THE UKRAINIAN CONNECTION: What's The Real Story Behind Max Levchin and PayPal?
Behind Stanford and Silicon Valley's weird ties to China, Ukraine, and South Africa
As with any good book there are multiple ways to read Soni’s book, The Founders: Elon Musk, Peter Thiel and the Company that Made the Modern Internet about PayPal. Throughout there are tantalizing little details that would escape all but the most careful readers. Fortunately you are in luck as I read the book with near Talmudic attention to detail and know some of the key players. One might say that I am if not a PayPal mafiosi then a sort of Inspector Javert to their Jean Valjean — pursuing the leads, almost to extremes. Or if you prefer, Tom Hanks’ FBI agent to Leonardo DiCaprio’s Frank Abagnale Jr.
First, let me lay my cards on the table.
I have never been particularly convinced that PayPal was, in fact, a technology company at all. Technology is about making the world better. Does PayPal? It’s hard to say it does.
My view is that PayPal was a money laundry masquerading as a tech company and that PayPal pulled it off by helping the U.S. government catch smaller fish. Peter Thiel has, by his own admission, said that PayPal wasn’t possible after the launch of Patriot Act. Why? Because of its strengthening of financial controls. Soni mentions in passing PayPal’s ties to SoftBank and Deutsche Bank — both of which are now under investigation by the FBI — isn’t really commented upon but we know from other journalistic investigations that both SoftBank and Deutsche Bank are deeply compromised by foreign actors.
The story of Max Levchin’s rise to power riches is chronicled in Jimmy Soni’s book but it leaves out curious ties to Ukraine and China that are altogether interesting and revelatory in light of the current crisis in Eastern Europe.
We have already explored the secret history of Facebook — where Peter Thiel was a major investor — and discussed at length Reid Hoffman’s ties to spy financier Jeffrey Epstein, ties which deserve further exploration and were whitewashed in a major MIT report.
Both Thiel and Hoffman have their own family ties to China through their fathers. (Hoffman’s father William Parker Jr. worked as a lawyer for the Black Panthers who have longstanding ties to the Chinese and his grandparents even took a camper across the Soviet Union in 1985 while Thiel’s father Klaus helped mine the uranium for the South African, Israeli, and Chinese atomic bombs.)
In a way one can look closely at Stanford with its Hoover Institution as a kind of extension of the Chinese influence in the United States. Hoover himself had quite a lot of Chinese ties — he remains our only U.S. president to speak Mandarin — and there’s some indication that his mining company was promoted by the Chinese Empire itself (such as it was).
Here’s an analysis from 1987.
Two grandchildren of President Herbert Hoover and a group of Hoover scholars are trying to reconstruct the three years the 31st American president spent as a young geologist in northeast China’s grimy industrial city of Tianjin.
Hoover, president from 1928-32, is best known for presiding over the onset of the Great Depression.
But Tom Walsh, assistant director of the Herbert Hoover Presidential Library in West Branch, Iowa, said Monday that Hoover’s stay in Tianjin from 1899-1901 was a formative period in the future politician’s life. He assisted the Chinese Bureau of Mines in developing mining resources and building harbors, Walsh said.
″When he first came to China at the age of 24, he had a job of incredible responsibility,″ said Herbert Hoover III of Los Angeles, the president’s grandson. ″It was what we call today a quick solution - go out and find gold.″ (Terrill Jones, “U.S. Group Exploring Herbert Hoover’s China Roots,” Associated Press, April 28, 1987.)
Hoover was essentially created by the Chinese and other foreign powers while there. He was a construct who ultimately became the first technocratic president as a very revealing Harvard thesis on Hoover’s China ties makes clear. No, seriously read it.
Recall further that I wrote my own college thesis turned book — Why Coolidge Matters: Leadership Lessons For America’s Most Underrated President — into a discussion of the statesmanship of Calvin Coolidge. Coolidge once said of his Harding-inherited Commerce Secretary, Herbert Hoover, "That man" — Coolidge called him a “wonder boy” — "has offered me unsolicited advice every day for six years, all of it bad.”
A young man in a hurry with an entrepreneurial bent who might forever be loyal to the system that brought him up and who nevertheless makes a lot of mistakes? Why, that sure seems familiar. A “wonder boy.” Gee, where have I heard of such a thing? Could it be in Silicon Valley where male youth is fetishized but where you can’t really break in thanks to the mafia?
As with Hoover, so too with Silicon Valley. Silicon Valley has a lot of secrets about itself that are only now coming into focus.
Hoover took with him some Chinese to South Africa — a group that would later prove essential for extracting the uranium and other natural resources from South Africa for the communist state.
