Nearly 10 months before he was arrested for fraud, crypto mogul Sam Bankman-Fried posed for a photo. Photo At the 2022 Super Bowl in Inglewood, Calif.
On one side of them were celebrity couple Orlando Bloom and Katy Perry. On the other hand was actress Kate Hudson. In the center stood a lesser-known figure hanging over Mr. Bankman-Fried’s shoulder: Michael Kives.
Mr. Kives, a Hollywood agent-turned-investor, took on an unusual role in Mr. Bankman-Fried’s business empire: the super connector. He and his business partner, Brian Baum, helped the young founder build relationships with Mr. Bloom, Ms. Perry and former President Bill Clinton, and introduced him to celebrities and business leaders ranging from Leonardo DiCaprio to the governor of Saudi Arabia. Arab Public Investment Fund.
The relationship was mutually beneficial. Court records show that Mr. Bankman-Fried invested $700 million in Mr. Kives’s venture-capital firm, an extraordinary level of backing for a fund with a short track record of start-up investments. Mr. Kives and Mr. Baum, the firm’s founders and faces, each received $125 million as part of the deal.
Mr Kives, 42, and Mr Baum, 34, were part of an under-the-radar network of middlemen who introduced celebrities and other power brokers to the once high-flying crypto industry. Before the cryptocurrency crashed last year, a drumbeat of endorsements from Hollywood stars, professional athletes, business titans and politicians created an aura of credibility around the volatile and largely unregulated market.
Now the legal fallout from the collapse of the crypto industry provides a window into how those hypes came together, revealing the kind of text messages, dinner parties and friendly introductions that fueled this world of fame, power and big-money deals. promoted.
On Thursday, FTX’s bankruptcy attorneys sued Mr. Kives’ firm, K5 Global, to recover money invested by Mr. Bankman-Fried. The $700 million was one of the largest amounts given by the FTX founder to any group; The lawsuit states that he made the investment “to increase his political and social influence”.
According to the lawsuit and a version of the crypto mogul’s contract with Mr. Kives and Mr. Baum, which was reviewed by The New York Times, Mr. Bankman-Fried agreed to invest more than $3 billion in K5 over three years. The complaint argued that Mr. Bankman-Fried did no meaningful due diligence and “grossly” overpaid Mr. Baum and Mr. Kives, describing the transaction as a fraudulent scheme to enrich the executives.
Federal prosecutors have accused Mr Bankman-Fried, 31, of a wide-ranging fraud in which he swindled billions of dollars from FTX customers to make charitable donations, political contributions and large investments. He has pleaded not guilty.
A spokeswoman for K5, Elizabeth Ashford, said the lawsuit was “without merit”, and that K5 believed it was entering into a legitimate, long-term business relationship with Mr. Bankman-Fried. A spokeswoman for Mr. Bankman-Fried declined to comment.
Mr. Kives, a former aide to President Clinton, began working for the Creative Artists Agency in 2003, representing such actors as Bruce Willis and Arnold Schwarzenegger. At their 2019 wedding to Mr. Kives in Palm Springs, California, Ms. Perry sings “Hawa Nagila”,” a Jewish folk song, and “The Office,” performed by two writers.
Mr. Kives introduced the K5 in 2018. He was later joined by Mr. Baum, an entrepreneur who co-founded A software company that was acquired by LyfTea. K5 has invested in start-ups including SpaceX and The Boring Company, run by Elon Musk, with a portfolio of 148 companies.
As he built K5, Mr. Kives and Mr. Baum described their relationshipIncluding billionaire financier Warren E. Buffett.
In an interview, Mr. Buffett said Mr. Kives was a “name-dropper” who “may say he has a relationship with me, but he doesn’t.” Mr. Buffett said he has known Mr. Kives since his time at the Creative Artists Agency. Since then, he said, Mr. Kives has approached him about some investment opportunities, which he declined.
In late 2021, Mr. Kives used his network to build a relationship with Mr. Bankman-Fried, who was rising to prominence due to the boom in cryptocurrencies. They got in touch over email and Mr. Kives introduced Mr. Bankman-Fried to musician Sia, the lawsuit says.
Two days before the Super Bowl last year, Mr. Bankman-Fried attended a party at Mr. Kives’ home in Beverly Hills, California, where he spent time with Ms. Perry and Mr. Bloom, said four people familiar with the matter. . During a karaoke session, the three men said, Ms. Perry performed a song that included lyrics about FTX. the next day, he wrote revealed on Instagram that she was leaving music to become an FTX intern.
