mason Street, Libra spent over $7.5 million in 2019 alone on third-party lobbying firms including Sternhell Group, the Cypress Group, and the law firm Davis Polk & Wardwell, the latter of which had previously employed Fed Chair Jerome Powell and NY Senator Kirsten Gillibrand – one of the authors of the Stablecoin bill. Davis Polk & Wardwell are perhaps best known for representing the Sackler family-owned Purdue Pharma, infamous for their role in the U.S. opioid crisis, and for representing major Wall Street banks and firms during the 2008 crisis while also advising the government on the design of the bail-outs, some of which were deemed quasi-illegal even by its own lawyers. Facebook also hired the lobbying firm FS Vector, which was led by partner John Collins, the former Head of Policy at Coinbase, who had previously served as senior staff for the U.S. Senate Committee on Homeland Security and Governmental Affairs which in 2013 held “the first congressional inquiry and hearing into crypto and blockchain.”

By September 2020, Brock Pierce’s Blockchain Capital, featured in The Chain of Issuance, officially joined the Libra Association, leading Libra’s Head of Policy Dante Disparte to comment that the firm “would advise on the creation of its global payment system” and “make its network of experts and industry figures available for the Association’s use.” Bradford Stephens, a co-founder of Blockchain Capital, also joined the Diem Association board. By December 2020, Facebook had announced the rebranding of Libra to Diem, in no small part due to attempts to distance the project from the social network. “The original name is tied to an earlier iteration of the project that received a difficult reception, shall we say, from regulators and other stakeholders,” CEO Stuart Levey noted at the time.

The initial white paper and project outline for Libra described a synthetic stablecoin that would be pegged to a basket of fiat currencies and government bonds or Treasuries, referred to as the Libra Reserve. According to reporting from CoinDesk in October 2019, Marcus described some alterations to these intentions, claiming that “the new path isn’t necessarily Libra’s desired option.” However, the project must remain “agile.” Marcus further stated that Libra “could definitely approach this with having a multitude of stablecoins that represent national currencies in a tokenized digital form,” and that this is “one of the options that should be considered.” The pivot from a basket to a directly tokenized fiat currency was perhaps influenced by remarks from future SEC Chair and former CFTC Chair Gary Gensler, who argued in July 2019 that “as currently proposed, the Libra Reserve, in essence, is a pooled investment vehicle that should at a minimum, be regulated by the [SEC], with the Libra Association registering as an investment advisor.” Marcus reportedly told Reuters that Facebook still intended to launch Libra in June 2020 despite the regulatory pushback: “We’ll see. That’s still the goal.. We’ve always said that we wouldn’t go forward unless we have addressed all legitimate concerns and get proper regulatory approval. So it’s not entirely up to us.”

In April 2020, Libra announced the “offering [of] single-currency stablecoins in addition to the multi-currency coin,” in its mission to become “a complement” as opposed to “a replacement for domestic currencies” while expressing a “hope to work with regulators, central banks, and financial institutions” to “expand the number of single-currency stablecoins available on the Libra network over time.” The cover letter further explained the change from solely a Libra Reserve model:

“While our vision has always been for the Libra network to complement fiat currencies, not compete with them, a key concern that was shared was the potential for the multi-currency Libra Coin (≋LBR) to interfere with monetary sovereignty and monetary policy if the network reaches significant scale and a large volume of domestic payments are made in ≋LBR. We are therefore augmenting the Libra network by including single-currency stablecoins in addition to ≋LBR.”

In addition to the stablecoin modulation, the updated white paper removed “any mention of ever introducing permissionless participation in the Libra network” with “all counterparties operating nodes in the Libra network” remaining “known to all others.” “Regulators raised thoughtful questions about the perimeter of control for the Libra network – in particular, the need to guard against unknown participants taking control of the system and removing key compliance provisions,” the cover letter states in direct opposition to the original intentions for Libra “to become permissionless.”

By November 2020, just a month before the Diem rebrand, Libra again adjusted their plans to launch a “single dollar-pegged stablecoin next year” according to reporting from the Financial Times. Libra will “simply launch as a single coin” that is “backed 1:1 by the U.S. dollar,” assuming it receives “approval from the Swiss financial regulator FINMA.” The social network still claims that “the other currencies within the basket and the composite may still be rolled out at a later time,” whereas “the dollar-pegged coin could launch as soon as January [2021].” In February 2021, Diem announced a partnership with custodian Fireblocks and First Digital Assets Group to provide “the digital plumbing to allow financial service providers such as banks, exchanges, payment service providers (PSPs) and eWallets to plug into Diem on day one.”

According to previous reporting from Unlimited Hangout, Fireblocks has significant ties to the Israeli military and intelligence state, in addition to the U.S. regulatory regime via its advisory appointments of former SEC Chair Jay Clayton and Coinbase co-founder Fred Ehrsam:

“In 2022, Israel’s Ministry of Finance and the Tel Aviv Stock Exchange established the first digital government bond with Fireblocks (a digital assets security platform). The initiative was called Project Eden and it focused on three features: “the tokenization of fiat, the tokenization of government bonds, and instructions to prompt the exchange of assets.” Fireblock’s CEO and co-founder, Michael Shaulov, was a team leader in an elite military outfit, Unit 8200 (participating in the most demanding and mission-critical IDF projects).

In 2022, Fireblocks was the highest valued digital (tokenized) asset infrastructure provider, supporting over 800 major institutions. That same year, BNY Mellon, the world’s largest custodian bank, tapped Fireblocks to develop a financial infrastructure for managing their digital assets and, since then, Fireblocks has secured the transfer of $2 trillion in digital assets.”

Fireblocks has been funded by BNY Mellon, Silicon Valley Bank, Malka’s Ribbit Capital, Mike Novogratz’s Galaxy Digital, and DRW Venture Capital, among others. Fireblock’s employees include many former Unit 8200 and IDF members, not to mention CLO Jason Allegrante who worked at the Federal Reserve Bank of New York, Davis Polk & Wardwell and the San Juan Mercantile Bank & Trust, which was founded by Nick Varelakis, a former executive of the Tether-affiliated Noble Bank founded by Brock Pierce. In October 2024, Fireblocks announced a $1 million grant program to “boost PYUSD [PayPal’s stablecoin] developer adoption.”

This partnership ultimately yielded little benefit for Facebook, however. In May 2021, the social network again pivoted to partner with Silvergate Bank to issue their U.S. dollar-pegged stablecoin and manage its reserves. “We are committed to a payment system that is safe for consumers and businesses, makes payments faster and cheaper, and takes advantage of blockchain technology to bring the benefits of the financial system to more people around the world,” stated Diem CEO’s Levey. “We look forward to working with Silvergate to realize this shared vision.” Silvergate CEO Alan Lane added his own commentary, stating “we believe in the future of U.S. dollar backed stablecoins and their potential to transform existing payment systems. We’re inspired by Diem’s technology and commitment to building a regulatory compliant payment system.” The press release accompanying the announcement would also note that Diem would be moving its operations out of Switzerland and back to the United States.

Diem’s Levey and his executive team informed the Fed and the Treasury that they were planning on launching their stablecoin with Silvergate at the end of June 2021. In a heated phone conversation, the Fed’s general counsel Mark Van Der Weide told Levey that “the government was uncomfortable condoning any project until it had put a ‘comprehensive regulatory framework’ for stablecoins in place,” while expressing “nervousness about a coin with the potential to ‘massively scale’ as Diem might.” Levey would respond publicly, while demanding “fair and equal treatment.” “Stopping a limited, legally permissible pilot while other stablecoins grow unchecked is neither fair nor equitable.” In response to the “No” from the U.S. regulatory regime, Dante Disparte, then-Executive Vice President at Diem Association, quit in frustration only to join Circle, the issuer of USDC, in April 2021.

In August 2021, Marcus appeared on Bloomberg Technology to discuss the recent developments of Diem:

“In the early days, the idea the big idea of Libra was really one that had a stablecoin that included a number of existing currencies instead of just being aligned with a dollar, which is what is being prepared now. Also it was to be regulated in Switzerland, and since then the team at Diem brought this back to the U.S. to be regulated in the U.S. given it was a dollar stablecoin that was worked on. And so now it’s basically in the process of getting approvals to move forward, and getting the proper licensing structure to actually move forward.”

Diem co-founder Catalini subsequently made comments to CoinDesk to further articulate their plans for the Silvergate collaboration, including a commitment to phase their token out once a CBDC was issued:

“What we’re really suggesting is more of a public-private partnership. We see this almost like a temporary exercise, where issuers like Silvergate in collaboration with Diem will be issuing a diem dollar, but the moment there is a CBDC … We are the only issuer of a stablecoin, to my knowledge, that committed publicly to phasing out our own token and replacing it with a CBDC token.”

Before Diem could launch their stablecoin with Silvergate, in October 2021, Facebook announced yet another partnership with Paxos, a trust company and stablecoin issuer with numerous connections to PayPal, as profiled in The Chain of Issuance. The pilot program was set to “go live in the U.S. and Guatemala” which would allow “users to start trading the Paxos Dollar (USDP)” while “crypto exchange Coinbase will provide custody services for the program.” According to a Coinbase blog post at the time of announcement, Novi users who participated in the pilot could “acquire Pax Dollar (USDP) through their Novi account,” allowing Novi users to “be able to transfer USDP between each other instantaneously,” which “Novi will hold on deposit with Coinbase Custody.” As Paxos’ Head of Strategy Walter Hessert stated in Paxos’ blog post, “This news represents a tide shift in digital assets, as it’s the first time that stablecoins are readily available in a consumer wallet outside of the crypto ecosystem.”

The very same day, October 19, 2021, a group of U.S. Senators – Brian Schatz (D-HI), Sherrod Brown (D-OH), Richard Blumenthal (D-CT), Elizabeth Warren (D-MA) and Tina Smith (D-MI) – penned an open-letter to Facebook demanding the immediate discontinuation of the Novi pilot. According to reporting from CoinDesk, the lawmakers felt that “Facebook cannot be trusted to protect user data or manage a payments network,” in the letter published “just hours after Facebook announced it was launching a pilot program for its Novi wallet subsidiary.” Excerpts from the timely letter include the following:

“On multiple occasions, Facebook has committed not to launch a digital currency absent federal financial regulators’ approval. In prepared remarks before the House Financial Services Committee in October 2019, you said that Facebook would ‘not be a part of launching the Libra payments system anywhere in the world unless all U.S. regulators approve it.’ More recently, David Marcus, the executive overseeing Facebook’s digital currency efforts, said, ‘[w]e are definitely not going to launch without the proper regulatory framework.’

Despite these assurances, Facebook is once again pursuing digital currency plans on an aggressive timeline and has already launched a pilot for a payments infrastructure network, even though these plans are incompatible with the actual financial regulatory landscape – not only for Diem specifically, but also for stablecoins in general. The agencies that oversee the U.S. financial system are studying the risks that stablecoins pose to financial stability. Accordingly, they are considering how to address these inherent risks and clarify regulation and supervision of these products. As Federal Reserve Chair Powell said of stablecoins at a July 2021 Senate Banking and Housing Committee hearing, ‘They’re like money funds, they’re like bank deposits and they’re growing incredibly fast but without appropriate regulation.’ Acting Comptroller of the Currency Hsu recently likened stablecoins to the wholesale funding markets whose collapse precipitated the 2008 financial crisis: ‘In terms of ‘known knowns,’ a run on a large stablecoin could be highly destabilizing.’ Mr. Marcus has cited Facebook’s success in securing ‘licenses or approvals for Novi in nearly every state,’ and concluded that ‘Novi is ready to come to market.’ To be clear, your ability to secure state-issued money transmitter licenses is not equivalent to obtaining the blessing of ‘all U.S. regulators,’ as you said in your testimony two years ago.

In addition to the risks products like Diem pose to financial stability, you have not offered a satisfactory explanation for how Diem will prevent illicit financial flows and other criminal activity. The intergovernmental Financial Action Task Force warned in a report to the G-20 finance ministers that stablecoins’ ‘propensity for mass-adoption makes them more vulnerable to be used by criminals and terrorists to launder their proceeds of crime and finance their terrorist activities.’ The President’s Working Group on Financial Markets said in December 2020 that stablecoins ‘are likely to attract illicit actors and, without appropriate mitigation measures, allow evasion of key public policy objectives.’

Unfortunately, Facebook’s decision to pursue a digital currency and payments network is just one more example of the company ‘moving fast and breaking things’ (and in too many cases, misleading Congress in order to do so). Time and again, Facebook has made conscious business decisions to continue with actions that have harmed its users and the broader society. Facebook cannot be trusted to manage a payment system or digital currency when its existing ability to manage risks and keep consumers safe has proven wholly insufficient.”

The letter concluded, “We urge you to immediately discontinue your Novi pilot and to commit that you will not bring Diem to market.”

The Dismantling of Libra

Despite the pivots, despite the new partners, and despite pandering to regulators across the globe, Diem never actually made it to market. Surprisingly, Facebook and its Libra/Diem agents were quite open in their acknowledgments that this was a likely final outcome, one foreseen by some even from the start of the project. In a conversation with CNBC in November 2019, Marcus was asked by Andrew Ross Sorkin, “What did you think was gonna happen then in terms of the expectation for how [Libra] would roll out and play out in the public?” Marcus’ answer was brief and to the point: “Well, almost as it actually happened.” In line with this sentiment, Facebook itself acknowledged that regulatory issues may be an insurmountable barrier to its Libra project in their quarterly report to the SEC in June 2019:

“Libra is based on relatively new and unproven technology, and the laws and regulations surrounding digital currency are uncertain and evolving. Libra has drawn significant scrutiny from governments and regulators in multiple jurisdictions and we expect that scrutiny to continue. As a primary sponsor of the initiative, we are participating in responses to inquiries from governments and regulators, and adverse government or regulatory actions or negative publicity resulting from such participation may adversely affect our reputation and harm our business.

As this initiative evolves, we may be subject to a variety of laws and regulations in the United States and international jurisdictions, including those governing payments, financial services, and anti-money laundering. In many jurisdictions, the application or interpretation of these laws and regulations is not clear, particularly with respect to evolving laws and regulations that are applied to blockchain and digital currency. These laws and regulations, as well as any associated inquiries or investigations, may delay or impede the launch of the Libra currency as well as the development of our products and services, increase our operating costs, require significant management time and attention, or otherwise harm our business.

In addition, market acceptance of such currency is subject to significant uncertainty. As such, there can be no assurance that Libra or our associated products and services will be made available in a timely manner, or at all.”

In a conversation with Harry Stebbings of 20VC, Marcus explained how the failure to convince regulators on the merits of Diem led him to call it quits:

Marcus: “When I think about the Facebook adventure with Libra – I still call it Libra because it’s a better name than Diem – when I basically decided it it was not worth fighting for it anymore, I felt really good, like really, really good, that we had tried everything in our power and then some to convince regulators and world powers, basically, that this was something of merit and that the world needed, but it just wasn’t going to happen.”

Stebbings: “What was the core reason it wasn’t going to happen?”

Marcus: “I think it was just really hard for regulators and others to accept that Facebook would be at the center of a protocol for money for the internet. And actually that any private company would be at the center of that and that’s why we devolved so much power into this consortium that we didn’t control, that we’re just a member of, but that wasn’t enough. And I think that the political – it was very political to be clear – and I think the political pressure on regulators to not enable a company with the reach of Facebook to actually be at the helm of such a project was just insurmountable.”

