BY HENRY ABBOTT
“Never invest in a business you cannot understand,” says Warren Buffet.
In an ad from March 2022, Stephen Curry and Shaquille O’Neal make a different argument. Steph, the ad suggests, invests in crypto without bothering to understand it.
“With FTX,” says Steph, “I have everything I need to buy, sell, and trade crypto safely.”
John Reed Stark is the former head of the SEC Office of Internet Enforcement; in a New York Times column, he suggests that celebrities who appeared in ads for FTX—Steph, Larry David, Spike Lee, Tom Brady, Gisele Bundchen, and others—deserve real legal scrutiny now that FTX has imploded, with billions missing.
On one hand, it’s probably crazy to expect a basketball player to have laser vision into the murky books of these offshore companies. On the other hand, they can afford financial advisors, agents, marketing experts, and lawyers. They say no to a lot. Doesn’t someone have the job to keep Steph and the Heat and the Warriors from representing brands so shoddy they can lead to legal trouble?
By the time this ad came out, trouble signs were everywhere. In the summer of 2021, the FBI warned cryptocurrency purchasers to beware of an industry rife with scams. Paul Pierce was part of a 2021 lawsuit in California for a tweet promoting cryptocurrency. Nearly a year before Steph’s ad appeared, Warren Buffett’s business partner, Charlie Munger, said:
I don’t welcome a currency that’s useful to kidnappers and extortionists … billions and billions and billions of dollars to somebody who just invented a new financial product out of thin air. So, I think I should say modestly that I think the whole damn development is disgusting and contrary to the interests of civilization.
Meanwhile, FTX courted the NBA. Why? Reed Stark’s Times column has interesting insight:
Last year, a University of Chicago study found that 44 percent of Americans who owned and were trading crypto were people of color. To make matters worse, a J.P. Morgan Chase study released this month found that people with lower incomes very likely made their crypto purchases when prices were elevated when compared to higher earners and have therefore suffered disproportionately.
And just as payday lender storefronts are often concentrated in Black or Hispanic communities, the same seems to be happening with crypto A.T.M.s (which are also notorious for charging fees that can range from 7 percent to 20 percent per transaction).
In hindsight, this looks like the exact opposite of Black empowerment.
So the question becomes: Do teams and athletes and billionaires who helped establish crypto brands as legitimate get to keep their crypto earnings when the entire thing blows up?
A class-action suit filed in November in Miami will force the courts to answer, and a key question will be how much players like Steph knew.
Then there’s Mark Cuban, who has been sued in a different lawsuit involving his promotion of bankrupt crypto firm Voyager.
Despite getting rich in what has been called one of the worst acquisitions in history, and despite the Mavericks recently being a disgusting place to work, Cuban has built a whole global brand around his business savvy. Surely, he should understand this business. The plaintiff’s attorney in a class-action lawsuit in Florida cites Cuban’s role:
Cuban … relentlessly promoted the Deceptive Voyager Platform through the use of various false misrepresentations and unfair and deceptive marketing tactics to keep customer money flowing continuously into the Deceptive Voyager Platform to keep the Ponzi scheme alive for their own personal gain. To date, Cuban has not disclosed how much he was paid as a result of his efforts.
Cuban not only promoted the Deceptive Voyager Platform through the Dallas Mavericks, the NBA team he owns, he also promoted it as a Voyager customer himself, in a ploy to dupe investors into believing that Voyager was a safe platform, stating that “I gotta add, I am a [Voyager] customer and I’ve been a customer for several months now. I like to use it, it’s easy, it’s cheap, it’s fast, and the pricing is actually really good, so we find it as a perfect fit for our Mavs fans and reaching Mavs fans of all ages.”
Cuban also shamelessly pushed investors to invest heavily into USDC and other assets on the Deceptive Voyager Platform, claiming that investing in the Deceptive Voyager Platform was “as close to risk free as you’re going to get in the crypto universe,” that it was good for small businesses, and even that it was “a lot easier” than opening a savings account at a bank for young children, concluding “[i]t’s also something you can do on your phone. You don’t have to have a bank account. So, people who are unbanked, trying to learn about financing, but have a smart phone and can download the app, you can start getting into this and saving your money and that’s just a unique opportunity.”
The lawyer leading that case notes that many NBA cryptocurrency deals were signed around the time Adam Silver noted that COVID had created serious financial strains for the NBA. The suggestion is that maybe standards dropped a little in the search for quick cash?
Lawyers were suddenly needed. Did you notice who was representing the crypto companies in the two cases? Kirkland & Ellis in one case, Sullivan & Cromwell in another.
Both have featured on TrueHoop. Kirkland & Ellis has represented Jeffrey Epstein in addition to Volkswagen, Brown & Williamson tobacco, BP, Nike, and various Russian clients. The list of power brokers who worked there includes former Attorney General Bill Barr; the prosecutor who cut Epstein a sweetheart deal (Alexander Acosta); Epstein’s attorney Ken Starr; Supreme Court justice Brett Kavanaugh; Trump attorney Jay Lefkowitz; and John C. Eastman and Jeffrey Clark who were both referred to the Department of Justice for potential prosecution by the January 6 committee.
Then there’s Sullivan & Cromwell: a whole story that’ll suck the heart out of your belief in American institutions. The firm’s history is a tale of absurd influence. Lawyers from that firm essentially created the country of Panama. Some well-placed lawyers from that firm did expert work in helping some of the richest American companies collaborate with some of the biggest companies in Hitler’s Germany—then those same lawyers, the Dulles brothers, founded American intelligence.
More recent Sullivan & Cromwell lawyers include:
Jay Clayton, former Chair of the U.S. Securities and Exchange Commission and current board member of Apollo Global, a company founded by Jeffrey Epstein's financier and the source of more than one NBA billionaire's fortune;
Peter Thiel, technology entrepreneur, venture capitalist, co-founder of PayPal (which was run by Elon Musk for a time) and a right-wing political force;
Keith Rabois, who went to Stanford as part of what became the Paypal Mafia and made a name for himself for being anti-woke;
Joseph Tsai, vice chairman of Alibaba Group, and the billionaire who runs the Brooklyn Nets.
All four of those people, incidentally, have promoted crypto.
But that’s not the point. The point is, these firms have represented some of the best-connected and most powerful people in history. That’s a reason to hire them! The Dulles brothers had clients who avoided any real heat for their connections to Hitler’s regime. The Epstein prosecution agreement was shockingly soft on the powerful—Epstein and whoever was part of his program—and disappointing to his victims. Fighting them can seem a bit like fighting the sky, which is bad news for people who lost money following the investment advice of Steph Curry or Mark Cuban.
Thank you for reading TrueHoop!
Mr. Abbottt, the articles you write are ground-breaking. I get to read information that just isn’t being talked about much elsewhere. Thank you for your efforts. Keep up the good work!