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The Good Life

The Crypto King

John Caruso is only 28, but he has made hundreds of millions of dollars trading Bitcoin and other cryptocurrencies
Sep 6, 2019 | By Michael Kaplan
The Crypto King

John Caruso is slightly disappointed. After 13 hours of playing blackjack for $5,000 to $10,000 per hand at Aria Las Vegas, he is ahead by  $140,000. “Not the $800,000 I was hoping for,” he says. “But I can’t complain.”

Exiting the casino, he and his crew pile into limos for the two-mile-drive to Signature LAS, a private section of McCarran International Airport. Then it’s a short flight to Scottsdale, Arizona, where Caruso’s company is headquartered. They step aboard an Embraer Legacy 500, a $20 million jet that seats 12 and can exceed speeds of 500 miles per hour.

As always, a pair of bodyguards accompany Caruso, a fair-skinned and slender 28-year-old. Skylar and Scott, former Marines, are well-trained in all sorts of lethal arts. Dressed in black, they exude a degree of menace that automatically keeps most bad actors at bay. Their presence seems like overkill.

Then, as the plane ascends, Caruso reaches into his pocket for a metallic USB flashdrive. At first glance, the two-inch-long device looks like what you would find at any workplace in America. It usually holds photographs or documents. But this one is different. It has a little screen containing a string of numbers.

“This is about $20 million,” he says as he slides it across the table. “It’s actually a modified USB, known as a cold storage wallet, specifically designed for holding crypto.”

Welcome to the high-flying world of cryptocurrency, the digital form of money through which an elite cadre of traders like Caruso have become incredibly wealthy in less time than it takes to get an MBA. Caruso deals in high valuations of a commodity that is anonymous and notoriously vulnerable to heists. (Vigilant about security, Caruso has managed to keep his stash unmolested.) His friends call him Crypto King, in recognition of his managing some $379 million in cryptocurrency, including Bitcoin, the best-known version. More than half the money is his.

Most nights, between 11 p.m. and 3 a.m., Caruso is in his element. He works out of a stone quiet, dimly lit home office in Scottsdale. It has a single window and a balcony. He calmly toggles his attention between three monitors. Behind him, 
covered by a painting, is a trapdoor built into the wall. “In case of a break-in,” he says, adding that it came with the house. A more obvious door leads from this room into his bedroom.

He trades 15 different forms of crypto, hopping in and out of 30 some-odd trades per session. His office is his favorite spot to operate, but he also works on the road. In June, during a trading day that began on a laptop in a Manhattan hotel room and ended over lunch at Nello, he had his largest return ever. “I wanted to make a big trade and push the envelope,” says the Long Island native. He executed five trades to buy $100 million in Bitcoin. “That day, Bitcoin went from 12,000 to over 13,000. I made $45.7 million. It was a special day,” he says. “But, to be honest, I could have lost $10 million.”

He’s finished in the red before, saying his biggest per-session loss was $4 million. Nevertheless, he handled that day with the same equanimity that characterized his $45 million gain. “Everybody else was going crazy and it was almost awkward to watch,” he says of the win. “But I retired early like I always do. It was a long day. I just watched TV and fell asleep.”

Two years from turning 30, Caruso has already become a private-jet connoisseur. One day earlier, following a session of blackjack at Aria, he leaves the casino’s high-limit room with a leather bag containing some $200,000 in cash slung over his shoulder, ready to look over a potential new plane. Coming along is the team from Zima Digital Assets—the name stands for Zero Is My Algorithm—his hedge fund that specializes in cryptocurrency. There’s business partner and CEO Zach Salter; Michael Giordano, the chairman of the company; his security detail and his fiancée Ana. Salter and Ana are also in their 20s. Giordano is the elder statesman of the group, at 40.

The aircraft can seat eight, with a small door that would require most people to crouch when they enter. “You can stand in here without ducking,” Caruso says to Ana. “That’s cute, baby.” Then he finds out that it can’t fly from Los Angeles to New York without refueling. That’s a deal-breaker. “Right now,” he says, “we need a second plane that can go coast-to-coast. That’s where things are at.”

