In late February, Gevers still reigned as foundation president. Kathleen had recently arrived in San Francisco from Paris via New York, and I drove with her to Los Angeles, where she was scheduled to appear at a blockchain conference at UCLA. She had recently received one more in a succession of Russian scam emails telling her that Johann Gevers had initiated a plot to hire assassins to murder her with poison, and that it could only be stopped if she transferred 10 bitcoin to the address included. She delivered an executive summary of the Tezos situation in a tone of hyperrational self-parody: “We overindexed on operational security risk, and underindexed on key-man risk.”
By then, however, most of her resentment was reserved for the Crypto Valley. A prominent Zurich businessman called as we headed south, with a patronizing offer to broker a deal that would put the foundation in wholly safe Swiss hands. Kathleen’s measured tone went out the window. “All these Swiss people calling me and telling me to shut the fuck up and do things the discreet way. If I got raped at a party, would you tell me it was my fault for wearing a skirt? Swiss business culture is a load of shit.”
Gevers, the Breitmans’ erstwhile key man, seemed to be doing fine. Kathleen described how she and Gevers had both recently been in St. Moritz to speak at a blockchain conference; Kathleen was allotted a “fireside chat,” while Gevers had been invited to give his own talk—on ICO best practices. A friend of Kathleen’s who had run security for Metallica paid for a German bodyguard to accompany her. At a white-tablecloth dinner, a prominent table companion brought up rumors that Kathleen had placed a bounty on Gevers’ head. She had taken the comment to heart, and as she related the scene she looked at me with pleading humor. “Do I look like a violent person?”
Gevers had delivered his speech with a calm, commanding sense of impending victory. (On his PowerPoint slides, he quoted Warren Buffett, Elon Musk, and himself.) Immediately afterward he released a series of triumphalist tweets about the future of Tezos. “After months of incapacitating interference, obstruction, and attacks, the Tezos Foundation has regained the ability to act,” he announced. “For those seeking to understand what happened at Tezos—both its successes and its failures: ‘In a high-trust environment, the impossible becomes possible. In a low-trust environment, even the possible becomes impossible.’—Johann Gevers.” Further tweets, later deleted, seemed to link, if implicitly, the future of Tezos to Monetas, for which Gustinis had found a buyer.
The Breitmans, Kathleen said, took Gevers’ social media proclamations to indicate he was prepared to continue fighting a war of attrition. Though Tom Gustinis says he was personally paying Gevers’ rent at this point, the foundation had expensive lawyers on retainer; the Breitmans, meanwhile, were paying $250,000 a month in legal fees. As Kathleen put it, “It’s not a corporate-governance matter anymore, it’s a hostage negotiation.” When I asked how it had possibly come to this—Gevers, it seemed, could have just cut the checks, celebrated the network launch, and emerged a wealthy man—Kathleen could only throw up her hands. “He’s the world’s stupidest scorpion, and Arthur is the world’s most gullible frog.”
Kathleen now felt as though they had one option: brinkmanship. This was no longer about the utopia to come but ascendancy in the here and now. “I feel like I’m in a hole, so fuck it, the game’s afoot. I’m going to blow this fucking canton up. I’m going to play the hand I was dealt, and I’ve got a much better deck. I keep telling Arthur that the people on the other side are just going to play their game for a billion dollars. It’s not about the morality of crypto. It’s about shipping and winning the game. I’ve got 60,000 lines of code that will ship with or without those guys in Zug.”
Thinking of Gevers and the others in Zug, Kathleen paused to stare outat the hills. “They fucked with the wrong nerds, is my take.”
She paused to stare out at the hills near Santa Barbara, blackened and denuded by fire. “They fucked with the wrong nerds, is my take.”
Their will had been renewed by the fact that they no longer felt so alone. Once it had become clear that the original board’s efforts were at best nugatory, the Tezos community had formed its own parallel “T2” directorate. In partnership with this second foundation, she and Arthur would continue to fund the platform’s development out of their own pockets; it had cost them $1.5 million so far, but they’d made a lot of money on their early personal investments in Bitcoin. She couldn’t comment on anything that pertained to their legal entanglements, but an actual launch could conceivably change the juridical landscape: After all, it was the original billion-dollar foundation that had the contractual responsibility to roll out the platform and distribute the tokens. More than anything, though, they wanted to see Tezos live.
