This could be one of the largest missed chances for wealth generation in Bitcoin’s history, leaving behind a legacy of corruption, revenge, and extortion.
The unusual saga began ten years ago in the Caucasus mountains of Georgia. The individual who lost out on what might now be a $21 billion fortune is Georgia’s reclusive leader. He has since resorted to using the force and resources of a nation-state to retrieve what he failed to acquire when he turned down a reputable offer to mine Bitcoin in the early days of cryptocurrency.
I first learned fragments of this tale this past summer, from a contact in Tbilisi, the capital of Georgia. He is unusually well-connected and has a knack for recounting real-life stories featuring eccentric characters from around the globe.
Over the years, I’ve found that his stories tend to be true more often than not, so upon hearing this one, I was eager to dive deeper, believing I would spend a week on it to craft something worthwhile. Instead, I ended up spending months exploring a geopolitical crypto labyrinth that continually served up bizarre revelations.
I published the first account in the New York Times earlier this month, detailing how the Georgian leader in question, Bidzina Ivanishvili, pursued his former financial advisor through pliable courts, intelligence agents, an international kidnapping, and a jailhouse beating in an ongoing and as-yet unsuccessful attempt to seize control of the advisor’s Bitcoin assets.
What follows is the previously untold story of the true depth of Ivanishvili’s Bitcoin blunder and his efforts to reclaim at least a portion of the cryptocurrency in ways that resemble coercion. It can be read as a stand-alone piece separate from the New York Times article.
First, let’s revisit Georgia a decade ago. The post-Soviet republic was mainly recognized outside its borders for its delicious cuisine and an ancient winemaking heritage of which it remains immensely proud. Then-President Mikheil Saakashvili, who led Georgia for ten years until 2012, was charismatic, youthful, and somewhat unhinged, working to rid Georgia of deep-seated corruption, opening it to global investments, and forging ties with the West, thereby distancing the nation from Moscow’s influence. However, his tenure was marred by his eventual descent into power abuse.
Enter Ivanishvili, who took over from Saakashvili and later had his predecessor imprisoned on politically-driven charges. Ivanishvili held office only briefly, choosing instead to shape Georgia from behind the scenes. Much media coverage of his ongoing shadow governance has discussed his attempts to re-establish Russian influence in Georgia and retract essential democratic freedoms.
What had been kept from public scrutiny, until he initiated an extrajudicial operation to punish his former financial advisor and recover nearly $1 billion in what he perceived as his “stolen” Bitcoin, are his escapades within the cryptocurrency domain.
In 2014, a crypto mining venture called Bitfury established a data center in Georgia. Co-founded by a Latvian computer scientist, Bitfury employed a Georgian executive who suggested they leverage the country’s favorable business regulations and remarkably low electricity rates, which are the largest operational expense in crypto mining.
At the time, Bitfury was facing a unique dilemma: it was loaded with Bitcoin but lacking in cash. The young company mined so much Bitcoin that it appeared profitable on paper yet hesitated to sell any to raise funds needed for expansion. Its executives believed Bitcoin’s value would continue to grow and that it would eventually be recognized as a global store of value. But this belief was ahead of its time, as many traditional investors regarded Bitcoin’s potential with skepticism and were reluctant to invest in firms whose business models hinged on an unproven asset. Thus, Bitfury explored creative funding methods: among other strategies, the company began leasing mining capacity to select investors willing to view the long-term horizon. It was a digital equivalent of renting a small plot of farmland, planting crops, and keeping the harvest at the end of the lease.
Georgia is a small country, and Ivanishvili is a towering figure within it. Bitfury representatives pitched an intriguing proposal to him: purchase $50 million worth of processing time from their mining machines and retain the Bitcoin produced. Three individuals familiar with the meeting provided detailed accounts. One mentioned that the pitch occurred at Ivanishvili’s residence situated on a hill overlooking Tbilisi, which can be seen from several vantage points in the city. The building is a quirky, sprawling blend of glass and steel, designed by a Japanese architect.
Although Ivanishvili’s estimated net worth has decreased considerably in recent years, he remains a wealthy individual. Forbes lists him at a current worth of $2.7 billion. He earned his fortune in Russia during the tumultuous 1990s through electronics imports and continued with investments in banking, conventional mining, and real estate. He sold off most of his Russian holdings before entering Georgian politics.
In his earlier Russian days, he went by the name Boris. Despite speculation from his adversaries suggesting he might be a Manchurian candidate groomed by Russian intelligence to bring the defiant Caucasus nation back under Russian control, Ivanishvili has continuously denied this. It’s equally plausible that his background and perspectives naturally align with Russia. However, this view does not resonate with most Georgians. Many support closer ties with the European Union and harbor disdain for Vladimir Putin due to his invasion of Georgia in 2008, which led to the occupation of parts of its territory by Russian troops.
