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A temporary City Hall for Bitcointopia. (Photo courtesy of Morgan Rockcoons)

The United States of Bitcoin will not be in Elko County.

Less than six months after Las Vegas bitcoin trader Morgan Rockcoons pledged to create a bitcoin utopia outside of Elko, federal prosecutors arrested the embattled Bitcointopia leader for wire fraud. According to the indictment, Rockcoons “would offer to sell land in Bitcointopia, and accept bitcoin as payment for land purchases, when in fact he had no land to sell.”

Blockchains LLC in Storey County wants to build a community around blockchain technology, but Bitcointopia bears little resemblance to the Northern Nevada startup. Where Blockchains LLC is backed by millions of dollars and has started to partner with some of the state’s top players, most of Rockcoons’ followers had only his word.

In an area of Nevada known for its libertarian streak, Rockcoons had hoped to run a government separate from the United States. In June, he told The Nevada Independent that the micronation would fall under an assortment of founding documents, from the Articles of Incorporation to the Outerspace Treaty of 1966. As a sovereign nation, he would negotiate his own treaties and produce his own electricity.

“Trust me, I understand how crazy that sounds,” he said.

First he said he needed settlers, and that’s where the land came in. On its website, which is still active despite the arrest, Bitcointopia claimed to have thousands of acres to sell for 0.5 bitcoin per acre (about $2,750). But Bitcointopia didn’t actually own the amount of land it claimed to.

Federal prosecutors wrote that it was “part of the scheme that defendant would falsely state on the website www.bitcointopia.org, ‘the land is currently owned by Bitcointopia, Inc. corporation,’ and 500-1,000 Acre plots are for sale for 0.5 [bitcoin] per acre,’ when in fact defendant owned two non-contiguous parcels of land in Elko County totaling less than five acres.”

In an interview with The Nevada Independent, Rockcoons suggested that he had purchased additional land under other names and owned about 170 acres as of early July. But as of this week, according to the assessor, Bitcointopia, Inc. owned 4.97 acres of land in two parcels.

During the interview this summer, Rockcoons had made numerous grand and unlikely claims about Bitcointopia, which he said would be constructed at first with container structures near the Humboldt River and could create new jobs for the county. At one point, Rockcoons said that the community would use the river as its water source, dismissing any questions about water rights or the fact that rights on the Humboldt River are some of the most contested claims in Nevada.

Rockcoons felt that the bitcoin was too regulated because it challenged traditional currency. His goal, he said, was to create a sovereign city more accepting of bitcoin than the United States.

“I’d love the United States to do something. But I have no faith anymore,” he said. “After this case, I’ve lost all faith. I’m a patriot but I’ve lost all faith in the form of the federal government.”

But Bitcointopia, federal prosecutors say, was more than a quixotic vision. It was fraudulent.

According to a search warrant obtained by Forbes, Bitcointopia received about $96,000 — but three of the people who purchased land had not received their deeds as of Nov. 7. The amount of land that they would have purchased came out to be more than five acres.

Rockcoons told another cryptocurrency enthusiast, who bought into Bitcointopia, that he had filed a deed with a county when in fact, according to the search warrant, he had not. The search warrant also alleged that Rockcoons did not own any additional land in Elko County.

“Records checks confirmed that other than the two parcels noted above, there have been no deeds of sale or transfer, or requests to transfer or sell any land by Rockcoons or any other name or entity associated with him,” a federal agent wrote in the search warrant.

Rockcoons was arrested on Oct. 28 in Chula Vista, California. One week earlier, the day after President Donald Trump visited Elko for an election rally, he tweeted to the president.

“Thanks for coming to Elko, we are building a brand new MegaCity here that will provide millions of jobs for Americans in the immediate future thanks to Bitcoin, AI and Nevada,” he tweeted.

Rockcoons’ case will be tried in federal court in Southern California.

Las Vegas attorneys David Chesnoff and Richard Schonfeld, who represent Rockcoons, did not respond to questions, but told the San Diego Union-Tribune their client will plead not guilty. Elko’s county manager was out of town this week and could not comment on the incident.

This is not Rockcoons’ first run in with the law. The newest charges build on an older indictment, also prosecuted by the Southern California District, that Rockcoons had assisted an undercover agent in using bitcoin for a sale of hash oil, which contains the federally controlled drug, THC.

If the United States of Bitcoin won’t be in Elko County, it could be in Storey County.

As Rockcoons was offering parcels for sale on Twitter and in bitcoin forums, another Nevada bitcoin utopia project was in stealth-mode, quietly building relationships and closing on 67,000 acres of land — an amount nearly the size of Reno — at the Tahoe Reno Industrial Center.

After spending more than 11 months behind the scenes, Blockchains LLC went public on Nov. 1 with its plans to create an Innovation Park for the digital technology that powers bitcoin and other cryptocurrencies. The company’s CEO and a multimillionaire lawyer, Jeffrey Berns, said at the unveiling in November that he believed in the power of blockchains enough to invest $250 million to start up Blockchains LLC. He has floated the idea of constructing everything from a blockchain bank to a blockchain-based master-planned community at the industrial park

Although the digital currency known as bitcoin is the most recognized use of blockchain technology, Blockchains LLC plans to use a different platform, Ethereum, for its community.

“I’m not a developer,” Berns said in November. “I have no idea how to code. I’m older than most of you in the audience, and I come from a profession that many of you think causes more problems than solutions. But I will tell you this: In all my life, in all of my career as a lawyer, I never saw a technology that I believed in more or one that I thought really could change the balance of power back to us instead of corporations, instead of Wall Street."

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