A brief history of Chimerica from 1991 to 2021
Recall then that the trade deficit between the United States winds up with the Chinese amassing considerable U.S. dollars. As the Chinese state more or less controls all these dollars coming into China they then control where and how those dollars are redeployed.
Since the fall of the Soviet Union — which was largely a Chinese exercise to steal Russian assets by way of the Soviet Jewish oligarchs — those dollars have gone around the world and achieved the objectives of the Chinese state by controlling the commanding heights. This great theft was understood as such by the Russians at the time and indeed
In the United States the Chinese deploy front men who act as their go betweens. In particular the markets they’ve targeted are real estate (think Jared Kushner), private equity (Steve Schwarzman), venture capital (think Sequoia’s Roelof Botha and Founders Fund’s Peter Thiel), Hollywood (Steve Mnuchin), and casinos (think Sheldon Adelson or Steve Wynn).
This is known at the highest levels of the so-called American deep state. Often the U.S. government works to turn the owners of these companies or, if necessary, works to jail them. Oftentimes the billionaires who are created by the Chinese cash want to play ball. That is, only once they’ve extracted as much as they can.
Now under Biden the Chinese cash spigot has been dialed back and the Chinese are directing its flow toward Latin America which they hope to pry from American control. The Chinese intend to flood America with migrants at will. This is the beginnings of migration as a weapon. Africa, meanwhile, has fallen out of their control and into ours.
We’re checking the Chinese by having a sort of detente with Venezuela and Iran, who currently sell discounted oil to the Chinese in contravention of the sanctions.
The Biden government believes that AUKUS will ultimately work with the Chinese to carve up Russia’s assets. Are they right? I suppose time will tell.
Back to the PayPal mafia…
It’s my contention, and indeed Soni’s, that Max Levchin’s story is the key story in the PayPal story and we will examine him in full in a moment.
Levin, along with Chinese-born Yu Pan, is the architect of the PayPal payment system and it is he who ultimately decides that Peter Thiel ought to become CEO of Continuity and eventually head up PayPal. (Interestingly neither Yu Pan nor Steve Chen’s role in PayPal are terribly closely examined in the book nor in the lore which is odd because Chen went on to start YouTube, which was quickly sold to Google. We are further told that Chen is Taiwanese, as if that’s much of a distinction these days.)
Soni notes that it was Thiel who brings in David Sacks, his COO, who is both Ukrainian Jew and South African-born. Later Sacks would found Geni (acquired by the very Chinese-Israeli MyHeritage website) and Yammer (bought by the very compromised Microsoft). Today Sacks runs a fund that invested in Locals, which has an Israeli cofounder and helps people — maybe governments? — fund key voices online. With a straight face Sacks claims that Bird — the electric scooter company imported from China — is solving the last minute transportation problem. Naturally Sacks is the second largest shareholder. We wanted flying cars and we got electric scooters. Don’t worry, though, Sacks has optioned Soni’s book for a TV show. In a recent interview he even compared it to Michael Jordan’s Last Dance.
Thiel’s aide-de-camp was the very young Roelof Botha, whose grandfather Pik Botha was a very pro-China foreign minister who helped the South Africans get the atomic bomb. Once Nelson Mandela became South Africa’s first black president in 1994, Botha served as minister of minerals and energy for two years. The looting of South Africa began in earnest. While the New York Times noticed that China and apartheid South Africa had an alliance, the Gray Lady got the degree of causation wrong. It was China which helped South Africa develop its uranium mines. Peter Thiel’s father Klaus, who never became an American citizen, went to go work in Papa New Guinea, a mine with strong ties to the Chinese. (Rather interestingly Botha was introduced to Musk through Jeremy Liew, an early investor in Snapchat who was forced into early retirement.)
The Ukrainian Connection
In the early days moving money from resource extractive and/or politically problematic economies into the United States is what PayPal is really about.
How to move the money is an important question and Levchin’s tech team had its share of foreigners who had a keen personal and familial interest in its success. The Fall of the Soviet Union, the return of Hong Kong to China’s authority, and the end of the apartheid government in South Africa necessitated the looting of those countries.
How then shall we take Levchin’s partnership with Israeli computer scientist Dan Bonen of Stanford whose own ties to Israeli intelligence are known? Recall the closeness of ties between the State of Israel and Levchin’s native Ukraine. (We explored some of those ties in the post we did on Facebook.)
And more to the point: what’s the deal with Levchin’s father?
Levchin has himself noted that everyone in his family was a physicist save his father. He endowed a scholarship for his grandmother at his alma mater.
It’s my view that Levchin is a member in good standing with the Ukrainian-Jewish deep state. His father, Rafael, is curiously hard to find many things about.
