Part of the Bright Moments crew in the alley behind the gallery

This is Part 2 in the saga of Bright Moments and Seth Goldstein, whose NFT art gallery was allegedly robbed of $4.3 million of digital art in August. Make sure to read Part 1 if you haven’t already.

Bright Moments would not exist if not for the global Covid-19 pandemic, which left the gallery’s founder, Seth Goldstein, in a bit of a funk as he searched for his last act, how to end his career, as he turned fifty that summer in Venice, California. The venue, which Seth opened in April, would not have become such a hub of influence in the Los Angeles blockchain community if not for Seth’s impeccable timing.

The crypto world was about to explode with a mania for a type of digital art he showcased known as non-fungible tokens, or NFTs. And if none of that had happened, Seth wouldn’t have found himself wondering in August how it had all gone so spectacularly wrong after a disgruntled insider at the gallery made off with $4.3 million worth of digital art.

Seth had spent a good part of his career in New York City, then went west in the early 2000s to San Francisco when his two boys were eight and five and needed some space to grow up in.

Living with his wife and kids in Mill Valley, Seth in 2007 founded a coworking space in San Francisco called Pier 38, and he had his hand in a few startups. He served as chief executive officer of Majestic Research, which in a few years would be sold to ITG for $75 million. Then he and his wife divorced in 2013, and Seth felt adrift like never before.

Soon enough, his boys were grown and off at college, and Seth wanted a change of scenery from Marin County. Covid hit right around this time so his plans to return to New York with his girlfriend Christy, whom he met in 2018, needed a rethink. Instead he looked south, and in August 2020 rented an apartment on Horizon Ave. in Venice.

Not long after moving in, Seth attended a birthday party at his downstairs neighbor’s apartment. This was the home of Christopher Dolenar, whom everyone calls Dole. He’s also “the underground mayor of Venice,” as Seth put it. “He knows everybody, he’s been here for like 15 years.” At the party, Seth met Louie Ryan, the owner of Townhouse Bar and Menotti’s coffee shop on Windward where the iconic Venice banner hangs above the street.

“This gets to how this whole thing started,” Seth said. “I could sit at Menotti’s and have coffee and talk about ideas.” There was a vacant storefront next to Menotti’s, a narrow high-ceilinged space with exposed rafters and no air-conditioning. As 2020 neared an end, Seth planted the seed for Bright Moments in that vacant space, with only one problem. He still had no idea what an NFT was.

Fred Wilson has written his name into venture capital history as the co-founder of Union Square Ventures who helped get the firm into early investments in Twitter, Tumblr and Etsy, among many other winners. A few years later he backed Coinbase, the extremely profitable crypto exchange.

He’s also been a friend, a mentor and a confidant of Seth Goldstein since hiring him to build a stock portfolio at Flatiron Partners in 1998. (Flatiron closed after the dotcom crash wiped it out, and Fred co-founded Union Square Ventures in 2004).

He quickly recognized Seth as someone who sees just a bit further into the future than most. In 1997 this meant Seth invested in mobile phone and Internet companies under the assumption they would soon combine their services in some fashion.

“It turns out we were a decade too early,” Fred said. “The iPhone didn’t come out until 2007.”

More than another decade later, both Fred and Seth had come to understand the transformational power inherent in blockchain based systems. Seth calls his friend his “kitchen cabinet” and has kept up over the years by running ideas by him. Seth knows he’s on to something if Fred’s on board.

“He’s got a bit of a chip on his shoulder,” Fred said, “to prove to the world that he’s a top-notch entrepreneur, which I think he is. Bright Moments might be the perfect alignment of everything he’s good at.”

Fred wrote about Seth and Bright Moments on his popular blog here

Seth is prone to diving into artistic endeavors when faced with setbacks. After his divorce, he painted. In Covid lockdown, Seth took to digital photography. Every evening he’d walk to the Venice breakwater to take photos of the sunset. But Seth being Seth, he didn’t leave it there. He used artificial intelligence to combine hundreds or thousands of the daily images into unique 30-second video collages. Seth called them Synthetic Venice Sunset or Digital Venice Sunset and they’re hauntingly beautiful and strange in equal measure as the waves and water and sunlight never behave in ways you’d expect.

Fred loved them. Familiar with NFTs through his investment in Dapper Labs, which makes the Top Shop digital NBA trading cards, he immediately saw what Seth was doing in the same vein. Yet when he suggested Seth turn the digital sunsets in NFTs Seth said, huh?

“I was sort of stunned he didn’t know what an NFT was.” Fred said to Seth, “’Holy shit, if anyone should know what an NFT is, it’s you.’”

Seth was soon hooked, and he minted his first NFT on Jan. 28, 2021. In an email to Fred afterward, Seth appears to have had a breakthrough.

“You are right about NFTs being a great fit for me,” he wrote to Wilson on March 20. “For whatever reason it is coming very easy to me in terms of connecting dots and helping people onboard into this new world.” From his prior career as an equity portfolio manager and his relationship with Fred, Seth had become a limited partner in a few venture capital firms, and got early access to buy private shares in Coinbase and Roblox, both of which went public this year with multi-billion-dollar valuations.

