Crypto Bros Are Trying to Buy an Island in the Pacific

Crypto millionaires are attempting to buy an island in the Southwest Pacific. It’s the latest in a long line of schemes by libertarians asserting the rights of private capital above all else.

Tourist bungalows on Iririki island, Vanuatu. (Phillip Capper / Wikimedia Commons)

Utopian thinking is everywhere out of favor, except in the libertarian fantasies of crypto enthusiasts who dream of a world free from the regulatory state, law, and all other forms of external authority. Hucksterism and hostility to collective life are this movement’s defining features. The worldview underlying it is embodied nowhere more literally than in the schemes to exit from the territorial jurisdiction of the nation-state prevalent throughout the history of libertarianism. Crypto luminaries have even sought to buy and govern islands, using oceans to separate themselves from taxes and democracy.

Satoshi Island — named after the alleged creator of Bitcoin, Satoshi Nakamoto, and located in the southwest Pacific archipelago of Vanuatu — is the most recent creation of crypto’s venture capitalists. “A real-life private island dedicated to the crypto community,” reads the promotional material. Measuring some eight hundred acres (just over one square mile), Satoshi Island is at this point almost entirely rainforest. Its main attraction: a rare species of giant coconut crabs. Other than flora and fauna, Satoshi boasts a small coastal clearing and a large house on its western edge facing the archipelago’s largest island, Santo. If plans go ahead, the tropical paradise will not remain pristine for long. Would-be crypto colonizers hope to transform the island into a “sustainable smart city.”

Much of the island’s promotional material, with its claims of private ownership and Satoshi citizenship, is misleading. Citizenship, for example, suggests Satoshi Island will be its own state and can confer political rights to its inhabitants. That is not the case. Rather, citizenship in this instance is a catchy way of acknowledging that you own one of the 21,000 Satoshi Island NFTs (non-fungible tokens) and thus can access the island community. But you would still need to hold a valid passport from another country in order to first enter Vanuatu, and no form of Vanuatu citizenship is attached to the island NFT.

One could, in this broad sense, count oneself a citizen of Satoshi Island in the same way that one could, in a sense, count oneself a citizen of Disneyland. Even the use of the phrase “private island” is a misnomer. Since independence in 1980, all land in Vanuatu is held by custom owners — native Ni-Vanuatu (native inhabitants of the islands) — who can lease but not sell land. It is not a “private island” because foreign investors will not be able to enjoy freehold ownership. Even the island’s name is more complicated than the promoters would like to let on.

The brains behind the project, Anthony Welch, a retired property investor who now lives in Vanuatu, renamed the island, in grand imperial fashion, two years ago. Vanuatu’s government has pointed out that such an act has no force of law or real significance. According to the country’s director general of the Ministry of Lands and Natural Resources, in order to formally change the name — which is actually Le-Tharo — the government’s Place Name Committee would need to approve such request. This hasn’t happened. Satoshi Island is, for all intents and purposes, a fantasy island.

Hijacking Independence

All of this could be filed away under the growing folder of goofy grifts that characterize efforts to create private countries, all too often involving cryptocurrency advocates. The archetype for these libertarian adventures is Burning Man; more often they are closer to the infamous Fyre Festival. There is, however, more at stake in these schemes then the money of naive investors. The language of citizenship and private property may be disingenuous, but it points toward how libertarian schemes dream of asserting the rights of private capital over those of sovereign states and their populations.

Although the distinctly modern form that these encroachments have taken may seem new, they have a long history, even in Vanuatu itself. In the 1970s, a group of US-based libertarians looked to Vanuatu — known as the New Hebrides and jointly colonized by the British and the French at the time — as a site to create a new country.

While the archipelago’s native inhabitants fought for independence, the libertarians advocated a very different form of self-determination: the creation of a new country governed entirely through contractual, market relations. Inspired by the fictions of Ayn Rand and the myth of Robinson Crusoe, men such as Nevada coin dealer and land developer Michael Oliver, University of Southern California philosophy professor John Hospers, Rand’s former acolyte and paramour Nathaniel Branden, and international finance guru Harry Schultz founded the Phoenix Foundation with the hopes of forging their own private archipelago.

Fantasies of libertarian exit from society were not uncommon at the time. The 1960s in the United States was as much the heyday of market libertarianism as it was of New Left anti-capitalism. Fears of demographic, ecological, and monetary collapse, combined with anxieties over the activities of social movements seeking racial, gender, and economic justice and redress, hastened efforts to find ways to abandon the sinking ship of state and to start anew elsewhere. But where?

In seeking new places for a new country, exiters found their efforts frustrated by the territorial realities of state sovereignty. They soon turned to new far-away locales in which to realize their utopian dreams. Islands have long served as the basis for libertarian political ecology — the ideal space upon which the drama of individualism, of man alone, could be staged — but more important, perhaps, is that Oceania and the Caribbean were places of incipient decolonization.