That mention of the Post Futurists a.k.a. Metarealists caught my eye. From my reading this group was an explicitly anti-Russian deep state operation which could well have imperiled the family. Like Elon Musk’s grandfather who had ties to Technocracy (which is itself a Chinese op that imagines governance by engineers) Levchin’s father’s ties to Ilya Kutik and this movement generally suggests something more interesting than at first blush. (Kutik would go on to work for the BBC and to become a professor of Slavic languages at Northwestern University.)
"In the early 1980s, as Levchin entered his teenage years, the Soviet economy was in freefall and the Politburo was in panic,” writes Soni. “Lukatskaya [Levchin’s grandmother] began to feel the disquieting echoes of World War II, the horrors of which she had seen firsthand. As best as the family could tell, the KGB was monitoring Levchin’s father, and the prospect of the government disappearing him loomed large."
Could it have been that they had good reason to monitor Levchin’s father? We aren’t told why. As with other refusenik Jews seeking to leave the former Soviet Union there’s a bit of intrigue. Elsewhere Levchin has alluded to his parents trying to leave Ukraine multiple times, unbeknownst to him at the time.
Levchin was admitted to the University of Illinois at Urbana-Champaign under false pretenses.
Levchin was referring, of course, to MIT. His college counselor recommended that he apply to the nearby University of Illinois at Urbana-Champaign (UIUC) instead. Here, too, there was an issue: Levchin had missed UIUC’s application deadline. But scanning the requirements, he noticed that the deadline for international students hadn’t passed yet. He saw an opening: “I’m international-ish,” he said. “I’m not a citizen, came to the US less than two years ago, who is to say?” And under that pretense, UIUC said yes to Levchin."
Levchin’s second scam proved more troublesome: lying to the U.S. government on a security related project.
"During Levchin’s tenure, the Army Corps of Engineers grew concerned about foreign employees and information security. Unfortunately for the research outpost at Urbana-Champaign, that meant potentially losing the vast share of its programming talent and leaving a complex computer system in the hands of staff unfamiliar with its upkeep. Levchin was on the chopping block as well, but his manager intervened: Levchin would continue working on his helicopter software, and he’d receive off-the-books payment in the form of computer parts. This worked in the interim, and the Corps ultimately kept its foreign workers, though with a troubling stipulation: non-US citizen contractors would have to wear yellow identification tags. “If you wear one of these badges, you were monitored closely. You could not leave your desk. And if you did, you would have to be escorted,” Levchin recalled. For a Jewish refugee, the badges evoked painful parallels. “I didn’t have to do this, but I had relatives who did,” he said. Levchin quit the US Army Corps of Engineers, though he kept the tag, a fraught relic from the strangest of his college side hustles."
So, rather than comply with a rather reasonable demand of the federal government, Levchin elected to smear it as evoking the Holocaust. Nice. Maybe he just didn’t want to be monitored?
Given these two scams and willingness to bend the rules, we might ask if Levchin bent the rules (or broke the law) at PayPal.
There’s a hint here.
"At one point, Levchin and his team learned that they neglected to use double-entry accounting in the PayPal system. Double-entry accounting is a centuries-old cornerstone of bookkeeping, by which any credit or debit has an equal and opposite record. “If you’re an engineer, and you’ve never encountered accounting,” Levchin said, “you don’t really understand why it might be helpful to have two copies… I thought ‘double-entry’ accounting was some weird accountant fiction.”"
This sounds awfully suspicious when you realize that PayPal had a vast problem with fraud. Levin used to talk to the fraudsters in Russian on the phone. What, pray tell, were they really talking about?
Levchin has done quite a bit of his own myth making and he has eluded the sort of attention and profiles that the other members of the PayPal mafia have attracted.
His other companies — Glow and Affirm — reveal close Chinese ties, ties that are especially relevant now that China has been building a biometric profile of everyone on Earth. The Chinese have shown a keen interest on pregnancy and financial literacy.
Glow never really took off. Today the U.S. government notes that China has been harvesting the data of millions of pregnant women.
Was Glow similarly affected? When I spoke with Glow about doing a deal they immediately cooled when I mentioned that I had problem with its Chinese ties.
And Levchin’s company, Affirm, where he is CEO, has its business model of Buy Now, Pay Later model under serious investigation by the Feds.
Is Levchin merely a dupe? Or is something more disturbing going on?
If Levchin is a dupe, it would have to be years of brainwashing by deep state Dad. But then he would have to unknowingly dupe Thiel for years? You’re right in that Chen is rarely mentioned in the lore even though he also gave us YouTube.