In an August 2023 conversation with Bankless, Marcus furthered these sentiments while articulating that “Unfortunately, no one actually believed the power dynamics behind it,” and that the “brand association with Facebook at the time was just not palatable from a political standpoint.” Marcus even went so far as to confirm that “the project was killed or shut down by the government.”

The fact that the government would be so hostile to Facebook’s digital currency efforts is interesting in light of the fact that Facebook was one of the vehicles used to privatize controversial U.S. military surveillance projects after 9/11. Shortly after Peter Thiel and associates created Palantir with CIA funding to privatize, and thus rescue, DARPA’s then-embattled Total Information Awareness program, Thiel became Facebook’s first significant investor at the behest of Sean Parker, whose first contact with the CIA took place at age 16. What Facebook became after the involvement of Thiel and Parker bore such an uncanny resemblance to another shuttered DARPA project of the same era, known as LifeLog, that LifeLog’s architect has even noted the direct parallels. One of these parallels, though left unmentioned by former DARPA project managers, is the fact that Facebook launched the very same day that LifeLog was shut down. Facebook’s long-standing ties to the military/intelligence communities, which go far beyond its origins to revelations about its collaboration with spy agencies as part of the Snowden leaks and its role in influence operations – some of which have involved the Thiel-founded Palantir – makes one wonder if the animosity of the government toward Facebook’s digital currency ambitions was merely a smokescreen and that the real intent was in perfecting the public-private partnership of capital creation for the digital age, specifically its surveillance potential.

Despite the predicted failure to launch, Marcus recognized that Libra “served as a blueprint for a lot of projects that came after.” As Lisa Ellis of Moffet Nathanson explained to FT, Diem “forced regulators and governments to start to educate themselves on the technology and stimulated venture capital investment in other initiatives because there was such a frenzy of focus.”

These sentiments were seemingly confirmed in both the projects later headed by former Libra staff, not to mention the venture capital invested in said businesses. While Marcus’ LightSpark will be discussed later, Sui and Aptos, two “descendants” of Libra raised $300 million and $350 million respectively, both leveraging Libra’s Move programming language. Aptos was funded by Andreessen Horowitz, Multicoin Capital, 3 Arrows Capital, Tiger Global, FTX Ventures and Coinbase Ventures. Sui, the blockchain built by Mysten Labs which added native USDC availability in October 2024, was founded in September 2021 by four former members of Libra. Mysten Labs, which co-authored a troubling paper with O.N.E. Amazon’s co-founders – including the architect of BlackRock’s ETFs, Peter Knez, as described in previous reporting from Unlimited Hangout – is deeply tied to Facebook and its Libra/Diem project. Evan Cheng, Mysten’s co-founder and CEO, was previously the head of Research and Development at Novi Financial, while Sam Blackshear, another co-founder and the CTO of Mysten Labs, was previously the Chief Engineer at Novi, having contributed significantly to the creation of the Move programming language used by Libra/Diem while at Meta. The founding team at Mysten also includes Adeniyi Abiodun and George Danezis, key contributors to Diem’s stablecoin and the aforementioned Move programming language.

In January 2022, the Diem Association formally folded by announcing the sale of its intellectual property related to the Diem Payment Network to their former partner, Silvergate Capital Corporation for $182 million. In the press release, Diem’s CEO Levey eulogized Facebook’s effort, claiming that despite “a senior regulator inform[ing] us that Diem was the best-designed stablecoin project the US Government had seen,” and “despite giving us positive substantive feedback on the design of the network,” it “nevertheless became clear from our dialogue with federal regulators that the project could not move ahead.” Levey commented on the continuing intentions of Libra even after the sale, stating that “we remain confident in the potential for a stablecoin operating on a blockchain designed like Diem’s to deliver the benefits that motivated the Diem Association from the beginning.”

Unfortunately for Levey, and those behind the efforts of the social network’s crypto project, Silvergate itself would be shutdown in March 2023, by the very same regulators that had first shuttered Libra.

The Regional Banking Crisis

Silvergate Bank was founded as a savings and loan association in 1988 by Dennis Frank and Derek Eisele. In 1996, Frank, an ex-Goldman Sachs banker, reorganized the S&L into a regional bank servicing the Southern California area after recruiting investors he had met from his stint at Goldman. Frank convinced the board of Silvergate to cease its mortage operations in 2005, a few years before the subprime debacle. Thus, when the Great Financial Crisis struck in 2008, Silvergate remained solvent and ready to lend. At the onset of the crisis, Frank asked Alan Lane to join the bank as CEO, having spent time at Independence One Bank, Business Bank of California, and Southwest Community Bancorp. According to reporting from CNBC, Lane shared that Frank told him “I’m a Wall Street guy and I need a banker as a partner, would you join me?”

While the bank’s books were balanced, the standard issue of banking remained: how to garner customer deposits in order to fund loans. At the start of the 2010s, Silvergate would turn towards the oft-unbanked cryptocurrency industry to fill their coffers. In 2013, Lane purchased his first Bitcoin, partially out of interest in a new industry, and partially out of fear of how this upstart currency could disrupt the banking sector at large. “I thought ‘uh oh, what am I gonna do?'” Lane expressed upon discovering the blockchain. “I put two and two together and I thought, well it might disrupt banking long-term but in the short-term these companies need banks. They’re not doing anything wrong. They’re not doing anything illegal or immoral. If they were we wouldn’t be banking them.”

In 2013, Lane brought in the executives from a handful of “young crypto exchanges” in order to assess their areas of friction, and how Silvergate could help the blossoming blockchain industry. A year prior, Silvergate had received Federal Reserve status, and in the Summer of 2014, Lane had invited the California State Banking Department board and the Federal Reserve Bank of San Francisco to share what he had learned from the exchanges, and more specifically present the merits of Bitcoin. “That open communication with the regulators early on has proven to be really foundational,” Lane would share. “We’re very collaborative with the regulators, we ask them if they have suggestions, and what we can do better.”

Silvergate quickly added the Winklevoss twin’s Gemini exchange, Paxos, Kraken, and others to their list of crypto-clients, helping the bank source much needed deposits, while also providing an olive branch to a smattering of mostly unbanked blockchain stalwarts. As FTX’s Sam Bankman-Fried put it himself in a now-deleted testimonial on Silvergate’s website, “Life as a crypto firm can be divided up into before Silvergate and after Silvergate. It’s hard to overstate how much it revolutionized banking for blockchain companies.” In January 2014, Silvergate brought on on their first crypto customer, SecondMarket, a firm started by Barry Silbert of the not-yet-founded Digital Currency Group.

SecondMarket was built to facilitate the sale of private securities, such as shares of companies not yet publicly listed. Its investors included FirstMark, Chamath Palihapitiya’s Social Capital, Temasek Holdings, Silicon Valley Bank, and Li Ka-shing among others, the latter being the controversial father of Block.one investor, Richard Li, as noted in The Chain of Consensus. SecondMarket was also advised by Steven Bochner – a former Chairman of the board of directors at Nasdaq, a former member of the board at the SEC, and a member of the board at the Federal Reserve Bank of San Francisco – in addition to being advised by Alan Denenberg, a partner at Davis Polk & Wardwell.

SecondMarket later rebranded as Genesis Trading in April 2015 with Genesis Trading naming their new CEO, Brendan O’Connor, after Silbert resigned in July 2014 in order to form the Digital Currency Group. O’Connor told CoinDesk that Genesis Trading was “the largest over-the-counter market maker” in cryptocurrency, as well as being the “first broker-dealer in the U.S. regulated by the Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC) to actively trade bitcoin.”

Nearly a decade later, both Genesis Trading and Silvergate would find themselves caught in the middle of the Terra-LUNA and FTX controlled demolitions. Terra’s Do Kwon accused Genesis Trading, via their subsidiary Genesis Asia Pacific, of collaborating with Sam Bankman-Fried’s FTX and Alameda Research in order to attack the peg of the algorithmic stablecoin TerraUSD, known as UST. Kwon, in a series of tweets dated December 7, 2022, suggested that “the time has come for Genesis Trading to reveal if they provided the $1B USD shortly before the crash to SBF or Alameda.” The $1 billion dollar purchase was indeed brokered by Genesis Trading’s Asia Pacific, in addition to another $500 million sourced from Three Arrows Capital, with the deal being officially announced as closed on May 5, 2022. Genesis Trading’s own Twitter account explained that “the Genesis aspect of the deal represents the first of its magnitude, with Genesis Asia Pacific Pte. Ltd. taking on 1 billion UST in exchange for $1 billion worth of BTC.” By May 12, Terra’s LUNA had lost 99.7% of its value, and the $1 billion of UST stable now held by Genesis was effectively worthless.

Kwon also questioned SBF himself, specifically looking for answers as to why his trading desk Alameda had borrowed over $1 billion worth of Bitcoin from Voyager during the de-pegging, alluding to possibility that the borrowing was related to a large short position on the Terra ecosystem. Kwon would also “reveal” that Alameda was responsible for the “large currency contraction that UST went through in Feb 2021” due to Alameda selling 500 million in UST “in minutes” to “drain the Curve liquidity pools during the Magic Internet Money (MIM) crisis.” FTX would officially lose around $100 million on the failure of LUNA. However, reporting from the New York Times would back Kwon’s assertion that SBF’s firms were behind the massive sell orders of TerraUSD. As covered inThe Chain of Consensus, the fallouts of Terra-LUNA’s collapse were crucial in creating the context that later led to FTX’s insolvency. It is of note that the Bitcoin that had once backed Terra-LUNA’s stablecoin was algorithmically liquidated via Binance, which was a long time banking client of Silvergate, having reportedly moved some $50 billion for the exchange through Silvergate accounts since 2019. The CEO of FTX’s Digital Markets, Ryan Salame, asserted via a Tweet that “Silvergate advised all our banking activity.” In the aftermath of their bankruptcy filing, FTX revealed that Genesis Global Capital “turned out to be the largest unsecured creditor of FTX” to the tune of $226.3 million owed.

The SEC went on to sue Silvergate for their participation in the FTX scandal, with the July 2024 suit claiming “SCC, Lane, and [former Chief Risk Officer Kathleen] Fraher misrepresented the operational and legal risks facing the Bank by falsely stating in SEC filings and other public statements that the Bank had an effective BSA/AML compliance program tailored to the heightened risks posed by its crypto asset customers.” According to reporting from Blockworks, the Silvergate staff “were able to trace $9 billion worth of transfers from FTX-related entities,” yet the lawyers at the SEC wrote: “Most troubling to the BSA staff was the trend of funds that flowed from FTX’s custodial accounts — which held FTX customer funds — to a series of non-custodial FTX-related entities’ accounts, followed by transfers of these funds to other third parties — either through the SEN or to accounts external to the Bank.” According to reporting from NYMag, SEC filings showed that “funds intended for FTX were deposited into the Silvergate account of an Alameda subsidiary” in order to “hide the fact that they were going to Alameda.” This subsidiary, North Dimension, claimed to be “an online electronics retailer” according to “a now-defunct website that appears to have been fake since nothing could be purchased on it.”

SEN, or the Silvergate Exchange Network, had become a critical piece of infrastructure for inter-exchange settlement in addition to providing much needed settlement services for stablecoin providers. As Alan Lane explained on Bloomberg’s OddLots podcast in 2022:

“We are the regulated on-ramp from the U.S. dollar and other fiat currencies into the bitcoin and digital asset market. And then likewise, we are the off-ramp from that the digital asset market back into fiat currencies… So let’s talk about the stablecoins. The stablecoin issuers who use our platform are all of the regulated, U.S. dollar-backed stablecoin issuers… We don’t bank the algorithmic stablecoin offerings, nor these other stablecoins that are maybe collateralized by other digital assets. Those don’t need a U.S. dollar bank because they’re not backed by USD. Importantly, we also don’t bank Tether and believe it or not, we had the opportunity to work with Tether very early on but because they weren’t inside the United States. And, you know, again we are very serious about regulation, and so we looked at it and we thought you know this is an interesting idea… But they’re offshore. We can’t really get our hands around their regulatory status in the United States and so we were not able to bank them back then. This was back in 2017, nor do we bank them today. So that’s what we don’t do.

What we do is for USDC, for the Pax Dollar which is issued by Paxos, for the Gemini Dollar issued by Gemini and for TrueUSD. They use the SEN and our API for the minting and burning of their tokens. Those tokens are issued when a dollar hits their Silvergate bank account and it’s all programmatic. So if somebody wants to purchase USDC from Circle, what they would do is they would send dollars into Circle’s bank account at Silvergate. And when those dollars hit the bank account then, at that moment, there is an API call from Silvergate to Circle that says ‘we just received x amount of dollars from this customer.’ And at that point, Circle knows we have the dollars in our possession. So they turn around and they mint the USDC token and send it to the wallet address of that institution that is looking to purchase the USDC. And then the same thing happens in reverse. If someone wants to redeem their USDC and go back to U.S. dollars, they send the USDC to the wallet at Circle. Circle, at that point, once they have possession of the USDC, they then send an instruction to us via API and we then, in turn, will send the dollars back to that prior USDC token holder.”

According to a SEC filing with data as recent as October 2018, Silvergate serviced 35 digital currency exchanges, including “the 5 largest U.S. domiciled digital currency exchanges,” holding just over $792 million of deposits. The filing stressed the importance of SEN, while also highlighting the substantial growth of Silvergate’s “digital currency initiative.” In 2014, with only 8 customers, the bank held $6 million in crypto-related deposits, whereas by 2018, the bank had 483 crypto clients, with $1.6 billion in deposits on the bank’s books.

It was also in 2018 that Silbert’s Digital Currency Group invested in Silvergate Capital Corporation itself, selling 9.5 million shares for $114 million in funds to “further support the bank’s fintech deposit initiatives.” By November 2020, Bitcoin custodian and stablecoin bank Xapo – featured in The Chain of Custody – would lose their Director of Institutional Investments, the 13-year Morgan Stanley vet Jonathan Melton, after he announced he was to join Silvergate as the Director of Digital Asset Lending, in part to help expand the bank’s SEN Leverage product. In June 2021, the former CLO at Coinbase, Michael Lempres, joined Silvergate as Chairman, taking over for Dennis Frank. Prior to Coinbase, Lempres was an executive at Andreessen Horowitz and a senior attorney at Silicon Valley Bank. At SVB, Lempres was instrumental in working with regulators to expand their booming cryptocurrency clients, and even started working at SVB’s customer, Bitnet Technologies, in 2015. BitNet was formed by former Visa employees after Visa purchased payment infrastructure firm Cybersource in 2010, and was funded by Blockchain Capital, Digital Currency Group, and Stephens Investment Management. In 2016, Lempres was additionally elected the mayor of Atherton, a small town in Silicon Valley that boasts Google’s Eric Schmidt and Facebook’s Sheryl Sandberg as residents. In the same announcement, Silvergate would add Aanchal Gupta, a former risk and security manager at Microsoft, Facebook, and Yahoo!, to its board. In 2019, Antonio Martino joined Silvergate as CFO, having been a senior manager at Bank of Montreal prior to 17 years at Citigroup.