Ivanishvili is known for his extravagant hobbies and preferences. He had people uproot rare trees throughout Georgia and replant them in a special park dedicated to his fascination with giant trees, a project that likely cost millions. “Since 2016, Georgians have witnessed the surreal spectacle of some of the nation’s most magnificent trees being uprooted from their longstanding homes in forests and gardens and transported by barge to a park on the Black Sea coast,” Eurasianet reported in 2020.
If the rejected $50 million Bitcoin venture sounds implausibly ambitious, consider that he once reportedly spent $96 million at Sotheby’s for a single Picasso painting, winning a bidding war that began at $50 million. This transaction marked the second-highest price ever paid for a painting at auction in 2006. For years, a replica of that painting was said to hang in his posh Tbilisi mansion, the very location where he considered the merits of investing in Bitcoin.
In 2015, while weighing the Bitcoin proposition, Ivanishvili’s fiat fortune was suddenly threatened. A rogue banker at Credit Suisse, where some of his finances were managed, was submitting falsified investment reports, leading to significant losses amounting to nearly $1 billion for Ivanishvili. With assistance from the same advisor later imprisoned in the Bitcoin dispute, Ivanishvili managed to secure legal judgments against the bank. However, he has faced difficulties in collecting these damages, in part due to his current status under U.S. financial sanctions for undermining democracy. The wealth manager involved in the fraud served prison time and took his own life in 2020.
As such, in 2015, during the early revelations of the fraud, it may not have been the best moment for Ivanishvili to consider investing $50 million in a collection of computers submerged in a cooling liquid based on a vague expectation of generating digital tokens with minimal intrinsic value. One might also speculate that after being deceived by one financial manager, Ivanishvili had grown wary of others proposing to manage and amplify his wealth.
Back then, Bitcoin was still considered a niche financial product, trading at a median price of around $272 in 2015, compared to today’s $115,000. It attracted true believers and faced criticism from skeptics who doubted Bitcoin’s long-term viability, given its volatility.
In Georgia at that time, one of the most prominent Bitcoin advocates was George Bachiashvili, the same financial advisor who would later have a dramatic fallout with Ivanishvili. Just 30 years old then and equipped with an MBA, he recognized the potential of blockchain technology and grasped its complex concepts and applications, according to those who knew him.
“Bitcoin functions more as a medium of exchange, with utility that can be applied. That’s why we don’t classify it as a commodity,” Bachiashvili, whose private-equity firm was an early investor in Bitfury, mentioned in a 2014 CoinDesk interview. “We see it as a medium of exchange that will be utilized for financial transactions and proofs of ownership.”
Bachiashvili aimed to ignite interest in the burgeoning crypto ecosystem among others.
To that end, he assisted Bitfury in presenting a Bitcoin investment opportunity to Ivanishvili. Nestled in his glass abode adorned with art replicas (the originals were stored in a London vault), Ivanishvili quickly dismissed the $50 million mining proposal without exploring any technical specifics, as recounted by three sources familiar with the episode. “I don’t recall anyone delving into details as (Ivanishvili) didn’t express any interest, leading to discussions ending,” said one individual.
Timur Tskivadze, a lawyer for Ivanishvili, asserts that he has no knowledge of this incident and sees no reason to comment, as it has “nothing to do” with the subsequent legal battle that resulted in Bachiashvili’s imprisonment.
As a co-founder of two banks—one in Russia and the other in Georgia—Ivanishvili felt much more at home with traditional currencies and lending.
When Bachiashvili and Bitfury were unable to pique Ivanishvili’s interest in Bitcoin, Bachiashvili sought a loan from Ivanishvili’s Georgian bank to personally invest in Bitcoin mining, mimicking the offer Ivanishvili had turned down. The Georgian leader consented, approving a high-interest loan. With the loan and personal funds, Bachiashvili rented $6.3 million in mining capacity from Bitfury, generating 24,000 Bitcoin a year later.
He repaid the loan with an additional $600,000 in interest, and the matter seemed resolved. However, almost a decade later, Ivanishvili accused the former advisor of theft concerning the Bitcoin. Ivanishvili contended that the loan entitled him to part of the mined Bitcoin. In May, Bachiashvili, who had escaped Georgia, was captured in a parking lot at an Abu Dhabi hotel, blindfolded, and returned by private jet to Tbilisi to serve an 11-year prison sentence on dubious charges of theft and money laundering. He was assaulted while incarcerated.
One can speculate that Ivanishvili’s determination to punish his past advisor and access his cryptocurrency wallets may have been fueled by the enormity of his Bitcoin oversight. Through his lawyer, Ivanishvili denied orchestrating the kidnapping, imprisonment, or beating of Bachiashvili.
