About 10 months earlier than he was arrested on fraud expenses, the cryptocurrency mogul Sam Bankman-Fried posed for {a photograph} on the 2022 Super Bowl in Inglewood, Calif.
On one aspect of him had been Orlando Bloom and Katy Perry, the celeb couple. On the opposite was the actress Kate Hudson. Standing within the heart, along with his arm slung over Mr. Bankman-Fried’s shoulder, was a lesser-known determine: Michael Kives.
Mr. Kives, a Hollywood agent turned investor, performed an uncommon position in Mr. Bankman-Fried’s business empire: tremendous connector. He and his business associate, Bryan Baum, helped the younger founder domesticate relationships with Mr. Bloom, Ms. Perry and former President Bill Clinton, and supplied introductions to a who’s who of celebrities and business leaders, from Leonardo DiCaprio to the governor of Saudi Arabia’s Public Investment Fund.
The relationship was mutually helpful. Mr. Bankman-Fried invested $700 million in Mr. Kives’s venture-capital agency, courtroom data present, a unprecedented degree of assist for a fund with a brief monitor report of start-up investments. Mr. Kives, the founder and face of the agency, and Mr. Baum every obtained $125 million as a part of the deal.
Mr. Kives, 42, and Mr. Baum, 34, had been a part of an under-the-radar community of middlemen who launched celebrities and different energy brokers to the as soon as high-flying crypto business. Before cryptocurrencies crashed final 12 months, a drumbeat of endorsements from Hollywood stars, skilled athletes, business titans and politicians created an aura of credibility across the unstable and largely unregulated market.
Now the authorized fallout from the crypto business’s collapse affords a window into how these promotions got here collectively, revealing the textual content messages, dinner events and pleasant introductions that fueled this world of fame, energy and big-money deal-making.
On Thursday, FTX’s chapter attorneys sued Mr. Kives’s agency, K5 Global, to get better the cash that Mr. Bankman-Fried had invested. The $700 million was among the many largest sums the FTX founder contributed to any group; the lawsuit stated he had made the funding “to burnish his own political and social influence.”
Mr. Bankman-Fried agreed to take a position as a lot as $3 billion over three years in K5, in accordance with the lawsuit and a model of the crypto mogul’s contract with Mr. Kives and Mr. Baum that was reviewed by The New York Times. The criticism argued that Mr. Bankman-Fried had executed no significant due diligence and “excessively” overpaid Mr. Baum and Mr. Kives, describing the transactions as a fraudulent scheme to complement executives.
Federal prosecutors have charged Mr. Bankman-Fried, 31, with a sweeping fraud wherein he siphoned billions of {dollars} from FTX prospects to make charitable donations, political contributions and huge investments. He has pleaded not responsible.
A spokeswoman for K5, Elizabeth Ashford, stated that the lawsuit was “without merit,” and that K5 had believed it was getting into a reputable, long-term business relationship with Mr. Bankman-Fried. A spokesman for Mr. Bankman-Fried declined to remark.
A former aide to President Clinton, Mr. Kives began working for Creative Artists Agency in 2003, representing actors like Bruce Willis and Arnold Schwarzenegger. At Mr. Kives’s 2019 marriage ceremony in Palm Springs, Calif., Ms. Perry sang “Hava Nagila,” a Jewish folks track, and two writers on “The Office” delivered a roast.
Mr. Kives began K5 in 2018. He was later joined by Mr. Baum, an entrepreneur who had co-founded a software program firm that was acquired by Lyft. K5 has invested in start-ups together with SpaceX and Boring Company, that are run by Elon Musk, amassing a portfolio of 148 corporations.
As they constructed K5, Mr. Kives and Mr. Baum touted their connections, together with with the billionaire financier Warren E. Buffett.
In an interview, Mr. Buffett stated Mr. Kives was a “name-dropper” who “might pitch that he has a connection to me, but he doesn’t.” Mr. Buffett stated he had recognized Mr. Kives from his time at Creative Artists Agency. Since then, he stated, Mr. Kives has contacted him about a couple of funding alternatives, which he declined.
In late 2021, Mr. Kives used his community to forge a relationship with Mr. Bankman-Fried, who was rising in prominence as cryptocurrencies boomed. They obtained in contact over e-mail, the lawsuit stated, and Mr. Kives launched Mr. Bankman-Fried to the musician Sia.
Two days earlier than the Super Bowl final 12 months, Mr. Bankman-Fried attended a celebration at Mr. Kives’s residence in Beverly Hills, Calif., the place he hung out with Ms. Perry and Mr. Bloom, 4 individuals aware of the matter stated. During a karaoke session, three of the individuals stated, Ms. Perry carried out a track that integrated lyrics about FTX. The subsequent day, she wrote on Instagram that she was quitting music to change into an FTX intern.