Exhausted, Kathleen looked out to the placid expanse of sea and wilted a little. “It’s the 13th inning, and we’re getting a little tired. Neither of us needs to be doing this. I’m doing it as an act of love for my husband, and he’s doing it because he thinks he can do a good thing for the world. We’re going to birth Tezos as an act of love and collaboration.”
The next day, in front of a crowd at UCLA, she unveiled this strategy for the first time. “We’re going rogue, and in the next few weeks we’ll release the token. It’s the software equivalent of carrying an ectopic pregnancy to term.”
A few days after the UCLA panel, Kathleen sent me a strangely low-key message over Signal to report that Gevers had resigned from the Tezos Foundation. The leader of the T2 faction—a preternaturally tranquil and even-keeled Mormon named Ryan Jesperson—had sat in a room with Gevers and the lawyers for 10 hours of what he insisted was polite, amicable conversation. In the end Gevers had consented to his departure on the condition that the entire board be replaced. Gevers stepped down; an unsigned version of the final resolution of the first Tezos Foundation stipulated more than $400,000 in severance. Pons was ready to be rid of the whole travail, and he communicated, via Reddit, that he would be returning his own settlement to the foundation. He publicly invited Gevers to do the same, but according to Pons, no such donation had materialized. Jesperson moved, with his wife and three small children, from Utah to Zug to take over the new foundation. Twitter users taunted the foundation account: “When Lambo? When Lambo?”
The end of the standoff did not mean that everything for Tezos was looking bright. The lawsuits had been consolidated and a lead plaintiff selected. But the network had yet to appear, and, unfortunately, the long delay meant a lot of competition. When the original Tezos papers were released, in 2014, nobody was concerned with the need for governance. Now it was a stock talking point.
The other piece of bad news was that in late February the head of the SEC, Jay Clayton, declared that, as far as he was concerned, all ICOs constituted the sale of unregistered securities. He did not exclude Ethereum. The longstanding fantasy that a centralized entity could presell a token on the premise of delayed decentralization might have to be set aside once and for all. In the meantime, the total ICO market in the first quarter of 2018 had, by one measure, surpassed $6 billion. An MIT professor estimated that up to a quarter of that total was collected by scam artists.
Arthur was in Paris for the spring, passing long hours with a team of international software developers drawn from academia; they had the mellow, abstracted air of a postdoc colloquium. The platform, with any luck, would at last come to realization over the summer. Kathleen joined Arthur there between speaking engagements and business-development meetings in Singapore, Hong Kong, San Francisco, London, Berlin. The constant dread of the past year had only deepened the bluff tenderness of their interactions. Kathleen mocked Arthur for ordering a gin drink thick with melted marshmallows; Arthur made fun of Kathleen for her terrible French. Their small apartment had the underfurnished ambience of an Airbnb. The only remaining evidence of the conflict was a piece of ruled white paper with a ballpoint rendering of something that looked vaguely like Babar; it floated over Arthur’s head in the video update he posted on Reddit, the elephant in the room.
In late March, Kathleen had yet another speaking engagement, this one in Zurich. Arthur wasn’t crazy about the idea of Kathleen alone and unprotected there; other people might associate Switzerland with chocolate, watches, and neutrality, but the mountainous confederation hadn’t been particularly kind to the Breitmans. I wanted to go to Switzerland anyway, to try to see Gevers and the lawyers at MME in Zug, so I went along. Gevers responded to my request to tell me that he was in “an intense work phase” but that I ought to try him in a month, then stopped replying, and I heard nothing from MME.
On the train to Zurich, Kathleen tried to concentrate on other things. But she couldn’t help ruminating once more over how, exactly, a system she and Arthur had designed to underwrite and extend interpersonal trust at scale had foundered on their inability to rely upon one single individual. In certain moods, their interpretation of the events of the previous year had the ring of conspiratorial fancy—not because their thinking was muddled but because it was, if anything, too crystalline. Conspiracies made sense. One of the things that drew the blockchain community together was a commitment to the idea that the whole of human behavior could be interpreted as the pursuit of rational self-interest, and there was something profoundly disturbing in the fact that their model remained unable to account for Gevers’ motivations.