In July 2021, Silvergate announced they had garnered $4.3 billion in new deposits from “new and existing digital currency customers” in Q2 of 2021 alone. The lion’s share came from crypto exchanges, which “deposited $2.4 billion in cash during the quarter,” while institutional investor deposits “grew by $1.8 billion.” Silvergate noted that 120 new digital currency customers were added in the quarter, bringing their total to 1,224, while the bank’s SEN had “processed 137,947 transactions and transferred $239.6 billion over the network” during the quarter. In the announcement, Lane commented on the growth of deposits, while speculating that future growth might come from a venture such as Facebook’s Diem:

“In the second quarter, average deposits from digital currency customers grew by $3.5 billion to $9.9 billion. Driven by the record volume we experienced on this, we are prudently deploying these deposits into interest earning assets, including the purchase of $4.5 billion of both short and long duration securities during the quarter…We are looking at our capital needs and anticipated growth to be capital efficient and having runway to support that growth. We’re also looking at off balance sheet mechanisms to take on that growth that might come from a stablecoin project like Diem.”

Of importance in regards to the bank’s eventual failing, Silvergate’s Tier 1 leverage ratio, which “measures equity capital against risk-weighted assets,” stood “well above the regulatory threshold of 5% at 7.9% this quarter” but down from “the 9.68% level it was at in the first quarter of this year [2021].” As noted above, Diem was shut down and its assets sold to Silvergate at the end of January 2022. On March 29, 2022, Silvergate issued a $205 million Bitcoin-collateralized loan with MacroStrategy, a subsidiary of Michael Saylor’s MicroStrategy, in the Washington, DC-based software company’s now-successful attempt to become one of the largest Bitcoin holders in the world. Interestingly, one of the other largest Bitcoin holders in the world, Block.one/Bullish Global, had taken a $225 million loan itself from Silvergate just the day before, on March 28, according to an SEC filing. Silvergate was quickly becoming an indispensable pillar in the cryptocurrency industry, but before 2022 could close, the entire industry, Silvergate included, would find itself scrambling to make depositors whole.

On November 7, 2022, Tyler Pearson, the son-in-law of CEO Lane, was demoted from his position of Chief Risk Officer, in addition to other executive level shakeups. Four days later, on November 11, FTX filed for Chapter 11 bankruptcy. Less than two weeks later, on November 23, Block.one CEO Brendan Blumer purchased a 9.27% stake in Silvergate, promptly upping the investment to 9.9% the next month, making EOS’s developer Block.one the largest single investor in Silvergate. According to reporting from Protos, Citadel Securities and Cathie Wood’s ARK Invest also purchased millions of dollars worth of shares of Silvergate, while millions worth of “advances from the Federal Home Loan Bank (FHLB) were taken out by Silvergate.”

On December 5, Silvergate filed a letter with the SEC where Lane claimed “we conducted extensive due diligence on FTX and Alameda Research,” and “we have a resilient balance sheet and ample liquidity.” However, a month later, on January 5, 2023, Silvergate revealed that, due to its client FTX collapsing, a massive bank run had taken place, with $8.1 billion, over 68% of its deposits, leaving the bank in Q4 2022. This quickly “led to an acute liquidity crunch, which forced Silvergate to sell off illiquid securities for a loss of over $700 million and to borrow $4.3 billion in short-term advances from Federal Home Loan Banks.” Likely in response to the balance sheet revelation, the price of Silvergate stock “declined by $11.54 per share, or 22.6%, from a closing price of $50.96 per share on November 7, 2022, to a closing price of $39.42 per share on November 8, 2022,” on “unusually high trading volume,” as noted by Cohen Milstein’s case study. Silvergate also announced they fired about 40% of their workforce, with 200 employees receiving pink slips.

Despite the tanking stock price, and accusations of fund mismanagement, Silvergate instead saw a string of positive announcements from traditional investment stalwarts as the winter of 2023 carried on. On January 31, 2023, Larry Fink’s BlackRock– a major shareholder in FTX – reported a 7% stake in Silvergate, after a filing with the SEC revealed that the firm increased their position from the previously reported 5.9%. Two days later, on February 2, State Street reported a 9.32% stake in Silvergate, while on February 14, Citadel Securities also revealed a 5.5% stake in the California-based bank.

While the traditional asset managers were seemingly buying up the deeply-discounted shares, March 2023 would fare far worse for Silvergate’s digital currency clients. On March 2, Coinbase, Michael Novogratz’s Galaxy Digital, Paxos, Circle, CBOE’s Digital Markets, Crypto.Com, Gemini, LedgerX and Bitstamp all suspended banking partnerships with Silvergate. The next day, March 3, Silvergate announced that SEN would be shut down “effective immediately,” after making a “risk-based decision.” This was likely due in part to a bankruptcy judge ordering the bank to release nearly $10 million to their former client, BlockFi, an issue which was ordered the same day.

Signature Bank, which failed two days after Silicon Valley Bank, had its own inter-crypto exchange network, known as Signet. Signature had relationships with many cryptocurrency companies, many of which had begun in 2018, including Circle, Coinbase, Kraken and even FTX. The bank was to the New York Community Bancorp subsidiary, Flagstar Bank, one week after the FDIC assumed control of Signature. Trump’s Treasury Secretary, Steve Mnuchin, would later lead an investment package to rescue NYCB with $1 billion in March 2024, leading the firms to rename the now-merged banks into Flagstar Financial in October 2024. Joseph Otting, a “longtime banking executive and close ally of Mr. Mnuchin,” the former President of OneWest Bank and the Chief Operator at Trump’s OCC before Brian Brooks, would become its CEO.

On March 7, Block.one, by then known as Bullish Global, liquidated its Silvergate position after expressing concerns about the bank’s inability to file its 10-K and the bank’s announcement of the shut down of SEN, revealing it had “no exposure to Silvergate.” The next day, March 8, Silvergate shut down operations after a voluntary liquidation to federal regulators. Certainly, a voluntary liquidation is an unusual happening in the banking industry, and thus there has been much speculation as to why Silvergate would do such, including a well-researched piece from Pirate Wires suggesting that the Biden administration’s regulators used “an informal mandate” which limited “crypto deposits at 15 percent” to bring the bank down.

While the exact reason why the bank shuttered will likely never see the light of day, there were certainly firms that benefited from the voluntary liquidation. On March 23, MicroStrategy announced they were able to repay their loan early due to the bank’s closure “without prepayment fees” and at a “21% discount,” paying only $161 million of the $200 million owed. On March 8, the day the bank was closed, Marathon Digital, which had opened a $200 million line of credit from Silvergate, announced they had halted its credit facilities, helping remove nearly $50 million in debt and save around $5 million in annual borrowing costs.

A month before the bank liquidated, on February 14, Yahoo! reported that George Soros’ Soros Fund Management, in addition to its sizable investments in Marathon and MicroStrategy, had placed “100,000 shares worth of put options” via a short position on the soon-to-be-shutdown Silvergate. Short sellers during the regional banking crisis made over $3.5 billion in mark-to-market profits in March 2023 alone, with Silicon Valley Bank and Signature Bank – the second- and third-largest bank failures respectively in U.S. history – having been in the top 20 most-shorted regional bank stocks, according to reporting from Yahoo!.

The Silicon Valley Bankruptcy

Silicon Valley Bank was founded in October 1983 by Stanford professor Bob Medearis and Wells Fargo executive Bill Biggerstaff, after the two former Bank of America managers decided to found a bank to fund an infantile Silicon Valley. The idea for the bank first emerged during a game of poker in Pajaro Dunes, California that featured Starr Colby, who was the head of Lockheed’s “pilot-less drone program” at the time. Medearis claimed the deregulation from the Reagan administration created the environment for such a financial institution, and the lack of venture capital in the region created ample opportunity to finance the students and entrepreneurs, kickstarting the computer revolution in earnest.

According to reporting by Vox, by 2021 SVB claimed to bank “nearly half of all U.S. venture-backed startups,” not to mention being a banking partner for “a lot of the venture capital firms” that fund those startups. By the time of its failure in March 2023, SVB held more than $200 billion in assets for California’s tech industry, making it the largest bank to fail since the Great Recession. But before it failed, the bank had become an indispensable pillar in the FinTech industry of the valley. Dallas Business Journal‘s Mark Calvey reported that executives at SVB had told him that “the bank’s focus on working closely with VCs and their portfolio companies was actually a way to reduce risk.” According to Calvey, if “top-tier venture firms,” such as Sequoia or Kleiner Perkins, were “pouring millions into a promising startup,” SVB felt “more comfortable in extending venture debt.” The once Treasurer of Silicon Valley Bank, David Jaques, went on to join PayPal extremely early in the company’s history, helping the firm properly comply with banking regulations.

Unfortunately, it was some of these venture capital stalwarts that would later help trigger the run that would bring the bank down on March 10, 2023. Two days before, on March 8, SVB Financial Group, the parent company of the bank, announced it would undertake a $2.25 billion share sale after offloading $21 billion worth of securities at a $2 billion loss. Deposits at the bank had soared after unprecedented pandemic-era stimulus coincided with effectively zero-percent interest rates, leading the bank to invest in longer duration bonds in the search of yield. While the purchase of U.S. government debt is often considered risk-free, banks that get stuck holding long duration bonds during an interest rate hike – such as the fastest rate hike in U.S. banking history in 2022-2023 after the highly inflationary period during government lockdowns – often have to sell at a loss before the bonds can mature to cover fleeing deposits.

Astute venture funds that had their money in SVB – often in egregious excess of the FDIC’s insurance limit of $250,000 – such as Peter Thiel’s Founders Fund and Fred Wilson’s Union Square Ventures advised their clients to pull their deposits out of the bank before the losses tallied higher. On March 9, the top executives at Founder’s Fund decided to move the firm’s capital to an assortment of larger banks, with their CFO Neil Ruthven stating, “Thursday morning [March 9] it was clear we were in the middle of a bank run, and we reacted in line with our fiduciary duties.” Other firms, such as Sequioa Capital, Coutue, and the several unnamed founders that shared comments privately to Axios, also moved their funds out of SVB that day as well. The Information reported that Union Square Ventures directed companies in their portfolio to “only keep minimal funds in cash accounts.” According to reporting from John Titus for BestEvidence, 10 customers alone had $13 billion in deposits at SVB, while $42 billion would leave the bank in just 6 hours. By the end of the day, the bank’s shares would drop over 60%, taking out nearly $9.4 billion in the stock’s market cap.

The priming for such a bank run, however, was far from built in a day. While the match in this regional banking bonfire was these aforementioned, influential VC firms advising partners to quickly pull funds, the tinder was these “killer whale accounts” depositing billions beyond typical FDIC insurance and the kindling was the bank investing in long duration bonds during a low interest rate environment. Ultimately, the fuel wood itself was the Trump administration’s deregulation of the banking industry in 2018.

In an effort to defang the Democrat-led Dodd-Frank regulation during the Obama administration, the Republican-controlled Congress passed legislation in May 2018 that weakened certain restrictions on banks, specifically upping the “too-big-to-fail” threshold from $50 billion in total assets to $250 billion as it relates to specific reporting and capital requirements. Due to this change, all three of the banks that failed in 2023 no longer had to “undergo stress tests,” or “submit so-called living wills,” both of which are “safety valves designed to plan for financial disaster.”

The bill, signed by President Trump and known as the Economic Growth, Regulatory Relief and Consumer Protection Act, lifted this provision to $100 billion for 18 months, and eventually raised it to $250 billion in an effort to make it easier for smaller banks to lend more and save costs on reporting and stress testing. Banks with less than a quarter trillion in assets would no longer need to undergo annual stress tests conducted by the Federal Reserve, nor would they have to conduct their own semiannual tests. In addition, banks with under $10 billion in total assets would no longer have to honor the Volcker Rule, named after former Fed Chair Paul Volcker, which banned banks from proprietary trading and made it illegal for banks to “place bets with money from deposits.” Finally, the capital requirements for banks no longer deemed “systemically important financial institutions” were loosened, freeing up capital for increased lending.

Senator Elizabeth Warren of Massachusetts, a proud heel of cryptocurrency, would specifically point to these reforms as being a critical component to the bank’s failure, stating: “President Trump and congressional Republicans’ decision to roll back Dodd-Frank’s ‘too big to fail’ rules for banks like SVB – reducing both oversight and capital requirements – contributed to a costly collapse.” Of note, as reported by The Lever, SVB had spent “more than half a million dollars on lobbying” to “hike the regulatory threshold to $250 billion” in 2015. Despite the bank itself having pushed for the exact regulation that helped set up its failure, many prominent financial figures came out in defense of the customer deposits, including Bill Ackman, Larry Summers, PayPal’s David Sacks, and Sam Altman.

Even Treasury Secretary Janet Yellen stated “We are concerned about depositors and we’re focused on trying to meet their needs.” According to reporting from The Washington Post at the time of the bank’s failure, “Federal authorities are seriously considering safeguarding all uninsured deposits at Silicon Valley Bank, weighing an extraordinary intervention to prevent what they fear would be a panic in the U.S. financial system.” The Post further noted that “Although the FDIC insures bank deposits up to $250,000, a provision in federal banking law may give them the authority to protect the uninsured deposits as well if they conclude that failing to do so would pose a systemic risk to the broader financial system. In that event, uninsured deposits could be backstopped by an insurance fund, paid into regularly by U.S. banks.”

Former Treasury Secretary and former Xapo advisory board member Larry Summers called for quick action to protect deposits, stating “What is absolutely imperative is that, however this gets resolved, depositors be paid back, and paid back in full…this is not the time for moral hazard lecture.” The former COO of PayPal, David Sacks, tweeted “Where is Powell? Where is Yellen? Stop the crisis NOW. Announce that all depositors will be safe. Place SVB with a Top 4 bank. Do this before Monday open or there will be contagion and the crisis will spread.” OpenAI’s CEO Sam Altman similarly tweeted that “TL;DR: at this point, to be certain of avoiding catastrophe, the FDIC needs to temporarily guarantee all deposits. other solutions might work, but this is the best one.” On March 12, two days after the bank failed, the Treasury, the Fed and the FDIC announced “steps to ensure deposits will be paid in full,” stating:

“After receiving a recommendation from the boards of the FDIC and the Federal Reserve, and consulting with the President, Secretary [Janet] Yellen approved actions enabling the FDIC to complete its resolution of Silicon Valley Bank, Santa Clara, California, in a manner that fully protects all depositors… Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.”

Endeavor board member Matt Harris – a Bain Capital Venture partner and NY Fed Fintech Advisory Group member discussed in The Chain of Custody – commented on the hypocrisy of the moment, tweeting “Looking forward to the tweets from the VCs who sparked this bank run congratulating themselves on their prescience.” According to their website, Silicon Valley Bank was an official bank partner of Endeavor.

While the U.S. regulators showed up at the right time to help ensure depositors were made whole, only a few weeks before SVB went under, the bank’s CEO, Greg Becker, had already begun offloading shares of the soon-to-be-collapsed bank. According to reporting from Newsweek, Becker had sold “more than $3.5 million in stocks,” with a February 27 filing with the SEC demonstrating that precisely “$3,578,652.31 in common stock” was liquidated “two weeks before SVB was shut down by federal regulators.” These 12,451 shares sold would account “for 10 percent” of “his roughly 98,000 shares,” while another SEC filing would show that the bank’s Chief Financial Officer, Daniel Beck, had also sold “$575,180 in stocks” on “the same February day.” SVB also reportedly paid out bonuses to U.S. employees mere hours ahead of the take over by regulators.