Mr. Bankman-Fried later raved that Mr. Kives was one of the related individuals he had ever met, the lawsuit stated. He reserved area for Mr. Baum in an condominium advanced within the Bahamas, the place FTX was based mostly, the lawsuit stated. And he gave K5’s companions entry to FTX’s inside messaging channels.
In April 2022, Mr. Bankman-Fried hosted a four-day crypto convention within the Bahamas. Mr. Bloom and Ms. Perry joined the occasion on the Baha Mar resort in Nassau, eating with Mr. Bankman-Fried and different high-profile guests.
Also in attendance was one other public determine whom Mr. Kives had launched to Mr. Bankman-Fried: Mr. Clinton, who appeared on a panel with the FTX founder.
By then, FTX had struck formal endorsement offers with celebrities like Tom Brady and Larry David. Ms. Perry additionally held talks with FTX about an official endorsement, three individuals aware of the matter stated.
Ms. Perry’s supervisor, Martin Kirkup, declined to touch upon the endorsement talks and stated her Instagram publish was a “joke.” Representatives for Ms. Hudson and Mr. Bloom stated FTX had not compensated the actors in any approach. And Ms. Ashford, the K5 spokeswoman, stated the agency had not brokered any of FTX’s formal endorsement offers.
But for months, the K5 companions acted as Mr. Bankman-Fried’s tour guides via the corridors of fame and energy.
At Mr. Kives’s Super Bowl social gathering, Mr. Bankman-Fried additionally met Bobby Kotick, the chief government of the online game firm Activision Blizzard, an individual aware of the matter stated. Mr. Kives tried to foster the connection, relaying a dinner invitation from Mr. Kotick to Mr. Bankman-Fried in April 2022, in accordance with messages seen by The Times.
That month, Mr. Kives additionally texted Mr. Musk, urging him to hitch forces with Mr. Bankman-Fried on the acquisition of Twitter, which Mr. Musk was pursuing. “Could be cool to do this with Sam Bankman-Fried,” Mr. Kives wrote in a message that was launched as a part of a distinct lawsuit final 12 months.
Last June, Mr. Bankman-Fried attended a charity gala at Casa Cipriani in New York. Mr. DiCaprio was additionally on the occasion. When Mr. Kives discovered, he texted the actor, encouraging him to talk with Mr. Bankman-Fried, an individual aware of the matter stated.
Around the identical time, Mr. Kives put Mr. Bankman-Fried in contact with MasterClass, a web site for tutorials by well-known individuals, three individuals aware of the matter stated. Mr. Bankman-Fried filmed a lesson on cryptocurrencies final summer time, the individuals stated. His phase was dropped from the ultimate model.
Representatives for Mr. Kotick and Mr. DiCaprio declined to remark.
Mr. Baum additionally tapped into his community. Last 12 months, he arrange a gathering between Mr. Bankman-Fried and Nelson Peltz, the billionaire activist investor, 4 individuals aware of the matter stated. Mr. Peltz was impressed sufficient with the FTX founder that he invited Mr. Bankman-Fried to the star-studded marriage ceremony of his daughter Nicola and Brooklyn Beckham, the son of David and Victoria Beckham, in accordance with emails obtained by The Times. (Mr. Bankman-Fried didn’t attend.)
Months later, Mr. Baum helped Mr. Bankman-Fried and his youthful brother, Gabe, schedule a gathering in Miami with Ron DeSantis, Florida’s governor, in accordance with three individuals aware of the matter and messages seen by The Times.
Then in October, he organized for Mr. Bankman-Fried to seem with Larry Fink, the chief government of the funding agency BlackRock, at a convention in New York, three individuals aware of the matter stated. Later that month, Mr. Kives supplied to attach Mr. Bankman-Fried — who was touring to the Middle East to lift cash — with Yasir al-Rumayyan, the chief of Saudi Arabia’s Public Investment Fund, in accordance with messages obtained by The Times.
Representatives for Mr. DeSantis, Mr. Fink and the Saudi fund declined to remark.
In November, FTX imploded after a run on deposits uncovered an $8 billion gap in its accounts. Mr. Baum and Mr. Kives contacted personal fairness corporations and billionaires to assist Mr. Bankman-Fried pull collectively money to save lots of the corporate, in accordance with the lawsuit.
None got here to FTX’s rescue. Mr. Kives and Mr. Baum have stated nothing publicly about their relationship with Mr. Bankman-Fried since FTX filed for chapter.
Mr. Kives has continued to community. In May, he and his spouse, Lydia, hosted a dinner at their Beverly Hills residence, in accordance with messages reviewed by The Times. The A-list invitees included Hillary Clinton, Kris Jenner, Olivia Wilde, Mr. DiCaprio and Ms. Perry.
Kellen Browning contributed reporting. Research was contributed by Kitty Bennett, Susan C. Beachy, Alain Delaquérière and Sheelagh McNeill.
Source: www.nytimes.com