Michael Oliver, one of the foremost exit advocates of the period and author of both A New Constitution for a New Country (1968) and the Capitalist Country Newsletter (1968–1970), made this clear:

A surprising number of nearly uninhabited, yet quite suitable places for establishing a new country still exist. . . . Many such places are scarcely developed colonies whose governmental or other activities are of little or no concern at all to their “mother” countries. There will be little problem in purchasing the land, or in having the opportunity to conduct affairs on a free enterprise basis from the very beginning.

Oliver was observant. This was, after all, the high point of decolonization. United Nations Resolution 1514 on the Granting of Independence to Colonial Countries and Peoples enshrined national self-determination as a fundamental right of colonized peoples. Given the uncertainties that would accompany processes of decolonization, libertarian exiters saw an opportunity to pursue individual self-determination in the very places struggling against colonial rule. The ugly and ironic perversion of Resolution 1514 should not be overlooked: in the era of self-determination, selfish-determination arrived in the Southwest Pacific.

Oliver had garnered some hard-earned experience at countrymaking. With support from wheat and housing magnate Willard Garvey, horologist and yachtsman Seth Atwood, and famed investor John Templeton, Oliver had first tried to build an island on an atoll south of Tonga. Tongan assertions of territorial water rights ended the project abruptly in 1972. They then sought to colonize, rather than build, an island by plotting to invade Abaco in the Bahamas. Although allied with an English lord, an American arms merchant, and three ex-CIA agents, Oliver’s efforts failed when Abaconian supporters withdrew and the FBI intervened. The Phoenix Foundation thus turned to the New Hebridean island of Santo, a place where Oliver had previously made contact with a chief named Jimmy Stevens.

By 1975 New Hebridean independence appeared not only possible, but probable. The British wanted out; the French held slim hopes of maintaining some presence in the archipelago. New Hebrideans themselves led the way to independence, through the Santo-based movement known as Nagriamel and the largely Anglophone Vanua’aku Pati (VP) — led by Anglican priests and intellectuals such as Walter Lini, Barak Sope, and Grace Mera Molisa — which formed in the early 1970s and drew inspiration from the examples of Ghana, Tanzania, and the United States’ Black Power movement.

Failed Rebellions

The VP and Nagriamel should have been natural allies. They shared many commitments: land to Ni-Vanuatu, the end of colonial rule, and self-determination. Up to this point, they had hardly been rivals. And yet Jimmy Stevens turned away from the VP and toward the Phoenix Foundation. Why? For one, the VP’s base was in the Anglophone Protestant church, which often found itself at odds with those in Nagriamel who tended to come from the bush and embraced kastom (custom), what anthropologist Margaret Jolly defines as a “self-conscious perpetuation of ancestral ways and resistance to European values and practices.”

Stevens equated custom with bush people, but leaders in the VP understood that the equation was not so simple. The Phoenix Foundation had mobilized around the idea of custom to further its own agenda and to cultivate a lasting political relationship with Stevens. But beyond custom, what Stevens and Nagriamel feared most is that they would not be directing their own destiny once independence arrived, and they chafed against what they perceived as second-class treatment by the Anglophone-dominated VP and its educated and politically cosmopolitan leaders.

Such concerns characterized struggles over decolonization in many places around the globe as the masses of working people, as well as ethnic and linguistic minorities, worried that a transfer of power from colonial to national rule would constitute little more than a shift from external to internal colonialism. Stevens proffered an alternative: drawing upon a certain cartographic logic, he emphasized that the New Hebrides was “an artificial creation, a colonial convenience,” and thus he would create an “autonomous, self-governing region or province of NaGriamel as part of a New Hebrides Confederation . . . based on Melanesian traditions.”

In order to pursue secession, Stevens relied on his libertarian allies and incorporated their ideological language. Warnings of communist influences, of taxation, and of VP shenanigans appeared with regularity in Stevens’s rhetoric, and the slogan “Individual Rights for All” began appearing on the Nagriamel flag. Eventually, with the Phoenix Foundation’s financial and logistical support, Stevens and Nagriamel launched a rebellion to secede from the new state of Vanuatu in 1980. That rebellion ended with death and displacement.

Stevens was sentenced to a long prison term and branded a traitor, even as he mourned the death of a son, shot during the rebellion’s suppression. His coleaders also served stints in prison, one of whom died from tetanus at the beginning of his sentence. Meanwhile, the collaborators in the Phoenix Foundation watched from a distant shore and then, like the British and the French, went home.

A Free Trade Zone

In 1995 Oliver returned to Vanuatu in a joint venture with Romanian economist Stefan Mandel. Mandel had managed to game the lottery system in the 1990s by purchasing every possible combination of tickets for the Virginia lottery’s $27 million jackpot. He had convinced investors to loan him money to purchase all the combinations, at the cost of some $7 million, in exchange for a share of the winnings. “I knew that I would win one first prize, six second prizes, 132 third prizes and thousands of minor prizes,” Mandel bragged. He pulled in nearly $20 million, but his investors saw little return on their investment after taxes, reimbursements, and Mandel’s appropriation of nearly $2 million as a “consulting fee.”