It wasn’t just executives at the banks, or Soros’ short positions, that benefited from the regional banking crisis. According to a study from McKinsey, deposits flowed “out of midsize U.S. banks after the regional banking crisis,” while “the largest and smallest banks added deposits.” One of these “smallest banks” was a new entity known as Mercury, which was founded in 2017 and has raised over $163 million from investors such as Andreessen Horowitz, Coatue, Naval Ravikant, Ron Conway’s SV Angel, and CRV as well as “angel investors, athletes, entertainers and customers.” Mercury saw more than $2 billion in deposits in the first handful of days after SVB’s collapse, with around 8,700 new customers in March 2023 alone. “It was by far our biggest month we’ve had at Mercury, a huge inflow,” Mercury CEO and co-founder Immad Akhund told TechCrunch. “We tried to prioritize people coming from SVB and even built some tools so they could connect to SVB accounts… We were already growing and we saw an approximately 20% jump because of what happened with SVB.” By July, Mercury had seen over 26,000 new customers since March’s regional bank crisis.

While the immediate uncertainty of the bank failure surely ruffled some feathers of the various depositors at SVB, the U.S. regulatory system promised to make them whole, and thus clients such as Sequoia Capital, the Tencent-backed Kanzhun, the Bezos, Milner and Mubadala Investment Company-backed Altos Labs, among others, would all escape unscathed. SVB’s largest creditor aided by the government rescue was be the issuer of the stablecoin USDC, Circle Internet Financial, which had had $3.3 billion deposited at the bank. According to a press release from Circle, this amounted to about 8% of the USDC total reserve, with a remaining 77% of its reserve being collateralized short-dated U.S. Treasury bills held by BNY Mellon and managed by BlackRock.

In the failure of SVB, USDC would “depeg” from the USD, falling as low as 86 cents. Howard Lutnick, the CEO of Cantor Fitzgerald which custodies Tether’s Treasury holdings, took a dig at Circle during his speech at the Bitcoin2024 conference in which he stated: “Think about it: Circle had USD $3.3 billion of your reserves uninsured in the Silicon Valley Bank when it went bust.” Tether’s Paolo Ardoino also commented on the situation, saying “You might remember that I was very public about my concerns about MICA and the requirement of 60% in non-insured cash deposits, like what happened to Circle with Silicon Valley Bank in 2023. They lost $3 billion and then survived because the FDIC stepped in.”

Despite allegations of starting the bank-run himself, PayPal co-founder Peter Thiel claimed to lose $50 million personally with the failure of SVB. Thiel’s Founders Fund had been investing in Bitcoin since 2014 and realized nearly $2 billion in profits from their 8-year cryptocurrency investment in March 2022, when Bitcoin was nearly $50,000 a coin. Founders Fund would begin investing again in the digital asset industry shortly after the banking crisis, putting $100 million each in Bitcoin and Ethereum.

Six months after the crisis, in August 2023, PayPal announced their own stablecoin, PYUSD, with all eyes turning towards Congress for the legislative clarity via their oncoming regulation that would determine the winners and losers of the “Great Stablecoin War.” The House Financial Services Committee’s Republican chair, Representative Patrick McHenry, commented that the PYUSD announcement was an indication that stablecoins “hold promise as a pillar of our 21st century payments system.”

Two weeks before Paxos and PayPal launched PYUSD, the U.S. House Financial Services committee advanced the first iteration of their stablecoin bill. McHenry stressed the importance of the bill, stating: “We are currently at a crossroads to keep America at the forefront of digital asset innovation. Congress is making significant, bipartisan progress on legislation to ensure the U.S. leads the financial system of the future.”

The Consolidation: The Gillibrand-Lummis Stablecoin Bill

Since 2022, the efforts to pass legislation dealing the crypto industry have been largely spearheaded by Kirsten Gillibrand (D-NY) and Cynthia Lummis (R-WY). The two female senators, who both receive a significant amount of funding from the crypto industry, tried but failed to get their first attempt at a crypto oversight bill passed in 2022 as did their second attempt in 2023. The Gillibrand-Lummis bills have generally favored giving the CFTC more oversight over the industry than the SEC (leading to criticism from the SEC’s Gary Gensler) while the most recent iteration would ban algorithmic stablecoins and ensure that stablecoin regulations are used to maintain “the U.S. dollar’s dominance.”

Ultimately, the bill – among other things – is seen as encouraging banks to begin issuing dollar-pegged stablecoins, having them compete directly or form alliances with existing stablecoin issuers like Circle, Paxos and Tether. Over the past few years, where concern over a Central Bank Digital Currency (CBDC) has become prominent in the U.S. and elsewhere, top crypto executives – like Coinbase’s Brian Armstrong – as well as CIA veterans have stated quite plainly that dollar-pegged stablecoins were to become the U.S.’ de facto CBDC in order to give the U.S. a “first-mover advantage” in digital currency issuance, as dollar stablecoins are “already here” whereas a CBDC would take years to develop. In addition, the policy of the Federal Reserve since last year has made it clear that they favor “private stablecoin issuance rather than official CBDC issuance.” With stablecoins being just as programmable and surveillable as CBDCs, and some stablecoin issuers like Tether already allied with U.S. intelligence and security agencies, the current stablecoin bill is poised to pave the way for the U.S.’ de facto CBDC and to ensure that Wall Street and well-established titans of digital finance like PayPal have the advantage.

Given the above, Kirsten Gillibrand’s involvement in the bill makes sense. After starting her career as a law clerk in Albany, NY, Gillibrand worked at the global, white-shoe law firm Davis, Polk & Wardwell, whose alumni include current Fed chairman Jerome Powell, from 1991 to 2000. The firm, since its earliest years, has been closely connected to J.P. Morgan (now a major donor to Gillibrand’s campaigns) and Wall Street in general. One telling example of the role of the firm in Wall Street’s political machinations occurred during the 2008 financial crisis, when the firm represented the public sector, i.e. the Treasury Department and Federal Reserve Bank of New York, as well as the Wall Street banks deemed to have played a role in creating the crisis, including Citigroup. Subsequently, the firm helped develop the government response to the crisis including by helping draft the relatively toothless Dodd-Frank Act which, over a decade after its passage, has done next to nothing to rein in the “too big to fail” banks or prevent the government’s “privatize the gains, socialize the losses” policy with respect to bank failures. Davis, Polk & Wardwell continues to give heavily to Gillibrand’s political war chest as does another law firm where she used to work, Boies, Schiller & Flexner.

While Wall Street banks like J.P. Morgan and Wall Street law firms like Sullivan & Cromwell donate heavily to Gillibrand, she has more recently taken on important players in the crypto industry as donors. The biggest of these is Coinbase, while other donors include Uniswap Labs. Another important donor is Fred Wilson’s Union Square Ventures, which has backed Coinbase as well as MondoDB. Andreessen Horowitz is another significant donor to Gillibrand, which has made many investments in the crypto space, including being the bulk of the funds behind Multicoin Capital, which is also backed by Union Square Ventures. Multicoin Capital itself donates significant sums to Gillibrand and is also a major donor to Cynthia Lummis. As will be discussed shortly, Mulitcoin Capital has significant ties to the stablecoin industry, particularly the stablecoin issuers most favored by the Gillibrand-Lummis bill.

While Gillibrand may have started off as a corporate lawyer, politics was always within her sights. Indeed, Kirsten Gillibrand’s political career is largely thanks to her very politically-connected family. Gillibrand’s father, Douglas Rutnick, a career lobbyist who has represented Morgan Stanley, Lockheed Martin and even the NXIVM sex cult, was a long-time “close associate” and friend of former New York Senator Alfonse D’Amato. Rutnick has been described as a “beneficiary” of the corrupt Democratic Party-run “machine” in New York’s capital Albany, with local papers noting that Rutnick “both served as Albany County public defender and ran a private law firm representing clients with business before the city” that was later accused of engaging in “questionable deals.” Gillibrand’s grandmother, Polly Noonan, was also intimately connected to the “Albany machine” as she was the long-time mistress of former Albany mayor Erastus Corning, a Democrat, and served as vice chair of New York’s Democratic party in the 1980s. That appointment was allegedly a favor granted by former New York governor Mario Cuomo, as Noonan had raised significant campaign funds for his gubernatorial bid prior to her appointment.

Gillibrand later claimed that it was her father’s ties to D’Amato that scored her a college internship at D’Amato’s office in Albany, NY when he was a serving Senator and marked her earliest foray into politics. Though she subsequently stated that she didn’t personally meet D’Amato until years later over “one lovely dinner together,” D’Amato – a scion of New York’s Republican party – was a central figure when it was announced that Gillibrand would inherit Hillary Clinton’s Senate seat after Clinton joined the Obama administration as Secretary of State in 2009.

D’Amato later claimed to have had nothing to do with Gillibrand’s appointment and Gillibrand later claimed that D’Amato did nothing to influence her politics, instead claiming that Andrew Cuomo and Hillary Clinton (both extremely corrupt) had helped secure her political future. She specifically identifies Clinton as a mentor. However, for anyone familiar with New York politics, where the back-door deal and close-knit power networks reign supreme, the reality is likely quite different from what they publicly professed.

D’Amato is noteworthy for a few reasons. First, he was slavish to criminal banks throughout his career, many of which funded his political campaigns. For instance, he was a major supporter of the repeal of Glass-Steagall, which allowed for the mergers that produced many of the “too big to fail” banks and later helped produce the 2008 financial crisis. D’Amato, while head of the Senate Banking Committee, had tried to speed up the passage of legislation that would repeal it. D’Amato had previously been bought out by Drexel Burnham Lambert, altering his stance on junk bond legislation that could have mitigated financial crises of the late 1980s, including that which led to Drexel’s bankruptcy in 1990. Gillibrand is backed by many of the same interests as J.P. Morgan – run by former Travelers Group executive Jamie Dimon – and Apollo Global Management – created by Drexel Burnham Lambert executives led by Drexel’s former head of M&A Leon Black – are among the current top donors to Gillibrand.

D’Amato is also important for his ties to organized crime networks that have become deeply embedded in U.S. politics and the American intelligence community, as discussed in the book One Nation Under Blackmail. For example, D’Amato was closely tied to both Roy Cohn and Cohn’s long-time law partner and right-hand man Tom Bolan, who was a close aide and advisor to D’Amato. Cohn was also reported to have been a major influence on D’Amato’s (unsuccessful) efforts to reduce sentences for a convicted mafia member as well as to push to re-evaluate murder charges against Gambino mafia boss Paul Castellano, a client of Cohn and Bolan’s law firm. As noted in One Nation Under Blackmail, Cohn – also widely recognized as Donald Trump’s mentor – was intimately connected to New York power networks as well as organized crime factions that worked with intelligence to blackmail prominent figures in government by hosting “parties” where targets were encouraged to have sex with minors.

Members of this faction have ties to the so-called “Mega Group” of billionaires, which is alleged to include figures like Ronald Lauder, heir to the Estee Lauder fortune, whose failed political career was backed by D’Amato. In addition, D’Amato’s later political campaigns intimately involved the Republican strategist Arthur Finkelstein, who is also credited with securing Benjamin Netanyahu’s successful win as Israel’s Prime Minister in 1999. Finkelstein’s role in the Netanyahu campaign had been brokered by Ronald Lauder, who had also donated heavily to Netanyahu that election cycle.

Doug Rutnick, Gillibrand’s father and D’Amato’s close friend, as noted earlier, was also a lobbyist for the NXIVM sex cult, which was closely associated with the Bronfman family. The Bronfmans have a long-standing association with organization crime and Charles Bronfman co-created the aforementioned “Mega Group” with Leslie Wexner, the main patron of Jeffrey Epstein, in 1991. Both the Bronfmans and Wexner greatly influence and are major donors to the Israel lobby organization AIPAC, Gillibrand’s top donor from 2019-2024.

According to reports, Rutnick was paid $25,000 a month by NXIVM in 2004. Though the group’s sex cult aspect was still unknown at the time, it had been derided as a “cult” before he was hired. However, Gillibrand’s associations with NXIVM, unfortunately for her, appear to go far beyond just her father, with her stepmother having also been wooed by the group. The NXIVM executive who courted her stepmother, Nancy Salzman, is also alleged to have sat with Gillibrand at a Hillary Clinton fundraiser in 2006. A key figure in NXIVM, Clare Bronfman, was a major donor to Clinton and also contributed $2,400 to Gillibrand’s 2010 campaign to maintain Clinton’s old Senate seat.

The founder of NXIVM, Keith Raniere, is the son of James Raniere, a New York-based advertiser who handled his agency’s account for Seagrams and knew Edgar Bronfman Sr. professionally during the 1970s. Keith Raniere, an avid fan of Ayn Rand, reportedly considered the population to be divided into two classes – parasites and producers – which helped shape the cult’s views and even the 12 commandments of the organization. The 11^th NXIVM commandment, according to reporting from The Observer, required all members to “pledge to ethically control as much of the money, wealth and resources of the world as possible” due to being “essential for the survival of humankind for these things to be controlled by successful, ethical people.” Despite most New Age organizations’ rejection of materialism, NXIVM understood the importance of money in the modern age. As Sara Bronfman explained in 2009, the year Bitcoin was launched, “in order to survive in a Western capitalist country, one needs to be able to exchange the products of their efforts for money that’s going to allow them to live.”

Lummis, like Gillibrand, is also funded by Multicoin Capital. In Lummis’ case, Multicoin Capital was her 4^th largest donor last campaign cycle and the biggest giver to her campaign from the crypto industry. Multicoin Capital is mainly backed by Andreessen Horowitz as well as other figures linked to Peter Thiel or Thiel protégés, such as David Sacks of the so-called “PayPal Mafia.” Multicoin investors such as Chris Dixon and Elad Gil have ties to companies created by Thiel protégé Palmer Luckey, Oculus VR (acquired by Facebook) and the defense contractor Anduril. Gil is also an investor in Coinbase in addition to Multicoin. Mulitcoin, along with several of its backers (Chris Dixon, Andreessen Horowitz and Union Square Ventures), invested a significant sum alongside Peter Thiel in the Brock Pierce-founded firm behind EOS, Block.one.

Multicoin’s portfolio includes Paxos (which is also backed by Thiel’s Mithril Capital) and Worldcoin (founded by Thiel protégé Sam Altman) as well as Algorand, Ethereum and the now defunct crypto exchange FTX. Multicoin was significantly affected by FTX’s collapse in late 2022, as it had around 10% of the assets for one of its three funds at FTX and also had significant exposure to FTX’s over leveraged token FTT. Unlimited Hangout previously reported on FTX’s close ties to the stablecoin Tether as well as FTX’s own ambitions to back a different dollar-pegged stablecoin via its affiliation with the highly suspect Moonstone Bank. Sam Bankman-Fried, prior to FTX’s implosion, had spoken of a “stablecoin war” where different players in the crypto industry were fighting for dominance over whose stablecoin would dominate in a post-regulatory environment. Bankman-Fried notably had played an outsized role in efforts that preceded those of Gillibrand and Lummis to regulate digital assets in the United States.

Multicoin itself is also very interested in and has invested in stablecoins. They have a particularly interesting relationship with Circle, which issues the USDC stablecoin. Circle Ventures is an investor in Multicoin, while Sei – which is backed by Multicoin – is an investor in Circle. According to Lummis, Circle is poised to benefit significantly more than its competitors from the stablecoin legislation she recently introduced with Kirsten Gillibrand.