“A USB is always with Crypto King,” says Giordano, who comes from a background in private jet management and trading on Wall Street. “At all times, he is either in a position or moving out of a position or possibly looking to get into a position. That’s why he has security. He can’t just walk around with that kind of money on his body. I once told a couple people at NASDAQ to get out of the elevator because I didn’t want them in there with him.”

Cryptocurrency values can swing wildly, which necessitates a need to be nimble. Unlike traditional stocks, they lack decades of history and intrinsic value. (To read all about the nuts and bolts of cryptocurrency, see the story on page 74.) Caruso trades in a rapid-fire style that is a challenge for most others in the space. “I look for micro opportunities,” he says, adding that he eschews long-term positions, which are the norm. “I make a point or two quickly, arbitraging when possible, and get out. . . . I’m usually in a position for two hours max and I have a stop loss of four percent. There have been years in which I’ve had triple-digit gains.”

Favoring giant Fendi sunglasses, torn designer jeans, cashmere hoodies and high-fashion sneakers, the Crypto King looks like a real-life, less-cocky, unfailingly polite version of Bobby Axelrod from “Billions.” An Axe for the virtual-cash age, he has a $50,000 Rolex on his wrist.

Back at Aria, Salter goads Caruso into playing a game of pool for $10,000. They are in the casino’s sleek, duplex Sky Villa suite, which has a gorgeous billiards table on the second floor. They played last night for the same sum, and Caruso won. The two each drop a $10,000 banded stack of hundreds onto the rail of the table.

Caruso wasn’t always a high roller, gambling for sums that make others weak. Early on, despite his wealth, he stayed low-key, living in his parents’ home on Long Island. “I was completely introverted,” he says. “ But introversion is the key to my success. And I knew that if I went broke I could start over again. Besides, I didn’t need to make $50,000 a month so I could go out every night.”

Salter breaks, and manages to win back his $10,000. He celebrates by spreading hundred-dollar bills on the table and posing for selfies. Caruso shrugs it off, munching on a leftover chicken finger, the remnants of a room-service feast that most kids would kill for: spaghetti, fries, chicken fingers, steak and a couple of big desserts. “I eat like an eight-year-old,” he says with pride. “Bring me the children’s menu every time and I am really happy.”

Caruso was only 17 when he started his money-making ascent, skipping college and going right into finance. He began with a five-figure sum that he deployed for day trading. On top of that, he picked up small chunks of equity in exchange for making business introductions via family connections. “My parents both worked in finance. I went to La Salle Military Academy, was in every advanced math class and saw numbers in my head from an early age. I never had to do math on paper,” he says. “To me, it wasn’t about having a [diploma] showing that I could learn an advanced concept. It was what my bank account looked like.”

That account grew fat quickly. He claims he had accrued nearly $1 million by the time he was 19. He began to trade traditional currencies on the foreign exchange (Forex) market, while slipping in and out of positions with high-risk pink-sheet and penny stocks.

One year later, he says his bankroll had swollen to $4 million.

In 2011, he took his first dive into cryptocurrency. “A friend told me about it. My original investment was buying $96,000 worth of Bitcoin,” he says. One Bitcoin sold for 30 cents at the start of 2011. It climbed to a high of $31.91 before closing 2011 at $4 and change. Over the next few years, he put in an additional $2 million. “I thought I would get a round-trip ticket of up and down,” he says. “But the ride turned out to be vertical.” Albeit, with serious turbulence.

For the burgeoning currency, a $96,000 purchase in 2011 was huge, and not particularly easy to negotiate. “I bought it from the private side of the market. It came from a miner,” Caruso says, referring to so-called Bitcoin miners who create the coins by solving increasingly complex algorithms on the blockchain, which logs all of the coin creations. “He was serious enough to have more coin than he knew what to do with but no cash. He sold it for six- or seven- or eight-percent off the value.”