Because of Mandel, the US lottery system no longer allows people to fill in their own tickets. In addition, they have expanded the possible number of configurations to offset the possibility of another Mandel. In the late 1990s, Oliver and Mandel worked with the Israeli Mondragon group to try to create a free trade zone (FTZ) on Big Bay on Santo. In a subversive twist, the group took its name from the highly successful Mondragón cooperatives of the Basque region in Spain, but with vastly different aims in mind. Rather than creating workers’ cooperatives that provide an array of economic and social services, the Israeli Mondragon group sought a ninety-nine-year lease to create an economic and cultural enclave free of taxes, customs duties, and import/export regulations.

The free trade zone would have had its own postal service, currency, and offshore financial center. The effort initially moved forward, although Oliver left after a falling out with Mandel. In any case, it did not end well. In late 1999 and early 2000, Vanuatu’s Council of Ministers and its Foreign Investment Review Board approved the project, but it quickly foundered after an ombudsman investigation in early 2001 determined the deal was corrupt.

Five years later, in 2006, US ambassador to Papua New Guinea Robert Fitts reported to the United States Pacific Command:

The Vanuatu Minister of Lands [Maxime Carlot Korman] recently signed an MOU with an obscure group of American investors to consider establishing a free port with an autonomous government. This closely parallels a 1980 attempt by the Phoenix Foundation which was only ended by bringing in PNG troops (ref A). The 1980 version would have had the powers to issue currency, passports, and was supposed to have featured untaxed and unregulated free flow of capital. (C) Ambassador learned Sept 6 from the Vanuatu Deputy Prime Minister that many of the same American figures are behind the current effort.

At least one of those figures was Michael Oliver.

The MOU went nowhere. Memories of Oliver linger. Claims circulated that he was in Santo in 2015, at the age of eighty-seven, and were met with fanfare; they turned out to be false. But now, as in the 1970s, there are male chiefs and Ni-Vanuatu with rights to custom land who want to see it developed, and they remember his name. Nagriamel endorsed a 2019 plan to create a free trade zone on Santo. The desires and needs are as real as the differences of opinion among custom landowners. Some counsel development, while others counsel against it. Some want free trade zones and to lease land because of the promise of jobs and a potentially improved quality of life; others are concerned that FTZs constitute little more than a land grab and will bring minimal benefits to local communities. Such concerns are not new. The route to independence, as well as what it would look like, was intensely contested among Ni-Vanuatu, and the question of land rights is central to such debates.

Prior to the 1980 rebellion on Santo, a French official tried to explain why American speculators had targeted the New Hebrides in the 1970s. He concluded that they were looking to reproduce life as it was in “Guatemala in the good old days.” It is an unnerving indictment. As the official surely knew, the landowners’ belle epoque that preceded Guatemala’s democratic revolution in 1944 had been characterized by feudal lords and “their” indigenous serfs, wealthy landowners and indebted tenants, capricious rule and unquestioned submission. That schemes arose to resettle Vietnamese refugees on Santo as unpaid laborers suggests that the characterization is not necessarily an exaggeration.

The French official’s observation was a self-serving, exculpatory barb designed to forgive his own country’s colonial legacies, but it was also a sharp recognition of what lay just under the surface of the libertarian rhetoric and market idealism. Rather than a brave new world of widespread freedom, Vanuatu might have become little more than a patchwork landscape of private fiefdoms worked by a dispossessed class of Ni-Vanuatu. Little more, that is, than a Melanesian banana republic.

Exactly what free trade zones and crypto paradises — if they come to pass — hold in store for Vanuatu now is unclear. But the efforts from the 1960s and 1970s should give us pause, as should more recent libertarian private-country schemes. Over the past decade, the Seasteading Institute has sought out locations to colonize, beginning initially with the “high seas” and continuing more recently with a Tahitian lagoon and the coastal waters of Panama. A repurposed cruise ship, christened by its cryptocurrency-enthusiast owners “Satoshi,” floated around the Circum-Caribbean for a while with similar private country aspirations.

Bitcoin disaster capitalists, rebranded as the Puertopians, descended on Puerto Rico after Hurricane Maria with promises of charity, wealth, and progress. Self-professed “radical social entrepreneurs” competed with former Ronald Reagan administration officials to develop free private cities and special economic zones in Honduras, with the blessing of an illegal regime that came to power through a coup d’état. These may be only the most visible of the varied projects underway. But at least thus far, all of these initiatives have floundered in the face of understandable opposition by communities that see such schemes for what they are: colonization, real estate speculation, land grabbing, and an assault on democracy and national self-determination.