Multicoin also led the Series A funding round for the Mountain Protocol, which produces USDM, a yield-bearing stablecoin backed entirely by short-term U.S. treasuries. Multicoin supports USDM in part because “USDM has the strongest regulatory moat today” compared to other dollar stablecoins and is “significantly ahead” when it comes to imminent stablecoin legislation. They write that they “are optimistic that USDM will become the market leader and scale to billions of people.” Coinbase Ventures also made a major investment in the Mountain Protocol, which is partnered not only with Coinbase itself but also the CIA-funded Chainalysis and the Israeli intelligence-linked Fireblocks. Within four months from its launch, USDM had become the largest Treasury-backed dollar stablecoin in the world.

Notably, yield-bearing stablecoins are absent from the Gillibrand-Lummis bill, even though such stablecoins can come with significant risk and often misstate the yield as gains rather than simply keeping up with monetary dilution. The lack of interest in addressing this type of stablecoin may be related to the fact that players much larger than Multicoin Capital, such as BlackRock, are launching their own yield-bearing stablecoins. BlackRock’s yield-bearing BUIDL token. Circle, which has a major alliance with BlackRock, offers conversion from BUIDL to its USDC stablecoin and USDM also only currently converts into USDC. In addition, Paxos, a Multicoin Capital and Thiel-backed stablecoin issuer partnered with PayPal, has also entered the playing field with their Lift Dollar (USDL) stablecoin.

In February 2024, both Treasury Secretary Yellen and Fed Chair Powell made remarks to Congress that the U.S. needs a legislative framework for stablecoins, stressing the importance they play in global dollar hegemony. Both Gillibrand and Lummis view their legislative efforts as largely aimed at ensuring dollar dominance. Lummis’ other crypto proposals, such as a recent introduction of bitcoin strategic reserve bill, are also aimed at “supercharging” the dollar. Lummis announced the strategic reserve proposal at Bitcoin 2024 in Nashville, commenting that “Establishing a strategic Bitcoin reserve would firmly secure the dollar’s position as the world’s reserve currency into the 21st century and ensure we remain the world leader in financial innovation.”

“Passing a regulatory framework for stablecoins is absolutely critical to maintaining the U.S. dollar’s dominance, promoting responsible innovation, protecting consumers and cracking down on money laundering and illicit finance,” according to Gillibrand. She also stated that:

“The bipartisan Lummis-Gillibrand Payment Stablecoin Act preserves the dual banking system and gives both federal and state agencies roles in chartering and enforcement. It protects consumers by mandating one-to-one reserves, prohibiting algorithmic stablecoins, and requiring stablecoin issuers to comply with U.S. anti-money laundering and sanctions rules. To draft the strongest bill possible, our offices worked closely with the relevant federal and state agencies and I’m confident this legislation can earn the necessary support in the Senate and the House.”

In April, Lummis and Gillibrand introduced the Payment Stablecoin Act of 2024. Gillibrand referred to it as a “landmark bipartisan legislation that creates a clear regulatory framework for payment stablecoins that will protect consumers, enable innovation, and promote U.S. dollar dominance while preserving the dual banking system.” The bill itself would also allow stablecoins to be “issued by non-depository trust companies (nonbanks) when the nominal value of all its tokens is under $10 billion.” The text itself states that stablecoin issuers with a market cap above $10 billion would be required to be “a depository institution authorized as a national payment stablecoin issuer.”

According to reporting from Forbes, companies such as Circle or Paxos would “have two options to be able to continue to issue stablecoins” if this bill was to become law by “either a state nonbank pathway” or as “a depository institution at the federal or state level that becomes a national payment stablecoin provider.” Importantly, the bill expressly prohibits “any other form of stablecoin issuance” beyond being backed by 1:1 reserves of dollar denominated assets, including algorithmic payment stablecoins such as the failed TerraUSD, as discussed in The Chain of Consensus. The bill also contains an “extraterritorial clause” which means that, if codified into law, even companies operating outside the U.S., such as Tether, would be required to abide by the legislation simply due to dealing with U.S. dollar tokens.

“In order to meet the growing demand for our ever-evolving financial industry, we need to craft legislation that strikes the careful balance of establishing a clear and workable framework for stablecoins while protecting consumers,” explained Lummis. “Together, Senator Gillibrand and I worked to preserve our dual banking system and install guardrails that protect consumers and prevent illicit finance while ensuring we don’t derail innovation. Passing this bipartisan solution is critical to maintaining the U.S. dollar’s dominance and making certain the U.S. remains the world leader in financial innovation.”

The content of the bill was advised via “multiple rounds of technical assistance” from representatives of the Board of Governors of the Federal Reserve System, Department of the Treasury, the National Economic Council, the New York Department of Financial Services, Wyoming Division of Banking and the Federal Deposit Insurance Corporation. While developing the landmark bill, both Lummis and Gillibrand “worked closely” with “key industry lobbies and trade associations,” publishing six pages of statements from entities including the Digital Chamber of Commerce, the Association for Digital Asset Markets, the Blockchain Association, Fireblocks, Multicoin Capital, the Crypto Council for Innovation, Kraken, Coinbase, and even FTX’s SBF, among others.

Included in this collection of statements was a quote from J. Christopher Giancarlo – the former Chairman of the CFTC, current board member of Paxos and The Digital Chamber of Commerce, and co-founder of the Digital Dollar Foundation – which stated:

“The Responsible Financial Innovation Act is what our country needs at this moment – a thoughtful, comprehensive approach to regulation that recognizes the potential of digital assets to drive American competitiveness on the global stage. The bill provides a common-sense path for digital asset exchanges to register with the CFTC and balances consumer protection and innovation. I look forward to working with Sen. Lummis and Sen. Gillibrand to ensure we have legal clarity for digital assets soon.”

Preserving The Dual Banking System: The Private-Public Partnership

The preface to the 2008 edition of Who Controls The Internet? by Jack Goldsmith and Tim Wu notes the pivot within the “net neutrality” movement. They note that, during the 1990s, the core belief was that government censorship of the internet was impossible, while the 2000s were spent lobbying the government to uphold and protect free speech on the web from threats emanating from internet service providers and adversarial foreign governments. The parallels to the cryptocurrency industry are astounding, complete with the formation of entirely new lobbying groups that perpetuate the notion that the adoption of the technology once framed as “kryptonite” to the nation state must now obtain “clarity” from legislators and regulators.

Two of the largest lobbying groups in the industry, Coin Center and The Digital Chamber of Commerce, have numerous connections to the parties covered thus far in The Chain series. Coin Center was previously advised by Xapo’s Wences Casares, in addition to both DCG’s Silbert and Paxos founder Charles Cascarilla being early funders. The original iteration of Coin Center’s advisory board featured Union Square Ventures’ Fred Wilson, Marc Andreeseen, World Economic Forum and Council of Foreign Relations member John Villasenor, and Jason Thomas, the creator and director of the FBI’s Internet Crime Complaint Center (IC3) and Associate Director of the Center for Intelligence and National Security Analysis (CINSA). In addition, Lightning Lab’s Elizabeth Stark is listed as Coin Center Fellow. Notable early Bitcoiners Balaji Srinivasan and Jeff Garzik were also listed on the founding Board of Directors, with Srinivasan also being credited as a co-founder of Coin Center.

The Digital Chamber of Commerce was founded by CEO Perianne Boring, a former television anchor and “legislative analyst in the U.S. House of Representatives.” The current Board of Advisors boasts heavy U.S. regulatory stalwarts; including former SEC Chair Paul Atkins; former CFTC Chair J. Christopher Giancarlo; the godson of David Rockefeller and former Richard Nixon speech writer, George Gilder; former J.P Morgan executive and creator of the credit default swap, Blythe Masters; the DCG’s Rumi Morales; former Trump White House Chief of Staff Mick Mulvaney; and DRW and DRW Cumberland founder Don Wilson, among others.

Giancarlo, lovingly referred to by some as “CryptoDad,” has served on numerous boards related to the blockchain industry, including BlockFi, Paxos, and PolyMarket, among others. He previously had been appointed by President Obama to the CFTC in 2013, and was eventually made its chair by President Trump in 2017. Giancarlo also was appointed a Director of the Board Risk Committee for Nomura Holdings, in addition to his stint on the board at the American Financial Exchange (AFX). The AFX was founded by Dr. Richard Sandor in order to create new lending rate benchmarks in lieu of LIBOR (London Inter-Bank Offered Rate), referred to as AMERIBOR.

Richard Sandor is credited with inventing financial derivatives in the 1970s and, during the 1980s, he was an executive at the scandal-ridden bank known for its role in the junk bond scandal and S&L crisis, Drexel Burnham Lambert. Shortly after Drexel’s implosion due to its financial criminality, Sandor was tapped by the Bush administration to develop a market-based “solution” for the acid rain crisis, resulting in sulfur emissions trading that was pioneered by groups like Howard Lutnick’s Cantor Fitzgerald. Shortly after the success of the sulfur emissions trading scheme, Sandor was sought out by Maurice Strong, a Rockefeller crony who served as founding director of the UN Environmental Programme and who was later fled to China to avoid prosecution for the egregious mishandling of UN funds in what is remembered as the oil-for-food scandal. Strong tasked Sandor with developing another market-based “solution” to carbon dioxide emissions in order to help implement Agenda 21, the pre-cursor to today’s “sustainable” development goals or SDGs. Sandor, with input from Strong, spent the next few years developing what is now known as the cap and trade system and has since become an advocate for creating similar markets for access to clean water and air.

Upon his announcement of joining Sandor’s AFX, Giancarlo stated: “Dr. Richard Sandor is one of the true visionary developers of new financial products. He has done it again with AMERIBOR and AMERIBOR Futures, recognizing that LIBOR will not be replaced with a singular benchmark, but with several. AMERIBOR is aptly designed to serve the particular need of America’s regional and community banks for an unsecured lending rate that is transparent, hedge-able and IOSCO compatible.”

PolyMarket, a prediction market that has come under scrutiny recently for facilitating alleged whale manipulation of their 2024 Trump/Harris election bet, announced the addition of Giancarlo as Chair of its board in May 2022 shortly after settling with the CFTC for $1.4 million. In May 2024, PolyMarket’s Series B founding round was led by Thiel’s Founders Fund, in addition to Ethereum founder and 2014 Thiel Fellow, Vitalik Buterin, among others. Upon the raise, PolyMarket also brought on former President of Cantor Fitzgerald’s Cantor Exchange, Richard Jaycobs, as the Head of Market Expansion, with reporting from Yahoo! claiming he will work “closely” with Giancarlo.

Three months after Giancarlo was appointed to the CFTC, in November 2013, the CFTC charged Donald R. Wilson and his company DRW Investments with price manipulation of interest rate swaps futures contracts, which “allegedly affected the prices of over 1,000 futures contracts,” according to the complaint. However, in December 2018, the CFTC lost their case against Wilson, having their compliant dismissed by Manhattan Circuit Judge, Richard Sullivan. Upon the ruling, according to reporting from Reuters, Giancarlo stated that “the regulator was considering its next steps,” but would “continue pursuing market manipulation cases, including at trial.” Judge Sullivan, a former counsel for Marsh & McLennan, was nominated by President Trump to the U.S. Court of Appeals for the Second Circuit in May 2018, and was confirmed by the Senate in October 2018, just two months before the ruling. On February 27, 2019, the CFTC announced they would not appeal the dismissal from Sullivan. “[A]fter careful consideration of the issues, as well as discussions with agency staff and Commissioners, Chairman Giancarlo has decided that the agency will not appeal the district court’s decision in CFTC v. Wilson et al.,” according to CFTC Director of Public Affairs, Erica Elliott Richardson.

Exactly one week later, on March 6, the Chamber of Digital Commerce announced the addition of Wilson to its advisory board, in addition to seven new companies joining their executive committee, including Block.one, DRW’s Cumberland, MakerDao and TrustToken, the issuer of the stablecoin TrueUSD. Upon his appointment, Wilson stated that “as a member of the Chamber of Digital Commerce, we [DRW’s Cumberland] look forward to engaging the policy community around the importance and potential of these technologies and helping this emerging market mature.” Six months later, in September 2019, Giancarlo was also appointed to the Board of Advisors for the Chamber of Digital Commerce.

Giancarlo had previously been the U.S. legal counsel to Fenics Software, an online U.S. Treasury market formed by Cantor Fitzgerald subsidiary BGC after selling their eSpeed product to Nasdaq. BGC is led by CEO and Chairman of the Board, Howard Lutnick, who now co-chairs the Trump transition team. In July 2022, BGC facilitated “the first ever intermediated block trade of CME Group Bitcoin options contracts in Asia” between Wilson’s Cumberland DRW and Goldman Sachs. Upon the settlement, Paul Kremsky, the Global Head of Business Development for Cumberland, stated that “Since Cumberland DRW first established an OTC cryptocurrency desk in 2014, the goal has always been to help usher institutions into the digital assets space.” Kremsky also added that “BGC will be a key partner in opening the growing asset class to a broader group of banks, funds, and investors, and Cumberland is extremely excited to work with them as a liquidity provider.”

Cumberland’s partnership with Tether (USDT) custodian Cantor Fitzgerald should be unsurprising, given that Cumberland is the second largest Tether customer, only behind FTX’s Alameda Research arm. Cumberland was considered an “incredibly important market maker on Binance” according to reporting from Protos, with approximately 79% of all USDT issued to Cumberland being sent directly to the world’s largest crypto exchange. Cumberland had also worked with Silbert’s Genesis lender, as was noted in a Tweet from Cumberland’s social media account. Cumberland is also “a very active participant” with other stablecoin providers, including Circle’s USDC and Binance’s BUSD (issued by Paxos), in addition to sending USDT to Coinbase, FTX, BitFinex and Huobi, among others.

Cumberland also participated in the 2021 President’s Working Group in their discussions on stablecoins, providing five recommendations to the administration, including giving “oversight authority to established banking regulators.” Cumberland also made clear the surveillance potential of digital dollars on blockchains, stating “stablecoins enable funds to be transferred 24/7, in real-time, globally, and with traceability,” while explaining that “existing banking solutions are unable to offer the same capabilities.” Both Coin Center and the Digital Chamber of Commerce offered similar comments regarding the future regulation of stablecoins. Interestingly, the Google Analytics ID for the Digital Chamber of Commerce’s website is reportedly linked to two of Tether co-founder Brock Pierce’s former companies, including Noble Bank and Blockchain Capital.

In August 2023, Coin Center referred to The Clarity for Stablecoins Act as one of “three good crypto bills” which “incorporates our guidance that stablecoins comprised purely of software not be subject to covered by regulation.” Coin Center would later push back on the Stablecoins Act provision for a two year moratorium on algorithmic stablecoins, citing “First and Fourth Amendment concerns” within the clause that states it is “unlawful for any person to engage in the business of issuing, creating, or originating an algorithmic payment stablecoin.” However, they would later backpedal and call this approach “not unreasonable” due to it being “not an outright permanent ban, but a two-year moratorium.” “It only prohibits future activity and does not affect existing projects,” the group explained, and “it does not prohibit speech, only the issuance of tokens that the ‘originator has represented will be converted, redeemed, or repurchased for a fixed amount of monetary value’.”