Roblox listed just 10 days before Seth sent his email to Fred, and Seth had cashed out. That money “has freed me up to think a bit more creatively,” he wrote. “I think also I am with the right woman, in the right location, at the right stage of my life to put the pieces together.”

The seed of Bright Moments had become a sapling in rude health, and Seth was about to create something that would change not only his life but the lives of many around him. His timing couldn’t have been better. The digital artist Beeple was just about to sell an NFT for a record $69 million, and the crypto world, as is its wont, would go on to take the NFT craze to the moon. In a personal sense, Seth seemed settled like he hadn’t been since – well, maybe since his divorce. He brought this up to his friend in the closing lines of his email.

“Appreciate you and your counsel all these years. Getting through my music tech wanderings and unwinding from [my ex-wife] was not an easy journey.

“Now it’s just paddle tennis in the morning and sunsets evening, and NFT stuff in between :-)”

The only question Seth still had to ponder was how to organize Bright Moments. But crypto had an answer for that too.

The 309 missing NFTs were discovered by Phil Mohun, who got to know Seth after buying one of his Digital Venice Sunsets and joining Bright Moments. Mohun has played a key role in the creation of the gallery’s NFTs, which are digital avatars of the Venice crowd called Crypto Venetians.

On the morning of Aug. 11, he awoke to thousands of messages on his phone spread across text, tweets and Discord. One of his friends told him to check Art Blocks, where the Crypto Venetians were supposed to be, and said, sorry, you’re going to have a bad day.

The reason the Crypto Venetians could go missing from Art Blocks is directly tied to how Seth set up Bright Moments. He was and remains the CEO of his privacy startup Spartacus and knew he couldn’t be CEO of Bright Moments at the same time. But this movement didn’t need a CEO anyway, it needed a community, and that’s how Seth built it.

The Bright Moments group is called a decentralized autonomous organization, or DAO, a term coined by coders meant to scare small children when whispered in the dark. But it’s not scary at all. It’s simply a new way for people to coordinate in a flat-organizational style suited to crypto’s peer-to-peer core ethos. In the case of Bright Moments, Seth created the DAO and invited people to join. Members were asked to either buy in with an amount of ether or to work their way into the group by offering services like writing, coding or business development. The 70 Ether collected from new members was eventually re-paid to them when Union Square Ventures invested 500 Ether in the gallery (about $1.6 million at the time).

Once formed, the Bright Moments DAO made decisions based on the majority vote of its members and had a treasury of ether to spend on opening the gallery to the public. As people like Phil Mohun joined the Bright Moments DAO, Seth gave them 25,000 Bright Moments tokens. The tokens had been created by Seth to allocate to DAO members so they could be used to vote. The number of tokens you held in Bright Moments equaled the weight of your vote when decisions like whether to accept an investment from Union Square Ventures (they did) or which artist to show next at the gallery were being made.

But the tokens had another purpose. They were required to create Crypto Venetians, which the gallery gave away to generate in-person traffic. The next lucky person on the waiting list arrived at 62 Windward Ave., where Seth would send 10 Bright Moments tokens to their Ethereum wallet (later it went up to 20). The visitor then used those tokens to mint their Crypto Venetian NFT and away they went. While Seth controlled the vast majority of Bright Moments tokens, he’d also given hundreds of thousands of them away to DAO members and others.

Maybe you see the problem?

In any event, this is the point in our story where we return to Art. (Remember him? If not, please read or re-read Part 1 of this yarn.) While that’s not his real name he’s the Bright Moments DAO member who allegedly used his Bright Moments tokens to mint the remaining 309 Crypto Venetians.

Art declined to speak to me for this story, didn’t answer a list of questions I sent and hung up on me when I reached him on his cell phone. After Part 1 of this story came out, he texted me to ask if I was in New York for an NFT conference, but I was in Los Angeles.

As a DAO member who was helping with business development, Art had been given 25,000 tokens, more than enough to mint, without permission, the remaining Crypto Venetians.

Prior to this August morning, things couldn’t have been going better for Bright Moments and Seth. In late June, he conceived a vision document outlining how he wanted to take the gallery forward. He thought of different pop culture eras and how they evolved. A picture of Mickey Mouse marked cartoon culture, a Nintendo icon to depict the video game era, and a Crypto Venetian to denote crypto culture.

A few weeks later, Bob Iger, the executive chairman and former CEO of Mickey Mouse’s employer Disney, walked into Bright Moments to get his own Crypto Venetian. Word got out almost immediately, and prices of the NFTs that Seth and his team had dreamed up suddenly soared in the secondary market.

“Okay, this is perfect, this is the one,” Seth remembered thinking. “Whatever the recipe is, it’s working.”

Check back next week for Part 3, where people begin to try to scam Bright Moments out of their free Crypto Venetians, some of the DAO members tell us how they really feel about the alleged thief Art and the gallery crew make a triumphant splash in New York City.

Again, special thanks to Robert Dieterich for his expert editing skills.

The Betrayal of Bright Moments, Part 2

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