When the so-called billionaire banking heir Matthew Mellon died suddenly in April 2018, he was worth almost $200 million.
Mellon owned nine sports cars, an exotic collection of Ferraris, Mercedes Benz, and other expensive makes. He had a watch worth more money than a typical American family makes in a year. In his will, Mellon left his oldest daughter a $100,000 Andy Warhol and the priceless collection of Mellon family silver.
But for years after his death, Mellon’s estate was still struggling to come up with the cash to pay off his taxes and satisfy the dozens of people and companies trying to collect Mellon’s debts.
That’s because the vast majority of Mellon’s assets—more than $193 million—were locked up in a cryptocurrency known as XRP, which is managed by the company Ripple.
“One might think that a[n] … estate comprised 97% by a single asset would be a straightforward matter to administer,” the estate’s lawyers wrote in one court document. “This estate has been anything but straightforward.”
The case wasn’t only a matter for the courts. Members of the online crypto community, and even lawyers, have long assumed that the XRP was lost forever because Mellon never shared his keys with anyone. But over 700 pages of court documents reviewed by the Daily Dot reveal a far more complicated story.
Fluctuations in the value of Mellon’s cryptocurrency, his massive tax bills, and a secretive agreement he made while still alive led to frantic selloffs through a tedious process that went on for years.
When his days of digitally-funded decadence came to an end, Mellon’s estate was forced to confront the host of problems that come with cryptocurrency, an asset that has only become more common in recent years.
From millionaire to billionaire and back
The late investor and businessman was a member of two powerful banking families, the Mellons and the Drexels. He reportedly inherited $25 million as a young man from his late father and later served as chair of the New York Republican Party Finance Committee, whom he’d gifted a six-figure donation.
His massive crypto fortune began with a $2 million investment in XRP in late 2017 after he had dabbled with Bitcoin. His enthusiasm for Ripple led him to become a “global ambassador” for the company.
“My family thought I was insane, when I knew it was a home run,” he told Forbes just weeks before his death. At one point, according to Forbes, Mellon’s investment was worth nearly $1 billion as Ripple struck deals with major financial institutions—though the rally soon ended and the currency depreciated rapidly during the spring of 2018.
The investor’s family and friends had their doubts because of his struggles with drug addiction. The day he died, Mellon had been scheduled to check into a drug rehab facility in Cancun to treat his OxyContin addiction.
“The thing that made him excited about everything was the same thing that got him sick,” a colleague of Mellon’s told the New York Times. “It was part of him trying to do more, see more, experience more.”
The week before, he posted a picture of himself holding a cigar in front of his bright white smile.
On the morning of April 16, 2018, Mellon was found dead in his hotel room at the age of 54. He had suffered a heart attack after taking ayahuasca, one source told the Daily Mail, though no other publication has been able to corroborate that fact.
Encrypted, and in a crypt
Mellon left behind two ex-wives, three young children, and an estimated $193 million in XRP. There was no mention of the currency in his outdated will, and he reportedly kept the keys to it on devices under other people’s names in various locations throughout the country.
His secretive methods left the estate’s lawyers scrambling to gain control. They wanted to sell the XRP as quickly as possible—court documents show that its value had fluctuated up and down 30% in the few weeks after Mellon’s death. Each day they went without selling, they ran a higher risk of losing millions of dollars while facing his exorbitant bills and debts.
The lawyers were able to get ahold of the XRP by approaching Ripple, the company that manages the currency. But that’s a unique privilege, estate planning experts say, because most cryptocurrencies aren’t closely tied to centralized entities.
“The family should thank their lucky stars, because it is not that common that they could go somewhere and get access to the account,” Gerry Beyer, a law professor at Texas Tech University and expert on digital assets in estate planning, told the Daily Dot.
But access to Mellon’s wallets was only the beginning of a years-long effort to settle the estate.
Bound by an agreement Mellon had made with Ripple, the estate could only sell off a small amount of XRP each day. The lawyers were able to negotiate a slightly higher limit, but their efforts to remove the limit or sell all of the XRP in bulk failed.
Such an agreement is a very unusual obstacle for an estate to encounter, according to Beyer.
“I’ve never heard of such a crazy thing,” he said.
Suzanne Walsh, a Connecticut estate planning lawyer who has pushed for regulation of digital assets, wasn’t sure exactly why Ripple would make such an agreement. But she said the cryptocurrency restriction makes sense when compared to stocks.