In October 2024, the Digital Chamber of Commerce (DCC) commented on the “Senate version” of the Clarity for Payment Stablecoins Act, remarking that “the absence of a clear regulatory framework has held back its full potential.” Cody Carbone, the President of the DCC added that “Stablecoin regulation is no longer just an option – it’s a necessity that’s been overdue for too long.” Previously, in April 2023, the group had made general comments to the House Committee on Financial Services, articulating that “We believe clear, consistent legal standards for stablecoins are critical to the success of the digital asset and Web3 industries globally, preservation of U.S. primacy in development and innovation, and for U.S. national security by upholding and extending the dollar’s world reserve currency standing.”

The Digital Chamber has since expanded on this concept of dollar hegemony via stablecoins in a section titled “Stablecoins will preserve the U.S. dollar as the worlds reserve currency”:

“A federally regulated stablecoin regime that requires backing by cash and cash equivalents like U.S. treasury notes does not infringe on government’s issuing authority, it extends the use of the dollar. As digital assets pegged to a stable value, such as the U.S. dollar, stablecoins offer a unique combination of stability and accessibility, allowing for seamless cross-border transactions while minimizing the risks associated with volatility. This can help maintain global confidence in the U.S. dollar and ensure its continued dominance in international trade and finance.

Additionally, the widespread adoption of stablecoins can foster financial inclusion, bringing the benefits of digital currency to unbanked and underbanked populations around the world. By promoting the use of stablecoins, the U.S. can leverage the advantages of digital currencies to extend the reach and influence of the dollar in the rapidly evolving global financial landscape.”

This idea of stablecoins helping retain U.S. dollar hegemony was echoed by President Trump in his keynote at Bitcoin 2024. As articulated in previous reporting on Unlimited Hangout, Trump’s speech included intentions to “create a framework to enable the safe, responsible expansion of stablecoins […] allowing us to extend the dominance of the U.S. dollar to new frontiers all around the world.” Trump even went so far as to say that “those who say that Bitcoin is a threat to the dollar have the story exactly backwards” and that “Bitcoin is not threatening the dollar.” Of note is Trump’s comment that “there will never be a CBDC while I’m President of the United States,” despite his intention to use dollar-denominated stablecoins to spread the U.S.’s dominance across the globe.

This concept can also be found in a May 2024 post by Morgan Beller, the previously mentioned co-founder of the Libra project, titled “Stablecoins Are Defense Tech.” Beller’s missive states in the first paragraph that “One of my personal motivations behind Libra was national defense.” The piece also stated the following:

“Stablecoins are defense tech…The basic idea is that the future of money will be more digital than it is physical. And stablecoins – in this case, cryptocurrency pegged to a stable currency like the USD – are the best tool we have for digitizing the dollar. If we don’t digitize the dollar, we risk losing its position at the center of the financial world. If that happens, we will lose a critical pillar of US stability and leadership that most people are taking for granted right now…

If you are a stablecoin founder and you haven’t been thinking of yourself as a defense tech company, think again. And if you are a regulator who has been sleeping on stablecoins and the role they will play in the hegemony of the dollar, wake up… If we want to create stable infrastructure – for finance and even democracy (bear with me) – then we need to move quickly…

Being the world’s reserve currency is not a right. It is a privilege. It comes with some financial perks, like never having to go through an exchange process for trade, or the fact that we borrow money at lower interest rates (and, in a different light, it makes it easier for us to impose sanctions on other countries).

But the real power is security. If the dollar were to collapse it would have huge repercussions throughout the world economy. Much of the world’s monetary system is held together by the fact that the US is stable. Which means we are less likely to experience targeted attacks, financial warfare, hostile takeover…or worse…

From our American POV, the USD not as much a weapon as it is a shield…It has always confounded me that there are still US regulators that don’t see safe and secure stablecoin projects as our (benign) trojan horses for continued dominance of the US dollar. If you want to proliferate your currency through many stable assets, across many secure exchanges, what better option do you have than a stablecoin? It’s also free marketing for USD – an immediate way to give access to those dollars to millions more people around the world who want them through a decentralized network…

A diverse stablecoin ecosystem is exactly what we want to see. Not just for consumers, but for national security. Many projects pegged to the USD, means the dollar is way harder to overtake…

We have a network of stablecoin founders throughout the US who can step in to solve this problem for us, if we provide them with the resources and support they need. The crypto-obsessed out there like to focus on individual coin market caps, but come on guys: this is a team sport.

Technically and organizationally, stablecoins will allow the dollar to digitally proliferate…This is what I hope all stablecoin founders will come to realize, if you don’t know it already. Your work is a matter of national defense, and even a matter of democracy.”

This sentiment seems widely shared, with many key figures in both the public and private sectors seeing the future of the dollar in privately-issued dollar stablecoins in lieu of a U.S. issued central bank digital currency so that it perpetuates the “dual banking system,” allowing the government to service its budget and debt via the selling of Treasuries to private banks and companies, such as stablecoin issuers. It should be of little surprise that many of the companies poised to capture this trillion dollar industry via king-making regulation, including many of the firms covered thus far in The Chain series, have numerous connections to the first major player in online settlement, PayPal.

Regulatory Approval: The King’s New Market

One of Libra’s other co-founders, Christian Catalini, recently co-authored a piece for Harvard Business Review in August 2024 titled “The Race to Dominate Stablecoins.” The article opens with “Stablecoins, a novel form of interoperable and programmable money, have the potential to rewire the global financial system.” Catalini, along with his co-author Jane Wu, expresses the thesis that stablecoins are poised to displace legacy payment networks, with the “promise to change the balance of power in these industries,” and thus “the companies that control the stablecoin market will wield substantial influence over the future of money.” The piece furthers that the concept of “The Stablecoin War” has come to a head, and the winner(s) of this conflict will become dominating figures in the new global financial system, making parallels to other technology platform wars such as HD-DVD vs. Blu-Ray, VHS vs. Betamax, or even Macintosh vs. PC. Unsurprisingly, the piece, excerpted below, paints an outcome favorable to PayPal’s PYUSD issued by Paxos vs. the incumbents, Tether and Circle:

“The conclusion of a platform war is always the same: A dominant design emerges, everyone switches over, and the conflict is done…But while the blockchains war might be over, the one for stablecoin dominance is just beginning…

Stopping the consortium behind Libra only bought incumbents time, and things are heating up again… Regulation gives incumbents a chance to leverage their distribution and lobbying to slow things down to a halt while building a counteroffensive. This is what killed Libra, and others may face the same fate soon.

Stablecoins present a second chance at reforming the financial system. But whether they will be able to do so depends on the stablecoin wars — and whether regulators tip the scales in favor or against innovation…Irrespective of the unpredictable level of regulatory interference in the stablecoin wars, the most important question is whether we will end with one or two global players leading, or with a swarm of commoditized issuers.

For both Tether and Circle, we believe the strategy is simple: Adapt to tighter compliance and consumer protection standards without losing the ability to monetize the stablecoin ecosystem. This is a delicate balancing act, as stricter regulation will inevitably limit how issuers create and capture value…

Paxos is betting on a world with many stablecoins. By positioning itself as a stablecoin infrastructure provider, Paxos helps others issue branded stablecoins. This has been so effective that when PayPal decided to enter crypto, it partnered with Paxos. While PayPal’s PYUSD only has $350 million in circulation, market cap is the wrong metric if you care about payments rather than crypto trading and decentralized finance (DeFi). For stablecoins that want to compete with the card companies, total payments volume (TPV) will be a better metric, and that’s where PayPal could rapidly overtake USDC thanks to its existing merchant business…

So while Tether and Circle have dominated the crypto era, graduating from this niche, unregulated market to billions of consumers and businesses is a fundamentally different game.”

Catalini left Meta after the Libra project was shuttered, only to shortly join former PayPal President David Marcus at LightSpark. LightSpark later partnered with Xapo, Ripio, and Coinbase in order to help facilitate their Lightning Network builds, including launching their Universal Money Address standard with Xapo and Ripio. Both of which boast ties to the Endeavor Argentina network, with Endeavor itself largely funded by Pierre Omidyar, the previous owner of PayPal who remains its largest shareholder. LightSpark’s roster is chock full of former PayPal employees, including Marcus, VP of Product Nicolas Cabrera, CMO Christina Smedley, Operating Partner Tomer Barel, in addition to former Libra team members, including Catalini, Head of Engineering Vincent Durmont, CTO Kevin Hurley, CDO Geoff Teehan, and VP of Finance, Mary Kauffman. LightSpark was funded by investments from Mickey Malta’s Ribbit Capital, Paradigm, a16z crypto, Kushner’s Thrive Capital, Beller’s NFX, and Coatue, among others.

In October 2024, LightSpark announced their own Bitcon Layer 2 platform Spark, which enables native issuance of stablecoins, while also allowing the transfer of stablecoins issued by other means, including Lighting Lab’s Taproot Assets. LightSpark also announced an upgrade to their UMA product, UMA Extend, which integrates Bitcoin’s Lightning Network directly with traditional banking systems for 44 fiat currencies in over 100 countries. VP of Product Nicolas Cabrera stated that “this is the first time connecting the Lightning Network to traditional banking routes and bank systems.” Marcus himself stated that “At the end of the day, if you build a more efficient network that enables global money movements to move faster, cheaper, in real time 24/7 with no blackout dates, then that’s where money is going to flow and the financial system and the ecosystem players are just going to need to adapt to that.” Due to Diem’s previous partnership with Paxos, the issuer of PYUSD, and Marcus’ relationship with PayPal, it seems likely that LightSpark could eventually add support for PayPal’s stablecoin.

Paxos’ Head of Strategy, Walter Hessert, expressed positive sentiments on PYUSD’s adoption in a conversation with Bitcoin Magazine in October 2023, stating “PYUSD certainly has an opportunity to be one of the largest, if not the largest stablecoin in the market over the coming years.” Hessert also stated that “we’re going to be in a market that is trillions of dollars of stablecoins, which are privately issued and highly regulated,” whereas “PayPal has set the standard for regulatory oversight.” In a slight to these incumbent issuers, Hessert asserted that “the USDT or USDC models of regulation,” or “lighter forms of oversight” are not “going to be sufficient anymore, and “that PayPal has a really, really great opportunity to take a big share of this next wave of growth.”

This regulation, which Hessert claims will dictate the future of stablecoins, is set to come to a head during the imminent 2024 Presidential election. Trump’s pick for Vice President, J.D. Vance, who has numerous connections to Peter Thiel and the extended PayPal mafia, was formerly a principal at Thiel’s Mithril Capital, a major investor in Paxos. Leading Trump’s Transition Team is Howard Lutnick, the CEO of Cantor Fitzgerald which custodies Tether’s Treasuries, who has recently come under scrutiny for “improperly mixing his business interested with his duties standing up a potential administration.” According to reporting from Politico, Lutnick took meetings on Capitol Hill under the guise of transition team matters, then “allegedly us[ed] the opportunity to talk about matters impacting his investment firm, Cantor Fitzgerald,” which included “high-stakes regulatory matters involving its cryptocurrency business.” In regards to the conflict of interest, Richard Painter, a White House ethics lawyer who served in President George W. Bush’s administration, articulated “to have a guy who is in the crypto industry picking financial regulators, I think, is an invitation for trouble.”

In addition, another member of the Trump transition team, former Presidential candidate Vivek Ramaswamy, who dropped out to campaign on behalf of Trump and whose top aide joined the Trump campaign in November 2023, founded Strive Asset Management in 2022, and was promptly funded by Lutnick and Palantir’s Joe Lonsdale, after receiving seed funding from Peter Thiel.

In September 2024, Trump announced plans to launch his own cryptocurrency, known as World Liberty Financial, which pegged Rich Teo – the co-founder of Paxos, as noted in The Chain of Issuance – to serve as their stablecoin lead. World Liberty Financial’s mission, according to a Tweet, is to “make crypto and America great again by driving the mass adoption of stablecoins and decentralized finance.” Another tweet from World Liberty Financial reads, “By spreading U.S.-pegged stablecoins around the world, we ensure that the U.S. dollar’s dominance continues, securing America’s financial leadership and influence on the global stage.”

In August 2024, Anchorage Digital announced a partnership with PayPal in which they would offer stablecoin rewards for holders of PYUSD. Anchorage Digital, as noted previously in The Chain series, was the first and only digital asset bank to receive a Federal Charter charter from the OCC in January 2021, which was given to Anchorage in the final days of the Trump administration. The head of the OCC at the time, Brian Brooks, a former co-worker at OneWest Bank with Secretary Mnuchin and the former Chief Legal Officer of Coinbase, left the public sector to join Binance’s U.S. exchange for three months before joining Bitcoin miner Bitfury . Anchorage has been funded by Visa, BlackRock, Ron Conway’s SV Angel, PayPal Ventures, Blockchain Capital, Alameda Research, Goldman Sachs, Andreessen Horowitz, Khosla Ventures, Naval Ravikant and Leon Black’s Apollo. In October 2024, Anchorage investor PayPal Ventures announced the future use of PYUSD as a funding mechanism for all future investments. Anchorage’s board features Blockchain Capital co-founder, P. Bart Stephens, in addition to a16z’s Chris Dixon, and Paradigm’s Kate Biber. It is also currently advised by former U.S. Fed Governor Kevin Warsh, former Soros Fund manager Stanley Druckenmiller, and PayPal co-founder Max Levchin.

While the initial promise of Bitcoin and cryptocurrency was to minimize government control over the issuance of money, the killer use case of blockchain technology thus far has been the tokenization of dollars backed by U.S. Treasuries. This premise, albeit with the added public and immutable ledger, is shockingly similar to the current “dual banking system” referenced by Gillibrand and Lummis. Capital creation remains the ultimate public-private partnership, in which the Treasury creates bonds, the Fed sets the rate of yield over set durations, and private banks use these securities to back dollars in checking accounts.

In a stablecoin economy – at least one in which non-Treasury-backed, algorithmic alternatives are neutered by public sector regulation penned in response to private sector crimes – the premise is precisely the same. The main differences, unfortunately, are due to the nature of public blockchains, in which every and all transactions are published transparently in a novel database structure allowing total observation of financial data, including account balances, payment size and denominations, and even the account addresses of senders and receivers. This is seemingly a significant disadvantage from legacy payment rails, which solely provides financial information to the select banking institutions involved in settling the payment. Government regulation generally restricts this type of data from being sold or made available to the public en masse, outside of the case of hacks stemming from irresponsible data protections.

The financial information to be gleaned from a public blockchain economy has created a scenario in which no longer do information brokers or intelligence agencies need warrants or regulatory approval to track and trace these digital payments. As Max Levchin put it, “There is no such thing as technology that is strictly for good.” This sentiment was articulated by the former Acting Director of the CIA, Michael Morell, who called the technology behind Bitcoin a “boon for surveillance.” Morell wrote a piece titled “An Analysis of Bitcoin’s Use in Illicit Finance” in which he furthered that “blockchain technology is a powerful but underutilized forensic tool for governments to identify illicit activity and bring criminals to justice,” and that “Put simply, blockchain analysis is a highly effective crime fighting and intelligence gathering tool.”

