- In 2012, Liron Shapira angel invested $10,000 in Coinbase and later sold his stake for $6 million.
- If he hadn’t diversified, Shapira’s stake would’ve been worth around $25 million when he exited.
- The blockchain skeptic breaks down why he now thinks all of crypto is “essentially worthless.”
Despite having profited millions from crypto, Liron Shapira says the nascent space is “essentially worthless” and “should all be shut down.”
This is a sentiment often expressed by bulge bracket bank execs, FOMO investors who lost their life savings from risky bets, and those who’ve fallen prey to scammy NFT projects.
As both an early bitcoin holder and angel investor in Coinbase, Shapira has positioned himself uniquely – whether purposefully or not – in a market prone to volatility and somehow exited unscathed. Although around 50% of the 34 year old’s net worth comes from investments in the industry, he’s become one of crypto’s most vocal critics.
In 2007, Shapira began researching cryptography at the University of California, Berkeley. He later purchased 200 bitcoin, when the token was trading around $5 each, an investment that would have been worth roughly $3.9 million on Tuesday, according to Messari. In the most bullish scenario, he thought bitcoin could be “the world’s most optimal payment structure.”
Bitcoin was interesting, Shapira says, because it solved the “double spending problem,” also known as when someone alters the blockchain to replicate a file, allowing a digital token to be spent more than once.
“That’s the number one thing that blockchain does. You don’t have a middleman and yet you prevent double spending on the ledger,” he told Insider.
Missing gargantuan returns, Shapira gradually sold all of his holdings in a decision that he describes as “the correct way to play my hand based on the information at the time.” Every time he made more money from the initial investment, it was tempting to sell, he says, adding that he wasn’t sure if the token’s price hike would be sustainable.
Then came his most notable investment, Coinbase.
In 2012, he cut a $10,000 check through FundersClub – comparable to an AngelList syndicate – to the crypto giant.
He secured a stake nine years before the now multi-billion dollar company went public for two reasons: its founder Brian Armstrong, and the startup’s lead on being the first official on-ramp into bitcoin.
“It was very simple,” Shapira said, describing his investment thesis at the time. “If the bitcoin space is going to be big, then it really seems like they’re the best picks and shovels.”
—Liron Shapira (@liron) April 14, 2021
Exiting Coinbase at the top
Throughout the years, however, Shapira grew disillusioned with crypto. He now describes it as an ecosystem filled with “bloated minimal viable products (MVPs),” referring to projects that don’t have a “logically coherent value prop story.”
After continuing to observe the space, while keeping his stake in Coinbase, he saw Web3 startup pitches that didn’t seem realistic. “It just doesn’t do much,” Shapira said of blockchain technology. “It’s a very academic curiosity.”
A year before Coinbase’s share price dropped nearly 80% and the company was shrouded in controversy related to a former employee’s alleged insider trading scheme, Shapira exited his position in 2021. At the time, he’d turned his $10,000 investment into $6 million, according to his tax return viewed by Insider. That same check size, however, would have been worth $25 million if he hadn’t diversified throughout the years.
Exuberant returns aren’t unheard of in crypto, however. If someone bought one bitcoin for $10 in 2012, their investment would have jumped 189,770% to $1.89 million by Tuesday, according to Messari.
“By the time of the direct listing, I though it was ridiculous how much of my portfolio was in Coinbase, which is something I barely even believed in,” he said. “My portfolio was lopsided like crazy.”
After Coinbase went public, it notched a valuation of $86 billion, which Shapira didn’t expect in his “wildest dreams,” but ultimately he thought the space was close to crashing. He has since predicted that Coinbase shares would drop further, going as far as to hedge bets against the company he gave his first angel investment to.
“A lot of people on Twitter are accusing me of like, ‘Wow, this guy’s so bitter about crypto. He must have missed the boat,'” Shapira said. ‘”No, I secured the bag. I just think it sucks.”
‘The Michael Burry of crypto’
Shapira’s failed attempt at his first tech startup, called Quixley, gave him insight on what it looks like when young founders are scrambling to run a business, he said.
“I was 21 and didn’t know what I was doing. Somehow, I managed to eventually raise $170 million,” he added, citing Alibaba as a strategic investor. “It ended up crashing and lighting all the money on fire. I know what it’s like to be on the Titanic when everybody acts like everything’s okay.”
Now, Shapira says he wants to be “the Michael Burry of crypto,” aspiring to be the Scion Capital hedge fund manager who was one of the first investors to predict the subprime mortgage crisis and then profit from its downfall.
He has garnered a following for his crypto criticisms on Twitter, citing popular blockchain game Axie Infinity as a “Ponzi scheme,” while calling out venture firms like Andreessen Horowitz for backing its parent company Sky Mavis.
Shapira has never worked full-time in crypto, however, and currently has zero money invested in the space.
When asked why he remains vocal about an industry he’s no longer participating in, he responded: “The only reason I care is because I think it’s a good place to speak out and help the industry. I’m a natural contrarian, and I’m attracted to positions where a lot of smart people think the opposite.”
“It’s just multilevel marketing and it’s a thing that is destroying value is wasting everybody’s time,” Shapira said of crypto. “It’s pretty big and even smart people are getting into it so I would love for it to just not exist.”