It sounds like a can’t-miss way to make money: Combine Atlanta’s booming real estate market with the growing world of cryptocurrency.
Some homeowners say it was lucrative for the man buying homes with a controversial cryptocurrency, but not for the people on the other side of the deal.
Mike Cherwenka calls himself the “Godfather of real estate.”
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In one of his contracts, about 30% of the deal was paid in something called Troptions.
When Channel 2 investigative reporter Justin Gray went to him with people’s complaints, Cherwenka said the problem was due to people not understanding how to use their Troptions.
Joe Cebalos thought he knew what he was getting into. He thought he was getting in on the ground floor of a growing cryptocurrency called Troptions during a real estate deal.
“I was like, ‘Oh, he’s giving away free money,’” Cebalos said.
But another homeowner, who asked not to be identified, said she had no idea what a Troption was, until looking over the final sale agreement for her metro Atlanta home.
“There was a significant amount of money that was placed into a Troptions account,” the homeowner said.
Troptions are a cryptocurrency. About 30% of the payment for both homes was going to be paid in Troptions, not U.S. dollars.
Cebalos told Gray that he now has a very different view of Troptions.
“I call it a s--- coin,” Cebalos said.
U.S. Secret Service agent Easton Espinosa puts Troptions in that category as well.
“Essentially just a coin that has very little value,” Espinosa said.
“This falls — in your mind — in that arena,” Gray asked Espinosa.
“Yeah, I think a lot of people consider it to be that,” Espinosa said.
That’s why the homeowner backed out of the sale.
“Nobody told me how to get the Troptions out of the account and translate it into cash,” the homeowner said.
That’s because you can’t.
According to the Secret Service, which is charged with protecting the country’s financial infrastructure, the main red flag with Troptions is that, unlike Bitcoin, you can’t cash out.
Troptions can’t be turned into U.S. dollars or any other currency.
“If the major exchanges aren’t going to trade it, you have to find someone on a peer-to-peer level to offload it,” Espinosa said.
That’s why after watching the paper value of his Troptions skyrocket to more than $1 million, Cebalos came to the realization that they were actually worth nothing.
“Inside, it’s like I’m boiling,” Cebalos said.
Cherwenka was the buyer in those deals.
“No, it’s not a poopy coin, man,” Cherwenka told Gray.
He’s also an evangelist for Troptions.
“It’s like being saved, telling everybody about Jesus. I just told everybody about Troptions,” Cherwenka said.
Cherwenka bought a big supply of Troptions and then started writing them into his real estate deals.
“In the real estate industry, you know, everybody is asking more for their property than it’s truly worth,” Cherwenka said. “Well, they got free money, or in legal terms, they got found money.”
But that’s not how Cebalos now sees it.
“To him, it was good. But to others it was a nightmare,” Cebalos said.
In 2019, Missouri Secretary of State Jay Ashcroft filed a cease-and-desist order against the founder of Troptions, Garland Harris, for allegedly misleading consumers.
“We’re a free country we want to be. We want to let people make their own decisions. But when people are being defrauded, when people are violating the law, we will step in,” Ashcroft told Gray.
“Right now, we’re like in the second inning of a nine-inning baseball game,” Cherwenka said
“So you think if somebody who sold you one of these houses, they’re going to win in the end?” Gray asked Cherwenka.
“Of course they are. Absolutely,” Cherwenka said.
“Are they winning right now with them?” Gray asked Cherwenka.
“Sure they are, they just don’t know how to use them,” Cherwenka said.
But it’s not that complicated. You have to find someone else willing to trade their real goods for your Troptions.
“It’s not a deal I would take,” Ashcroft said.
“Tell me why not,” Gray asked Ashcroft.
“Well if I’m selling something of value, I’d like to know that I’m receiving something of value in return,” Ashcroft said.
“You’ve got to find someone willing to take those Troptions for it to be worth anything?” Gray asked Cherwenka.
“OK. Say for example.”
“Right? Yes or no? Yes or no?” Gray asked.
“For a barter coin, yeah. You barter for something else,” Cherwenka said.
Cherwenka tells us he did nothing illegal. The contracts spelled out what a Troption is and it’s up to the seller to do their research.
A Georgia judge agreed that Cherwenka did not make promises or say anything that would be considered fraud.
Cherwenka told Gray that the Missouri cease-and-desist order was thrown out.
But Missouri’s secretary of state said that’s only because the defendant, the founder of Troptions, died.
“If the individual you’re talking about wants to come to Missouri and wants to try to get people to invest in Troptions, I think he’ll find the case is not at all dead,” Ashcroft said.
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“If I offered you Troptions for this house, would you make a deal involving Troptions being the purchaser?” Gray asked Cherwenka.
“I have Troptions, so I’m not interested in selling the house,” Cherwenka said.
“You don’t want more? If it’s so great, wouldn’t you want more?” Gray asked.
“I have plenty of Troptions, don’t bait with these questions,” Cherwenka said.
About an hour after the interview, Cherwenka texted Gray to say he wanted to correct that, saying he would sell Gray his house if Gray paid in Troptions.
But that is a deal that experts like the Missouri secretary of state and the U.S. Secret Service would warn Gray against taking.
Cherwenka also emailed Gray a few days after the interview to say that if and when Troptions are traded on exchanges, buyers can cash out their investments.
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