“If you’re going to protect your company, you need to protect your company against wide-scale dumping of your stock,” Walsh told the Daily Dot.
Agreement or not, the XRP had to be liquidated as quickly as possible. Mellon’s estate had tens of millions of dollars in taxes due, plus hundreds of thousands of dollars in debt—and not enough cash to pay it all off.
Before he died, Mellon was years behind on his income tax returns, and the size of his multimillion-dollar estate meant the IRS wanted a major slice of it.
There were also two dozen entities, mostly private individuals, who claimed Mellon owed them money in sums ranging from a few hundred to nearly 6 million dollars.
The largest claim came from a former friend of Mellon’s, Stacy Engman, who engaged his estate in over 200 pages of legal back-and-forth about money Mellon had verbally agreed to invest in her luxury sunglasses line.
In another unique example, the estate reached a $282,500 settlement with Mellon’s housekeeper who filed a posthumous sexual harassment lawsuit against him.
“This is essentially a 24/7, 365 day-a-year-on-call asset,” the lawyers wrote in one court document. For years, a lawyer or staffer would have to log on and sell the maximum allowable amount of XRP every single day, including holidays and weekends, to make all of the payments.
By the end of 2019, the estate was worth less than half of its original $197 million value as the liquidation continued and the price of XRP dropped to its lowest point since Mellon died. At 19 cents per unit, it had lost more than two-thirds of its value.
After another year of selling, in late 2020, the estate paid $60 million in federal estate tax, its largest liability. But even then, there was still a “substantial” amount of the estate tax left unpaid.
The estate only settled all its debts in January 2021, almost three years after Mellon died, because of the delays imposed by Ripple’s agreement.
Having an estate still in court that long after a death isn’t unheard of, Walsh said, but it’s not ideal.
“What an incredible nuisance for those fiduciaries to have to do that,” she said.
Shrouds of secrecy
Anyone made familiar with the settlement between Mellon and Ripple had to sign a non-disclosure agreement, court documents show. The estate’s lawyers couldn’t even ask consultants to appraise the value of the XRP without first making them swear to secrecy.
The law firm managing Mellon’s estate declined to comment, though it did not cite a non-disclosure agreement as the reason. Ripple did not respond to multiple requests for comment.
The Daily Dot also reached out to both of Mellon’s ex-wives and their lawyers, as well as the trustee responsible for managing the Mellon children’s inheritances. None of them responded to multiple requests for comment, except the lawyer for Mellon’s second wife, who declined to comment.
Though it isn’t clear whether executors kept selling off Mellon’s remaining XRP this year, it could still be worth much of its initially appraised value. The price of XRP has rebounded this year to levels not seen since before Mellon’s passing, according to CoinMarketCap.
That decision of selling or holding could have a profound effect on Mellon’s children. Araminta “Minty” Mellon, Force Mellon, and Olympia Mellon—ages 19, 10, and 9, respectively—are all named as heirs in their father’s will.
The trustee responsible for their inheritances might have no choice but to keep selling, experts say. The law requires trustees in his position to make only prudent investments to preserve the value of the trust.
“Most folks interpret that to mean you can’t hold much, if any, cryptocurrency because of its volatility and risk,” Walsh said.
Beyer concurred that the children’s trusts could run into trouble with most of their value in XRP.
“They probably would need to sell it and invest in something more secure,” he said.
While cryptocurrency was once considered an obscure type of asset, estate planners are now confronted with a growing number of clients who hold money in digital wallets.
“We’re seeing people walk in the door with serious money in crypto,” Walsh said.
Certain people are drawn to cryptocurrency because it’s private and usually not governed by a central authority, but those traits put digital assets at odds with standard estate planning practices. Some of Walsh’s clients have been hesitant to record their passwords in any material way.
“Some of them think they know best—they’re the ones who recognize this technology, they’re the ones who parlayed it into this wealth,” she said. “And they don’t necessarily trust the likes of me.”
It’s impossible to know whether distrust is the reason Mellon never updated his will to include his XRP holding; maybe he meant to do it before he died. But Mellon’s vast wealth, celebrity status, and untimely death made a common estate planning mistake into an extremely unique case.
“I doubt anybody could have foreseen this, or thought all of these things would have happened,” Walsh said.
Read the rest of the Death on the internet series