The piece sets the premise that governments should not fight this technology, but rather embrace it as means to combat illicit finance. Within the report, a current CFTC official stated that it “is easier for law enforcement to trace illicit activity using Bitcoin than it is to trace cross-border illegal activity using traditional banking transactions, and far easier than cash transactions.” Another unnamed expert told the authors that “the chance of catching illicit actors” is “magnitudes greater” using “blockchain than in the traditional banking sector,” while another “went so far as to say” that “if all criminals used blockchain, we could wipe out illicit financial activity.” Another expert drove this point home, with the report stating that “the biggest threat involving cryptocurrencies is not illicit finance but rather that governments do not yet fully understand the power of blockchain as a tool for law enforcement and intelligence agencies.”

This sentiment was echoed by Tether founder Brock Pierce in a conversation at Idealab, the California technology incubator known for being PayPal’s first institutional investor, as covered in The Chain of Issuance:

“Bitcoin is not really anonymous. Imagine if I had a dollar bill and passed it to you and then that bill was signed that this transaction was conducted and that bill got passed around. Every transaction that occurs with a Bitcoin is permanently recorded, maybe not with my identity directly associated with it, but in the same way that you thought you would post things on the internet 5 or 10 years ago, and that might not ever be tracked back to you, at some point pretty much every Bitcoin transaction is going to be connected back to an individual. So anonymity is actually not its real use case.”

Peter Thiel himself has also perpetuated this idea, stating that “people in the FBI tell me that they’d much rather have criminals use Bitcoin than 100 dollar bills.” Thiel’s CIA-linked Palantir even announced in 2021 that they were considering adding Bitcoin to its balance sheet, and that it currently accepts Bitcoin as payment for its products and services. While banks like J.P. Morgan and Citi are widely considered to be the forefathers of information banking, PayPal’s Max Levchin insinuates that it was in fact PayPal that pioneered this data-driven behavioral analysis which, when paired with its anti-fraud algorithim “Igor” – the precursor to Thiel’s Palantir– created a formidable private-sector intelligence broker:

“At PayPal, which I co-founded many years ago and was a CTO for the first four years – right after we got acquired by eBay, I left – we sort of pioneered that concept, I would say, by capturing human behavioral data in the transactional processing, that we’ve seen millions of those per day, to gain such deep understanding of what people would do that we were able to predict their intentions sometimes before they knew their own intentions”

According to Thiel, PayPal was the first company to file in the U.S. for a public offering after the events of 9/11. The downstream effects of that day would have large implications for the world at large, and the reactionary regulations the U.S. put in place would both limit capabilities of new ventures, while king-making incumbents such as PayPal. As Thiel himself stated, “I actually do not know if a company like PayPal could have been started even two, three years later.” He would further articulate this concept in an interview with The Rubin Report:

“In the aftermath of 9/11, we got the Patriot Act in the U.S and that attached, you know, much more regulatory scrutiny to financial transactions, to payments, that know-your-customer rules became much, much trickier. And so I do think that there’s a weird way in which there was an opening to start a business like PayPal in 1999, 2000, [but] even three years later, I think it might not have been possible.”

While Thiel claims to be a libertarian – despite being a government contractor and an FBI informant, among other hypocrisies – his first real success as a business, not to mention his first major windfall of cash, was cemented in its near-monopoly in no small part due to government regulation after a major destructive event. Unfortunately, the parallels to the controlled demolition of FTX and Terra-LUNA to the mass casualty event of 9/11, at least in regards to inspiring king-making government regulation, are numerous. For starters, there were mass profits made by those equipped with insider knowledge informing their short positions, and further, the proliferation of government-endorsed technological answers to criminal activity has led to constitutional conflicts with massive impacts on the privacy of the country’s citizens, not to mention the world population at large, all under the guise of protecting people.

Thiel overtly expressed the need for redistributing the compromises between security and freedom in his essay “The Straussian Moment,” in which he wrote that “the brute facts of September 11 demand a reexamination of the foundations of modern politics,” further stating:

“The twenty-first century started with a bang on September 11, 2001. In those shocking hours, the entire political and military framework of the nineteenth and twentieth centuries, and indeed of the modern age, with its emphasis on deterrent armies, rational nation-states, public debates, and international diplomacy, was called into question.

For how could mere talking or even great force deter a handful of crazy, determined, and suicidal persons who seemingly operated outside of all the norms of the liberal West? And what needed now to be done, given that technology had advanced to a point where a tiny number of people could inflict unprecedented levels of damage and death?

The awareness of the West’s vulnerability called for a new compromise, and this new compromise inexorably demanded more security at the expense of less freedom. On the narrow level of public policy, there needed to be more x-ray machines at airports; more security guards on airplanes; more identification cards and invasions of privacy; and fewer rights for some of the accused. Overnight, the fundamentalist civil rights mania of the American Civil Liberties Union (ACLU), which spoke in the language of inviolable individual rights, was rendered an unviable anachronism.

Even as the debate over freedom and security gathered strength, whatever military force could be mustered was used to track down those responsible for the violence of September 11… On the broader level of international cooperation and development, September 11 called for wholly different arrangements. The issue of unilateralism, and of the institutions designed to provide a cover for unilateralism, could be raised publicly by serious people for the first time since 1945.”

Serious People: Satoshi Nakamoto, Max Levchin, and Peter Thiel

One of these “serious people” would be the anonymous creator of Bitcoin, Satoshi Nakamoto, who understood that “technology had advanced to a point where a tiny number of people” could fundamentally change the world. Despite once claiming that “if we knew who it was, the government would arrest him,” Thiel believed he had actually met Satoshi on a beach in Anguilla during a financial cryptography conference a year before the events of 9/11:

“My sort of theory on Satoshi’s identity was that Satoshi was on that beach in Anguilla… I met them on the beach in Anguilla in February of 2000. We were beginning the revolution against the central banks on the beach in Anguilla. We were going to make PayPal interoperable with E-Gold and blow up all the central banks… Bitcoin was the answer to E-Gold, and Satoshi learned that you had to be anonymous and you had to not have a company. Even a company, even a corporate form, was too governmentally linked.”

Thiel had previously told the story of traveling to Anguilla with PayPal’s cryptographer and CTO, Max Levchin, in a 2004 discussion with Levchin at Stanford University:

Levchin: “We were not the first company in digital payments. In fact, a decade of digital payment attempts had just been capped off with a very spectacular flame out by a company called DigiCash. And literally a couple of nights before I met Peter, I went to the shutdown party of DigiCash which was on Stanford grounds. And it was a bankruptcy and it was a CEO brought in to just, you know, dispense with the employees and dispose of the intellectual property. It was really bad news. The whole cost of digital cash has been around for about 25 years, so certainly we were not the first ones. I think we were the first ones to compromise wisely on the notion of user interface being actually useful, as opposed to complicated, or just purely secure.”

Thiel: “There’s a three-way trade-off between privacy security and convenience and if you get any two of them 100% the third one you’ll be at 0% and that would be bad. I remember Max and I went to this financial crypto conference in Anguilla. We have all these people to try and develop new payment system, they have a conference on this, and in February of 2000, we went there and we decided, you know, all these people working on this for 10-15 years, and we announced we have figured out the formula for how to do payments online and how to actually create a new digital currency, and it is hard to to understate the degree of anger and resentment that the people felt.”

Levchin: “So when Peter and I went there, I made a promise in February 1999 that I will come back and I’m gonna do something very obnoxious if PayPal is successful because I wanted to make a point that, you know, we have figured it out because people were really not very friendly… I actually gave a talk at Financial Crypto 2000 and I think Peter wasn’t in the audience because he slept through, but I forgave him later on. The talk was titled ‘No One Needs Anonymous Digital Cash’ and the whole point of the talk was really ‘Look, there’s this trade off.’ There’s privacy, security and convenience, and if you get the security perfectly and privacy perfectly, convenience is gonna go to hell, and you just have to deal with that and compromise. The talk was fairly academic, and I was really trying to make a point, and they sort of involved a lot of math. But I basically had two slides. The first slide had all of my math and all of my academic stuff in it, and a second slide, I had a dramatic pause and I said, ‘Look, if you don’t believe me, look at my slide.’ That’s a 250,000 users, which is what we had at the time. The largest number of users DigiCash has ever seen was, I think, 2000. So it was a very quiet moment in the audience, then people started to boo me offstage.”

In 1975, long before Levchin would explain how he and Thiel had “figured out the formula” for online payments and “how to actually create a new digital currency” at the same Anguilla conference Thiel speculated he had met Satoshi, Maksymilian Rafailovych Levchyn was born into a family of physicists in Soviet-era Ukraine. In 1991, Levchin and his family departed the Soviet Union under political asylum, boarding a PanAm flight in Moscow with only $700 to their name, before arriving in Chicago. As the story goes, before the wheels had touched ground in Illinois, the USSR had collapsed. “My family immigrated to the United States as refugees. I was a man without a country,” explained Levchin. “My red Soviet passport was a passport to no country. America offered us safety and opportunity.”

Levchin attended the University of Illinois at Urbana-Champaign, majoring in Computer Science alongside two future PayPal co-founders, Luke Nosek and Scott Banister. Levchin stated in 2013 that he “spent [his] entire college career reading up on distributed networking [and] distributed systems, which was all about bringing intelligence all the way to the edge.” Between his studies, Levchin also demonstrated his entrepreneurial spirit, founding SponsorNet New Media in 1994, NetMomentum Software in 1996, and NetMerdian Software in 1997. His alleged reasoning for continuing the trend of naming his companies with SN or NS as initials was simply because he wanted to retain the use of a logo featuring the letters. All of these companies would focus on early online advertising, with SponsorNet focusing on ad banners, while NetMomentum and NetMeridian would built out early “white-label classifieds for newspaper sites.” Both Nosek and Banister were involved in SponsorNet while still students, although the company was a failure.

Levchin graduated in 1997, and promptly headed to Silicon Valley – specifically a couch in Banister’s apartment in Palo Alto – where he would encounter the then-currency speculating Thiel, whose main venture at the time was Thiel Capital. Before PayPal, or X.com, or even Confinity, there was FieldLink, a 1998 technology startup founded by Levchin, Thiel and Nosek, which was focused on applying cryptography on handheld devices for enterprise use. “I was one of the first developers of the PDA… and I was like one day, everyone is gonna use these at work,” Levchin recalled telling Thiel. “What do you think they’re gonna do when the man is gonna try to read their documents, when their customers are gonna steal all their data? They’re gonna encrypt it. And I’m gonna invent all the crypto.”

But the community was small and the applications dreamed up by Levchin and his compatriots were early, leading him to describe FieldLink as “early Christians in the first century… waiting for the second coming.” In 1999, a year before the aforementioned Anguilla conference, Levchin appeared at the International Financial Cryptography Association conference to pitch the company’s – now known as Confinity – on the concept of “a cashless, all digital, PalmPilot-based money system.” The response was hardly enthusiastic, perhaps dimmed by the recent failure of DigiCash.

Despite the conference-goers sentiment of rejection, Confinity soon scrounged up significant investments from Nokia Ventures, Idealab, Deutsche Bank, and Goldman Sachs before the millennium’s close. In a widely publicized event now referred to as “Beaming At Buck’s,” the PayPal co-founders “beamed the capital [raised] for its first round between Palm Pilots,” arguably marking “the first time in history money was ever transferred electronically.”

Pete Buhl of Nokia Ventures, which had invested $4.5 million in Confinity, stood across from Thiel, both equipped with PalmPilots, and after positioning their infrared ports correctly, “beamed” the entirety of the Nokia-invested capital across the California restaurant. Levchin, who had spent many sleepless nights preparing for the 9AM event, made sure to express it was anything but a publicity stunt in a 2004 conversation with Thiel, stating: “And it was really for real…I kid you not…it was a real encrypted transaction.” Buck’s of Woodside, an aptly-named, Americana-decorated breakfast joint which sits between Stanford University and the VC breeding ground, Sand Hill Road, was owned by Jamis MacNiven, who has posed in photos that adorn the walls of Buck’s with prominent public figures like Yitzhak Rabin and George Bush. The event was both a technological and social success, leading to many features in papers, and effectively putting the-soon-to-be PayPal on the map. Or, at least, in investors’ Rolodexes:

“Three million dollars, Palm pilots, breakfast at Bucks, it was actually a technology story that sort of made sense and got written in a number of papers, number of press coverage.. And at that point on the investor side, people just started banging down the door and I remember the range from sort of the very respectable, sketchy, and the seemingly respectable but really sketchy..

I remember the classic example of the second type was about a month later, we installed this one thousand square foot office, we had about fifteen people working at the company in a thousand square foot office at University Avenue in Palo Alto and this delegation from Japan showed up, Six Japanese business suits and ties and “We would like to form a relationship with your company and we read about you in the newspaper and we like to invest.” Over the next three, four months, it was this iterative process.. We fly to Tokyo a few months later and one of our Japanese advisers told us, “Hikari Suchen, they’re a very aggressive company and many people of Japan do not like them.” And I thought, “That’s great! We want people who are aggressive and who will be able to move quickly.”

And two months later as we were ready to close another round, they called me up at midnight and said, told me, “I’ve been getting orders from Tokyo.. I must invest $20 million in your company.” And I said, “Well, I can’t really take any of your money right now but can we rest half a million…” It was just, it was really, really crazy.. Although, a few months later, we figured out that they were actually a front organization for organized crime in Japan.. And of course we’ve been warned very clearly by our Japanese adviser although the slight translation problem didn’t quite catch it…”

While the technology certainly worked, then-Confinity board member Reid Hoffman questioned its practicality outside of their PalmPilot-dense Silicon Valley bubble. According to Jimmy Soni’s The Founders, Hoffman pushed the company to utilize this technology via another medium, stating: “We are living in the heaven of PalmPilots, and we could walk into every single restaurant and go to each table and ask how many people have PalmPilots.” Allegedly, Hoffman postulated that “the answer was between zero and one per restaurant.” Leading Hoffman to determine that “your use case can only be used between zero and one times, per restaurant, per meal cycle! You’re hosed! It’s over on this idea.” And further more, what happened if a PayPal user forgot their PalmPilot at home? Levchin would quickly hack together a “backup” email service, allowing PDA-less users to still be able to send money electronically simply by using an email provider. While initially designed as a “throwaway demo” banished to the corner of PayPal.com, Levchin increasingly found himself “using the email service to test transaction functionality” due to its convenience over the hardware instance.

The future COO of PayPal, David Sacks, would later stress during his job interview that he would only join the company if they made the email service the main product offering, bringing up a few problems with the PDA approach: “One is that there are only five million Palm users, so unless you’re with somebody who also had a PalmPilot, the app is useless. And then there’s the other problem, even if you’re with somebody who’s got a PalmPilot, what would you use it for? Nobody could really come up with anything better than splitting dinner tabs.” The Primordial PayPal Mafia was, of course, directionally correct, and while PalmPilots were overtaken by smartphones by the end of the 2000s, today, email remains one of the most widely-used technologies in history.

Unfortunately for Levchin, the viral network growth of PayPal led to a plethora of fraud, as covered in The Chain of Issuance, and the majority of his time as CTO of PayPal was spent focused on anti-fraud efforts. This effort led to the creation of the Gausebeck-Levchin Test, used essentially as a reverse-Turing test – meaning the successful completion of the test would prove one is a human, and not a computer – and was the first commercial application of CAPTCHA, ultimately being instrumental in limiting fraud on their website. Within the constant fight to stop the bleeding of funds lost to fraudulent activity, Levchin collaborated heavily with government intelligence and law enforcement. He later stressed these relationships in a controversial conversation with Charlie Rose in 2013, stating “When we were working on security and anti-fraud measures at PayPal, we collaborated with every imaginable three and four-letter agency and those were some of the best, most productive relationships I’ve had as a business person.”

