Miami’s Love Affair With Crypto Is Souring as Bitcoin Faithful Flock to the CityOn the eve of the annual bitcoin conference, the city and its mayor have mostly moved on from crypto
Kaseya Center, the home court of the Miami Heat, was formerly known as FTX Arena.
By Deborah Acosta
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| Photographs by James Jackman for The Wall Street Journal
May 10, 2023 5:30 am ET
A year ago, when the annual bitcoin conference opened in Miami, the city was arguably the country’s biggest booster of digital currencies. MiamiCoin traded on a global crypto exchange. The Miami Heat basketball team played at FTX Arena, and cryptocurrency exchange Blockchain.com was preparing to move its headquarters to a splashy office in the city’s Wynwood neighborhood.
Today, as Miami prepares to host Bitcoin 2023 on May 18, none of those things is true anymore.
Skepticism toward digital currencies has been rising across the U.S. ever since FTX filed for bankruptcy last year and its co-founder, Sam Bankman-Fried, was arrested on fraud and other charges related to the cryptocurrency platform.
While the world’s two biggest cryptocurrencies—bitcoin and etherum—have rallied this year, the global market cap for cryptocurrencies is down 60% from its peak in November 2021, according to data provider CoinGecko.
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Probably nowhere has the country’s about-face on crypto been more pronounced than in Miami, where Mayor Francis X. Suarez once referred to his city as the world’s crypto capital.
The Heat are now playing their postseason home games at Kaseya Center, after Miami-Dade County severed ties with FTX. The exchange that hosted MiamiCoin halted trading in March after its value dropped more than 99%. Blockchain.com won’t be occupying the Wynwood office space, triggering a lawsuit for unpaid fees between the building’s owner and the broker.
Even though he continues to receive his salary in bitcoin, the mayor no longer takes every chance to promote Miami as a crypto haven.
“We thought it was a great opportunity, as a fintech marker, for us to jump in and be able to differentiate ourselves,” Mr. Suarez said about digital currencies in a recent interview. “I don’t regret us being innovative. You learn, you grow, you get stronger.”
 Miami Mayor Francis X. Suarez posing last spring with the newly unveiled Miami Bull statue outside the Miami Beach Convention Center.
Many other Miami officials and business leaders have soured on crypto, no longer counting on it as a main driver in the city’s quest to become a world-class business and financial center. Even some locals who are part of the city’s digital currency economy are openly critical.
“Most of crypto was a pyramid scheme,” said Ryan Kirkley, a local businessman who runs and advises early-stage blockchain and artificial-intelligence companies and helps connect them with venture capital.
At Miami’s NFT conference earlier this spring, attendance was down by about 1,500 from last year, a spokesman for the conference said. Instead of the 45,000-square-foot warehouse that housed the main stage in 2022, the audience was relocated to an area less than half the size. Many chairs were still empty. The spokesman said the turnout exceeded expectations based on the market.
 ‘Most of crypto was a pyramid scheme,’ says Ryan Kirkley, a Miami businessman who runs and advises early-stage blockchain and AI companies.
Now, some of the city’s most prominent crypto proponents are backing away from the business. E11even Hotel and Residences, named for the popular nightclub where much of the crypto crowd spent their free time and money, accepted crypto for condos in a building where some units were priced as high as $20 million. After the collapse of FTX, which facilitated its crypto transactions, it stopped accepting payments in digital currencies.
Other crypto-related firms are ensnared in legal actions. Yuga Labs last year was valued at $4 billion and its flagship NFT collection—known as the Bored Ape Yacht Club—was plastered on T-shirts worn throughout Miami crypto circles.
In December, the company was hit with a class-action lawsuit. The complaint alleges that the firm artificially inflated the price of its digital offerings by using celebrity insiders, who promoted the NFTs without disclosing their financial relationships to the firm.
 A mural in Miami features the Bored Ape Yacht Club NFTs.
MoonPay, a Miami-based firm that allegedly facilitated the NFT transactions between the firm and the promoters, also has been named in the suit along with multiple celebrities including Gwyneth Paltrow, Madonna, Justin Bieber and Jimmy Fallon.
“We strongly believe that these opportunistic claims are without merit and we look forward to proving as much,” a Yuga Labs spokesman said. The other defendants have either declined to comment or denied the allegations.
Meanwhile, the NFTs seem to have lost their cool factor. “There’s no one walking around with a Bored Ape on their shirt this year,” Mr. Kirkley said at the eMerge Americas conference, Miami’s annual flagship tech event.
Despite the rapid decline in the crypto business, Miami’s economy and property market show little sign of strain. Residential real-estate prices are growing at the fastest pace in the nation. The office market has a vacancy rate of 16.2% according to JLL, one of the lowest of any major U.S. city. The vacancy rate in Miami’s Brickell district fell in the first quarter to 6.6% from 7.5% a year earlier, according to Blanca Commercial Real Estate, a commercial real-estate-services firm
“The crypto zeitgeist was a global phenomenon. We should step away from debating the merits of cryptocurrency and instead focus on the fact that it brought so much talent and capital into Miami,” said Ken Griffin, the chief executive of hedge fund Citadel who moved his firm’s headquarters to Miami from Chicago last year.
Much of the talent that came to Miami, he said, will likely stay and start new businesses. At the same time, more mainstream financial companies continue to add offices or expand in South Florida.
 Office vacancy rates in Miami’s Brickell district have been falling as more mainstream financial companies expand their presence in the city.
“The halcyon days of Miami crypto may be behind us,” said Joe Haggenmiller, who until recently was head of markets at XBTO Group, a Bermuda-based crypto firm that has its largest U.S. office in Miami. “We seem to be transitioning to a community of established financial firms with crypto operations.”
JPMorgan Chase is the latest traditional financial company with plans to expand its operations in the city “to meet the market demand and growth that Miami is experiencing,” it said. Developers Swire Properties and Related Cos. are partnering to build a 1,000-foot-tall office tower in the Brickell district.
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Mr. Suarez, meanwhile, has turned his focus away from luring crypto firms. Instead, the mayor is spending more time going after tech startups, their financial backers and AI. In 2022, $5.8 billion in venture capital funding flowed into South Florida, a record for the region, according to eMerge Americas.
This year Miami’s venture fundraising is running at about a quarter of what was raised in the first quarter last year, according to data and research firm PitchBook. Mr. Suarez is trying more aggressive tactics. He recently told his staff to cold call the top 23 venture-capital firms that were listed in a news article he came across.
“This is not a free-flowing funding environment as it was before,” Mr. Suarez said.
Miami has shifted its focus from luring crypto firms to going after tech startups, their financial backers and AI.
Write to Deborah Acosta at deborah.acosta@wsj.com |