Caruso’s high-risk background in pink sheets and Forex eased the transition into trading crypto. But early sales, particularly those in the six-figure range, still had to be made hand to hand. The process was clunky, usually executed in a lawyer’s office (to maximize the legitimacy of dealing in a currency that was murky at best and favored by criminals at worst) and lacking the lightning-fast opportunities he desired.

In 2016, things changed. “It became a real market,” Caruso says. “Speed and safety and methods 
for trading large sums improved. Exchanges expanded. Opportunities came up to short crypto and to quickly move in and out of positions. It got safer and more people got involved. That was when I realized I could truly trade the market. There may have been 20 or 30 people around the world with the same idea. I figured that I would really be able to crush. And that’s what I did.”

Between 2009 and 2017, Caruso says his wealth spiked to more than $100 million. (During that time, the value of Bitcoin soared. What could be had for 30 cents a coin in 2011 rose above $19,000 in late 2017, then came back down to a few thousand per coin. At press time, one coin was worth roughly $10,000.) He went from living with his parents to a $17,000-per-month pad on Central Park South in Manhattan to a ritzy condo in the Sunny Isles section of Miami to a 30,000-square-foot house in the affluent Paradise Valley neighborhood of Scottsdale. (He relocated there full-time in 2017 to be close to a relative who was dealing with health issues.)

For all the money and moving, though, his lifestyle is downright ascetic. He avoids drugs and drink—he’s been keeping his friends sober by putting up $100,000 no-alcohol bets with each of them—and finds entertainment in traveling to auto-racing schools. On the side, he buys and sells super-cars. Early on, he plunked down $160,000 for a Lamborghini. His last car buy was a $1 million Ferrari F12tdf. “I drove it six miles, got the speed up to 120 and held onto it for three days,” he says. For fun, he takes luxe vacations and relaxes while gambling.

Caruso met Salter—who had been in the business of marketing luxury real estate—soon after checking out Scottsdale in 2016. A bit of a social butterfly around town, Salter introduced Caruso to his stylishly affluent crowd and convinced him to take on local investors. Suddenly, almost by accident, the two fast-friends were running a cryptocurrency hedge fund. They came up with the name Zima and focused on the newly vibrant market.

“He’s all IQ and I am all EQ,” says Salter. “Most of the individual investors have come from my group. I work on retention, relationship management and diverting people who are going to be a distraction. Our motto right now is ‘no new friends.’ ”

After a night in Arizona, members of the Zima crew fly to New York for a series of meetings, hoping to convince institutional investors to kick in the kind of money that will allow Caruso to leverage his strategies and push around the market. After two days of successful meetings, the guys convene for a celebratory dinner at Daniel, one of the finest restaurants in America. Chef Daniel Boulud rolls out the red carpet for Zima. But Caruso is absent—on the way over, he took one look at the menu before realizing that foie gras and langoustines were not for him. He scored a slice of pizza and promised to swing by for dessert.

Then he is rebuffed at the door. Daniel maintains a strict jacket policy. He shakes his head at the offer of a loaner jacket and gets back into the Escalade that brought him there. Concerned, Giordano has a chat with Boulud. It is agreed that an exception will be made. The Crypto King saunters to a center table, jacket-free, pride intact, and is brought a dessert slathered in chocolate.

He’s happy, and willing to talk about future goals.  But there’s only one: He wants to hit his number. “There’ve been a lot of times when I could have cashed out and never had to worry about money again,” he says. “But I’ve always had a number in my head, the number I want to reach, and that number is a billion dollars.”

It’s vast, but like all numbers that go through Caruso’s head, this one doesn’t give him pause. “I am going to make it and I think I am going to make it soon. I’d like to do it by 30.” He smiles, and shrugs his shoulders. “I think I have a shot.”

Michael Kaplan is a Cigar Aficionado contributing editor.

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