This Cryptocurrency Billionaire Is Trying to Split California Into Three States


Tim Draper, the billionaire venture capitalist and legend in the world of cryptocurrency, has an idea: Let’s split California into three separate states.

There are at least five reasons why this idea is doomed from the start, but first, here’s his case:

The way Draper sees it, smaller states would be run by more efficient and less bureaucratic governments as they compete for residents and business. Education, safety, infrastructure and health care would improve. Taxes would be lower. And the investor who made a name for himself funding tech giants like Hotmail, Skype and Tesla Inc. says he “won’t have to think anymore about moving myself, Draper Associates, the Draper Venture Network and Draper University out of California.”

Draper — who scored a huge windfall a few years back when he bought a load of bitcoin that had been seized by the U.S. government— has gone from being a Democrat to Republican to Libertarian to, well, his own party that believes California’s government’s problem is that it lacks competition. The party platform is simple: break up California.

Draper says he’s already gathered more than 600,000 signatures for his initiative, almost double the number he needs to get his plan on the ballot come Election Day. He still needs to get the signatures verified and confirmed by counties by June 13.

“My goal is to get it on the ballot, and then it is up to Californians to see the beauty of a new empowerment, and run with it,’’ Draper said by email.

Meanwhile, here’s what he’s got going against him:

1. Last Time This Happened Was During the Civil War
The last time the U.S. approved the breakup of a state was in 1863, when West Virginia moved to split with Virginia at the height of the Civil War. Even then, it took a two-year legal battle and presidential approval.

President Abraham Lincoln eventually signed off on the split, but he worried at the time about the precedent it would set for states going forward. Needless to say, there is no clear process for a breakup of a state.

2. Why Would Any Republican Want This?
Even if Draper gets California’s voters to buy into the idea of a split, government law experts say the plan would probably take an act of Congress. (Again, there’s no clear-cut process.) And there’s no indication that Republicans in Washington would be amenable to a breakup.

If each of the three new California states – with a population of about 12 million to 14 million people – were granted two senators, Congress could be welcoming more Democrats into its chambers. Draper’s envisioned borders would form at least two solidly blue states.

“Why would any Republican want to create two more Democratic senators?” asked Jack Citrin, a professor of political science at the University of California at Berkeley.

Executive approval is looking even less likely. President Donald Trump and California have been clashing on everything from immigration policy to environmental regulations. Trump’s in no mood to be doing favors for the Golden State.

3. Check Draper’s Track Record
Draper’s idea might ring a bell. That’s because, in 2014, he came up with a very similar initiative to divide California into six “startup” states.

His campaign missed the deadline to make it onto the 2014 ballot and then failed to qualify for the one in 2016. While he submitted more than 1.13 million signatures that time around, officials estimated only 752,685 were valid.

Draper’s response to falling short: The state’s signature verification process was archaic and just further proof that California’s current system is dysfunctional and needs new governments.

4. Some Californians Just Want Out of the Entire U.S.
Draper’s three-state initiative has competition. Some similarly minded individuals, who are also pushing for better education and a tax overhaul, want California to remain whole but secede from the U.S. in a movement coined “Calexit.” The proponents say secession will promote peace and security, because being part of the U.S. makes the state a target for terrorism.

This movement has tried and failed in the past. It faces some major hurdles, such as a federally required constitutional amendment, a two-thirds vote in Congress and ratification by 38 states. It also says something that Texas may very well be the one state that has the power to split itself – and it hasn’t.

That all aside, Calexit has been cleared to start collecting signatures for a 2021 referendum.

5. California’s Differences Run Deep
Political disputes within California run deep. And Draper is proposing to form states out of counties that haven’t always gotten along so well.

Take the far-north region of California, where some have for years longed to unite with southern Oregon to form a new state called “Jefferson.” Many voters in that area wouldn’t exactly be thrilled with the idea of being lumped together with the Bay Area and Sacramento.

Jim Newton, a public policy lecturer at the University of California at Los Angeles, isn’t convinced people will see their lives as better served by three different governors, three different legislatures or three different Departments of Education.

“I don’t think it’s substantively sensible,” he said, calling Draper’s initiative “politically doomed.”

As for Draper himself? He said he remains hopeful. After all, he said, “Anything can happen in politics.”