Levchin’s affinity for the intelligence community started far before PayPal’s founding, during his early days exploring cryptography, once stating “I was hooked [on cryptography], and even tried to apply to the NSA for an internship, but was promptly rebuffed because I was not (yet) a U.S. citizen.” A few weeks after his Charlie Rose appearance, Levchin appeared at TechCrunch’s Disrupt SF 2013 to clarify his statements, articulating:

“When I was a in college, I applied to the NSA. I couldn’t get accepted because I was not a citizen yet…I was a crypto nerd. I was very excited about applying cryptography for the good of the country that I literally just came to. [The NSA recruiter] said the one thing you should be very clear about [is that] not only will you get paid peanuts, you will also never achieve fame as a mathematician because you are not allowed to publish any result that you find as a mathematician under the employment of the NSA.”

During the 2019 SFELC Summit sponsored by Hoffman’s Greylock Partners – a firm with numerous ties to the CIA and the intelligence community, as described in The Chain of Custody – Levchin suggested that law enforcement was still reaching out to him for information regarding the aforementioned trip with Thiel to Anguilla. Levchin explained that in attendance at the Financial Cryptography conference “there were three types of people,” including “broke students like me,” “real cryptographers like the R and the S of the RSA” and “a bunch of guys in two-piece suits that spoke with really heavy Eastern European accents” asking for help with private payments. He would further reveal that “on occasion, I still get calls from investigators saying ‘Hey, did you meet this person 20 odd years ago at Anguilla?’” In the same spirit, in 2015, Levchin joined the advisory board at the Consumer Financial Protection Bureau, a “watchdog agency created by the Obama administration to police financial institutions.”

At the start of 2016, Levchin would announced the creation of Levchin Prize for Real-World Cryptography, stating in a LinkedIn post that “I hope that this prize encourages younger researchers – especially students – to think about how cryptographic principles can be applied to improve the many flawed systems of today.” The post concluded with the sentiment that “at a time when governments and corporations are scrambling to stem the rising tide of data breaches, cryptography has never been more important to the security of our economy and our personal privacy.” During the 2022 Levchin Prize Award Ceremony, the committee requested nominations for future prize winners, with the caveat that “we’re a bit bored of Satoshi getting nominated because who would we give it to?”

Levchin himself, in 2017, told CNBC that “It’s a brilliant mathematical idea, fantastic technology, interesting commodity to speculate on.” While unsure on Bitcoin itself – “I’m still trying to figure it out” – he expressed a firm belief in the underlying database structure itself, stating: “I think a form of a blockchain technology, bitcoin or otherwise will be essential and will not go away. Not only that, it will continue advancing and being used in many different industries from financial technology to medicine. But it’s not clear to me whether Bitcoin itself is the great long-term investment.” Alluding to the similar “digital gold” argument of his PayPal Mafia counterparts, Levchin claimed it was “TBD [to be determined] on whether it’s a currency or just a way to make money fast.”

Despite his public-facing ignorance on Bitcoin in 2017, in 2014, Levchin admitted to investing in a “friend’s startup that mines Bitcoin.” Presumably, this startup was Balaji Srinivasan’s 21e6, which raised $70 million in 2013 from Levchin’s compatriots, Peter Thiel and David Sacks, in addition to Marc Andreessen and Ben Horowitz. According to Nathaniel Popper’s Digital Gold, “the 21e6 investment was attractive in part because venture capital firms generally felt that they couldn’t buy Bitcoins directly. 21e6, on the other hand, offered to pay its investors back with Bitcoin dividends, allowing the firm to get Bitcoins without buying them outright.” Levchin would confirm this payment arrangement in the aforementioned 2014 interview, stating “they paid dividends in Bitcoin. I’ve never taken my dividend, but I believe they declared at least one. So, I actually have some Bitcoin to my name somewhere.”

In a 2014 conversation with Pando, Levchin expressed admiration for Bitcoin’s white paper, stating “The math behind the original paper, which I read it a many, many times before I decided I actually believed it, is beautiful.” He also added that “the fact that it’s a distributed ledger without a third-party trust system is awesome, and a fundamental breakthrough.” Levchin would also seemingly take a positive stance on the underlying database structure, if not Bitcoin a a currency itself, claiming “I am confident that there will be a form of settlement that will be a cryptocurrency. And the ledger piece, there’s no need to reinvent that. The bitcoin distributed ledger is a fundamentally sound idea and it will get used, maybe in a slightly different format.”

Thiel would take a slightly differing approach with his public views on Bitcoin, stating that, despite its lack of a payment system, it held much potential. In a 2017 interview with Fox Business, Thiel articulated this idea further:

“It’s like a reserve form of money. It’s like gold and it’s just a store of value. You don’t actually need to use it to make payment… If bitcoin ends up being the cyber equivalent of gold and it has a great potential left and it’s a very different kind of thing from what people in Silicon Valley focus on – companies, not algorithms not protocols – but this might be maybe one exception that is very underestimated.”

In a telling comparison, back in 2014, Thiel concluded that “Bitcoin is the opposite of PayPal, in the sense that it actually succeeded in creating a currency.”

PayPal: The New World Currency

In March 2014, a group of early Bitcoiners descended on Lake Tahoe to visit the vacation home of Dan Morehead, a former Goldman Sachs trader who started Pantera Capital after leading the global macro desk at Tiger Management. Morehead, a Princeton graduate, was one of the first investors of Coinbase and his Pantera firm became one of the largest cryptocurrency holders in the world. This meeting, known as Bitcoin Pacifica, attracted the likes of Mt.Gox’s Jed McCaleb, Kraken’s Jesse Powell, BitGold’s Nick Szabo, BTCC’s Bobby Lee and SatoshiDice’s Erik Voorhees, among others. Another unnamed guest was identified as a New York trader who formerly worked at the NSA. As described in the book Digital Gold, after this ex-NSA agent brought up the idea that Bitcoin likely came out of his former agency, one of the first Bitcoin evangelists, Voorhees, revealed his “pet theory” on the identity of Satoshi Nakamoto. Voorhees speculated that Satoshi was “actually a small circle of programmers at some major tech firm, who had been assigned by their company to come up with a new form of online money.” He speculated the firm’s executives deemed the project “too dangerous,” and thus its creators decided to release it anonymously.

While unbeknownst to most, and in spite of their obvious, world-changing success, the true founders’ vision for PayPal and its “new world currency” never materialized before the formative group of early PayPal-ers had moved on to other enterprises. It wasn’t until 2009, with the launch of Bitcoin, or perhaps not until the 2014 founding of Tether – the first USD stablecoin – or maybe not until the 2015 launch of Ethereum, that PayPal’s original vision was achieved. But certainly, as this series implies, it had materialized by PayPal’s 2020 integration with Paxos and the subsequent 2023 announcement of PYUSD. While Thiel’s intended expressions for “world domination” are easy to naively dismiss as enthusiastic rhetoric, his company’s goal to create a new world currency was anything but an afterthought. Brought up in board meetings, discussed in their Silicon Valley offices, and even printed across their T-shirts, PayPal’s aspirations to dismantle the legacy financial system with technology has been publicly resurrected by the emergence of the cryptocurrency industry.

As the former COO of PayPal David Sacks explained to CNBC in 2017, “Bitcoin is fulfilling PayPal’s original vision.” He stated:

“After PayPal I never thought I would get interested in payments again. But bitcoin is fulfilling PayPal’s original vision to create ‘the new world currency.’ We actually had T-shirts printed in 1999 with that mission statement. A payment is just a credit to one account and a debit to another. That’s a database entry. We believed that, if we could get enough people to participate, money would never need to leave the system. PayPal could become the database of money. We added features like interest and debit cards so you’d never have to withdraw funds to the legacy banking system. When we got acquired by eBay, that project kind of stopped. But cryptocurrencies like bitcoin are now fulfilling that original vision. They are doing it in a decentralized way (with a decentralized database called the blockchain) whereas PayPal tried to do it in a centralized way…

In its purest form, currency is confidence. It’s a network effect around an agreed-upon medium of exchange that has some promise of scarcity. Bitcoin enforces its scarcity through a combination of cryptography and economic incentives (“cryptoeconomics”). A lot of people find that more comforting than relying on the good faith of a government. In math we trust. People in the U.S. – and especially longtime participants in the U.S. financial system – have tended to underestimate bitcoin because we have long enjoyed relatively stable political and financial systems. People in parts of the world with less trusted systems have gotten it sooner because almost anything would be preferable to having their life’s work trapped in a fiat currency that could collapse or be confiscated at any moment.”

While these comments were made in 2017, they sound eerily similar to those made by Thiel before 2000 in the early PayPal offices. In The PayPal Wars, the insider account of PayPal from an early marketing hire Eric M. Jackson, an illuminating company meeting led by Thiel is depicted in which the young entrepreneur articulates an apparent altruistic good that comes downstream from the technology-driven dollarization of the developing world, and what PayPal was intending to deliver:

“We’re definitely onto something big. The need PayPal answers is monumental. Everyone in the world needs money – to get paid, to trade, to live. Paper money is an ancient technology and an inconvenient means of payment. You can run out of it. It wears out. It can get lost or stolen. In the twenty-first century, people need a form of money that’s more convenient and secure, something that can be accessed from anywhere with a PDA or an Internet connection.

Of course, what we’re calling ‘convenient’ for American users will be revolutionary for the developing world. Many of these countries’ governments play fast and loose with their currencies…They use inflation and sometimes wholesale currency devaluations, like we saw in Russia and several Southeast Asian countries last year, to take wealth away from their citizens. Most of the ordinary people there never have an opportunity to open an offshore account or to get their hands on more than a few bills of a stable currency like U.S. dollars.

Eventually PayPal will be able to change this. In the future, when we make our service available outside the U.S. and as Internet penetration continues to expand to all economic tiers of people, PayPal will give citizens worldwide more direct control over their currencies than they ever had before. It will be nearly impossible for corrupt governments to steal wealth from their people through their old means because if they try the people will switch to dollars or Pounds or Yen, in effect dumping the worthless local currency for something more secure.”

Thiel would conclude that he has “no doubt that this company has the chance to become the Microsoft of payments, the financial operating system of the world.”

While PayPal may have faltered where Bitcoin thrived, as articulated in The Chain series, their fingerprints are all over the history of Bitcoin. As an early PayPal programmer states in The PayPal Wars, “Why move atoms in order to exchange bits?” In 2009, the first year of the network’s existence, Martti Malmi, a Satoshi-collaborator and software developer from Finland, made the first ever Bitcoin transaction for dollars, selling 5,050 BTC for $5.02 to early Bitcoiner NewLibertyStandard, with the dollar-end of the transaction settled using PayPal. NewLibertyStandard then started the first ever Bitcoin exchange, New Liberty Standard (NLS), which settled it fiat needs using PayPal, allowing the first ever Bitcoin/USD exchange rate to be published on NLS on October 5, 2009. Another early Bitcoin exchange, The Bitcoin Market, went live in March 2010, using PayPal again for all dollar-denominated needs. Even Jed McCaleb’s Mt.Gox, the first prominent exchange of Bitcoin, also handled all their dollar settlements using PayPal.

PayPal itself wouldn’t publicly affiliate itself with Bitcoin until April 2013 when then-President of PayPal David Marcus told Bloomberg “I’ve been spending a lot of time looking at it and it’s truly fascinating. The way that the currency has been designed and the way inflation is built in to pay for miners and all of that is truly fascinating… I think for us at PayPal, it’s just a question of whether bitcoin will make its way … as a funding instrument or not.” Marcus concluded by stating, “We’re kind of thinking about it.” Seven months later, in November 2013, eBay President John Donahoe echoed this idea, telling the Financial Times that PayPal (then-owned by eBay) may one day accept Bitcoin natively. In September 2014, PayPal even released a short promotional video titled “PayPal Voices” that included someone saying “Our phone is our wallet. We can spend bitcoin with a tap, without a pocket.” This clip was quickly replaced by a nearly identical promo instead saying, “Our phone is our wallet. One touch to buy just about anything without sharing our credit card and banking details.” Also in September 2014, Thiel appeared on a Reddit Ask Me Anything, in which he stated “PayPal built a payment system but failed in its goal in creating a ‘new world currency’ (our slogan from back in 2000). Bitcoin seems to have created a new currency (at least on the level of speculation), but the payment system is badly lacking.”

With the 2020 partnership with Paxos, PayPal’s founding mission converged directly with Bitcoin’s novel database architecture and its internet-native asset, complete with stablecoins like their PYUSD acting as a payment medium, for a truly new global financial system. With their regulators at bay, their politicians soon to be – if not already – in office, and their technology stack built and distributed across the planet, the Bitcoin-Dollar system has been carefully constructed. Furthermore, this system has presented itself as a randomized organization of separate entities, rather than a cleverly hidden network of technologists and economists working in tandem towards a desired goal.

A disinflationary monetary reserve asset, such as Bitcoin, which is heavily custodied within the United States, complete with an internet-based, transparent payment system built on stablecoins backed by government debt, preserves the dual banking system within the country and effectively neuters the world’s nation states from fighting capital flight towards an ever-inflating, yet ever-demanded dollar. Thiel himself stated that “the ability to move money fluidly and the erosion of the nation-state are closely related.” When Bitcoin broke $60,000 in 2021, Thiel felt “it surely tells us that we are at a complete bankruptcy moment for the central banks.”

At Libertopia 2010, Thiel told the crowd of the founding intentions of PayPal, and how within technology lies the ability to circumnavigate the political system and the global order of currency:

“The initial founding vision [of PayPal] was that we were going to use technology to change the whole world and basically overturn the monetary system of the world… We could never win an election on getting certain things because we were in such a small minority, but maybe you could unilateral change the world without having to constantly convince people and beg people and plead with people who are never going to agree with you through technological means, and this is where I think technology is this incredible alternative to politics.”

With the recent embrace of Bitcoin and stablecoins by Wall Street, Senators, and presidential candidates as a means to extend the dollar’s world reserve status, the anti-state framing of the early Bitcoin ethos has withered on the vine – at least as it applies to the United States. The cryptocurrency industry at large, with a handful of dollar-denominated stablecoin issuers operating on a dozen-or-so dollarized blockchains, has become a tool of U.S. empire building, at the expense of other nation states and central banks around the world. The sales pitch of the blockchain being a mechanism for financial empowerment for the individuals of the world has been slowly and carefully replaced with one that perpetuates the hegemony of Silicon Valley oligarchs and their Washington, DC counterparts. The window for making Bitcoin a means for global freedom is quickly shutting, and with it, the realities of a financial system based on private-issuers of tokenized dollars upheld by public, transparent blockchains are made apparent. The poles of power remain deeply entrenched between the coasts of the continental United States, and those in command of The Chain – the new digital Federal Reserve – wield immense leverage over the global financial system.

Thiel would put it simply, in a fitting conclusion: “We need to take over the world, we can’t slow down now.”

The Chain Of Command: How Facebook’s Libra, Bank Regulators, and PayPal Built A New World Currency.