The conference was two stops outside Zurich’s city center, at a hulking black venue called Samsung Hall. It looked like what you’d get if you gave an alien civilization’s stodgiest corporation a written definition of a nightclub. Kathleen ducked and dodged her way through the lanyarded slicks who wanted to network or gossip.
Then she froze. “Well,” she said, with a weak laugh. “There’s Tom Gustinis now, Johann’s flying monkey.”
Gustinis flashed Kathleen a wide smile and approached her with an unhurried, deliberate gait. He was very tall and broad-shouldered, with graying blond hair gone shaggy over his ears, and he vibrated with pocket-jangling energy. He greeted her with affected warmth. Curtly polite, she returned the greeting, introduced us, and immediately excused herself. Gustinis looked a little hurt.
We stood at a high, rickety cocktail table and made small talk about our shared origins in New Jersey. When I asked him about Tezos, he assumed the frowning detachment of an elder statesman. In the ICO world, he said, there was now “Before Tezos and After Tezos, after everything that happened with the Stiff-dong.” It took me a moment to realize he must have meant Stiftung, the German word for “foundation.” But he didn’t think that ought to be the case, and his own postmortem was lax and mild. “The project was delayed—probably unnecessarily. The project could have done without the noise.” He’d tried to mellow the fuss. “After Kathleen and Arthur hung up on me many, many times, I still say the same thing: It started as a misunderstanding, and then egos got involved. She gives me a cold welcome here, but I’ve never done anything against the Breitmans.” He’d only gotten involved because the world of blockchain felt electrifying in a way banking no longer did.
His deflationary story, if slightly evasive, felt plausible. “Look, I’m a conservative guy who comes from accounting and worked my way up at UBS. I was astonished at how this anarcho-capitalist community was going to cannibalize themselves.” He stopped to sum it all up. “It was a fundamental misunderstanding that started it—and I disagree with Johann. And for that I have a lot of empathy for the Breitmans. But maybe that’s too boring a story for you.”
Two people from one blockchain startup or another came over to network aggressively and I excused myself. Through the business scrum I could see Kathleen far across the room, her back to the wall, editing her talk. Maybe it all had been a boring misunderstanding. After all, there had been few apparent consequences for Gevers; the previous week he had been quoted as a coin-issuance expert in a Financial Times story. There would, however, be at least some formal repercussions for Arthur for promoting Tezos while employed at Morgan Stanley: In April, the Wall Street regulator Finra suspended him from trade with its members for two years.
A few minutes later, Gustinis materialized once more. Kathleen conceded a second hello without looking up. He chatted idly to nobody in particular—“Who will be the Elon Musk of the blockchain?”—while Kathleen ignored him until she left to watch a panel.
I made to follow Kathleen, but Gustinis, all of a sudden upset, turned to confront me. “So,” he said, “I see what this is, from one Jersey boy to another.” As he spoke, he slowly leaned closer, until his heavy frame was looming over me. (Gustinis disputes this account, claiming he is simply tall.) “You’re here hanging around with her, huh? I get what’s going on.”
I said I had press accreditation for the conference, but Gustinis only smirked. “Well, I’m going to tell people what this looked like to me.” He turned on his heels to saunter away. As I began to stutter in reply, he wheeled back around and placed his palms flat on the high rickety table. “Are you going to make me be more explicit with you, Jersey boy?”
And then he was gone. Gustinis kindly apologized later. There was something, we both tacitly acknowledged, about this troubled crypto utopia—the conditions of perpetual alarm and mistrust, as well as fear, uncertainty, and doubt—that, even now, drove otherwise sensible people to paranoid extremes.
I said I of course forgave him, but at the time I’d walked into the dark hall on the verge of panic. Onstage the conference organizer was interviewing a panel of four Swiss men in suits. Their faces were gigantic and fleshy on the screen mounted behind them. I texted Kathleen to say I thought Gustinis had just tried to scare me. When I found her at her seat she just nodded, and even seemed to smile.
A lawyer onstage in a fitted waistcoat was talking about the necessary role of the proper regulator. “We take the fear away,” he said. It is our job to tell people, he continued, “Don’t be afraid.”
Gideon Lewis-Krausis a contributing editor at WIRED.
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