Had Ivanishvili accepted the $50 million offer in 2015—and assuming his mining contract produced Bitcoin at a similar ratio to how Bachiashvili’s $6.3 million investment did—he could have become one of the largest individual Bitcoin holders globally, a “whale” possessing approximately 190,000 Bitcoin. Currently, his hypothetical crypto riches would have exceeded $21 billion, far surpassing his known fortune. Georgia’s trajectory might have shifted too, though it’s difficult to say whether a significantly wealthier Ivanishvili would have simply enjoyed life and pursued even more extravagant ventures or utilized his crypto wealth to amplify his detrimental influences over the country.
Satoshi Nakamoto, whose true identity remains unknown, established Bitcoin after the 2008 financial crisis, envisioning that a decentralized digital currency would provide a safer alternative to an unstable traditional banking system. To combat inflation and prevent monetary manipulation, Nakamoto capped the total Bitcoin supply at 21 million tokens, of which about 19.9 million have already been mined.
When Bitfury initiated its mining operations in Georgia more than a decade ago, the rate of new Bitcoin production was much faster than today, illustrating the cryptocurrency’s deliberately staggered deflationary structure, whereby the rewards for validating blockchain transactions are halved roughly every four years.
For those gutsy or eccentric enough to invest in Bitcoin during those early days, mining offered a clear route to wealth creation. Back then, acquiring Bitcoin on the secondary market wasn’t as straightforward as it is now; exchanges were primitive, unregulated, vulnerable to hacks, and often faced liquidity issues.
Given Bitcoin’s mark on the current market, Ivanishvili appears intent on acquiring the cryptocurrency by any means necessary. The Georgian leader’s renewed interest in his former advisor’s Bitcoin holdings coincides with a sharp decline in his own net worth.
Global billionaire estimators from Bloomberg and Forbes have slashed Ivanishvili’s wealth estimates this year by $2 to $3 billion—Bloomberg even excluded him from their prestigious roster of the world’s 500 wealthiest individuals. Various factors contributed to this decline, but U.S. financial sanctions and ongoing issues with Credit Suisse likely played significant roles.
Prior to Bachiashvili’s trial in Tbilisi, Ivanishvili’s lawyer presented a peculiar proposal to his counterpart on Bachiashvili’s defense team. This bizarre document masked an intimidation tactic beneath a legal façade.
Casually shared via Whatsapp, the document indicated that Ivanishvili was willing to accept 60% of what he claimed was his stolen Bitcoin, with the implicit understanding that criminal charges would be dismissed if Bachiashvili acquiesced.
Furthermore, Ivanishvili threatened that for each month Bachiashvili remained inactive, the perceived crypto debt to the Georgian leader would rise by 5%. By the time the court ruled against Bachiashvili—the Whatsapp communication intimated that an acquittal was unlikely—“the accused would forfeit any chances of discounts,” becoming liable for 100% of the Bitcoin, along with jail time. Bachiashvili still maintains substantial Bitcoin assets, though the exact amount from the initial mining investment remains uncertain.
Ivanishvili’s lawyer confirmed he sent this proposal on behalf of his client, describing it as “standard practice” in criminal cases. Bachiashvili labeled it extortion and declined. As threatened, he was swiftly convicted.
David Jandieri—one of Bachiashvili’s lawyers specializing in international matters—soon became a target of a smear campaign on a pro-Ivanishvili television channel, accused of being a Western spy and an aspiring politician. He was also subjected to questioning and threatened with criminal charges related to his defense of Bachiashvili.
Worried for his safety, Jandieri subsequently fled Georgia via a convoluted route, mimicking Bachiashvili’s own escape from Tbilisi in March. His journey met an alarming complication at Georgia’s border with Armenia when security personnel informed him that his passport was no longer valid. They took pictures of him and made calls. Afterward, he was allowed to proceed. Jandieri now lacks access to his client, which may have been the intent all along.
The fallout from the Bitcoin debacle continues to spread in strange manners. The head of the Georgian security agency who personally traveled to Abu Dhabi to enforce Bachiashvili’s return suddenly resigned after only five months, with no clear reasons given.
While imprisoned, Bachiashvili claims he faced threats from the prison warden, who urged him to surrender his Bitcoin to Ivanishvili. After Bachiashvili refused, he was savagely assaulted by another inmate. Later, Georgian authorities asserted that Bachiashvili orchestrated his own attack to present a favorable image in international legal settings.
And what happened to the prison warden? He abruptly resigned from his position and was later discovered dead from a single gunshot wound in his garage. Georgian officials stated he likely took his own life.