The lawsuit states that Mr. Bankman-Fried later said that Mr. Kives was one of the most connected people he had ever met. The lawsuit states that he reserved space for Mr. Baum in an apartment complex in the Bahamas where FTX was located. And they gave K5 partners access to FTX’s internal messaging channels.
In April 2022, Mr. Bankman-Fried will host a four-day crypto conference in the Bahamas. Mr. Bloom and Ms. Perry attended the event at the Baha Mar resort in Nassau, dining with Mr. Bankman-Fried and other high-profile visitors.
Also present was another public figure who was introduced by Mr. Kives to Mr. Bankman-Fried: Mr. Clinton, who appeared on a panel with the FTX founder.
By then, FTX had formal endorsement deals with celebrities such as Tom Brady and Larry David. Perry also held talks with FTX about official endorsements, said three people familiar with the matter.
Ms Perry’s manager, Martin Kirkup, declined to comment on the endorsement talks and said her Instagram post was a “joke”. Representatives for Ms. Hudson and Mr. Bloom said that FTX did not compensate the actors in any way. And K5 spokeswoman Ms. Ashford said the firm has not brokered any of FTX’s formal endorsement deals.
But for months, the K5 partners acted as Mr. Bankman-Fried’s tour guides through the corridors of fame and power.
At Mr. Kives’ Super Bowl party, Mr. Bankman-Fried also met with Bobby Kotick, chief executive of video game company Activision Blizzard, said a person familiar with the matter. Mr Kives tried to foster the relationship by sending Mr Bankman-Fried a dinner invitation in April 2022 on Mr Kotick’s behalf, according to messages seen by The Times.
That month, Mr. Kives also sent a message to Mr. Musk urging him to join with Mr. Bankman-Fried in the acquisition of Twitter that Mr. Musk was pursuing. “It might be a good idea to do this with Sam Bankman-Fried,” Mr Kives wrote in a message, which was released last year as part of a separate lawsuit.
Last June, Mr Bankman-Fried attended a charity Festival At Casa Cipriani in New York. Mr. DiCaprio was also at the event. When Mr. Kives found out, he sent messages to the actor encouraging him to speak to Mr. Bankman-Fried, said a person familiar with the matter.
Around the same time, Mr. Kives put Mr. Bankman-Fried in touch with Masterclass, a site for tutorials by famous people, said three people familiar with the matter. People said Mr. Bankman-Fried filmed a lesson on cryptocurrencies last summer. His segment was dropped from the final version.
Representatives for Mr. Kotick and Mr. DiCaprio declined to comment.
Mr. Baum also took advantage of his network. Last year, he arranged a meeting between Mr. Bankman-Fried and billionaire activist investor Nelson Peltz, said four people familiar with the matter. Mr. Peltz Was So Impressed With the FTX Founder That He Invited Mr. Bankman-Fried to the Star-Studded Ceremony The wedding of his daughter Nicola and Brooklyn BeckhamDavid and Victoria Beckham’s son, according to emails obtained by The Times. (Mr Bankman-Fried did not appear.)
Months later, Baum helped Bankman-Fried and his younger brother Gabe set up a meeting in Miami with Florida Governor Ron DeSantis, according to three people familiar with the matter and messages seen by The Times.
Then in October, he arranged for Mr. Bankman-Fried look like With Larry Fink, chief executive of investment firm BlackRock, at a conference call in New York, three people familiar with the matter said. At the end of that month, according to messages obtained by The Times, Mr. Kives introduced Mr. Bankman-Fried – who was traveling to the Middle East to raise funds – with Yasir al-Rumayyan, the leader of Saudi Arabia’s Public Investment Fund. offered to add.
Representatives for Mr. DeSantis, Mr. Fink and the Saudi fund declined to comment.
In November, FTX exploded when deposits exposed an $8 billion hole in its accounts. According to the lawsuit, Mr. Baum and Mr. Kives contacted private equity firms and billionaires to help Mr. Bankman-Fried raise cash to rescue the company.
No one came to the rescue of FTX. Mr. Kives and Mr. Baum have not spoken publicly about their relationship with Mr. Bankman-Fried since FTX filed for bankruptcy.
Mr. Kives continues to network. In May, he and his wife, Lydia, hosted a dinner at their Beverly Hills home, according to messages reviewed by The Times. 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 delaquarriere And sheilagh mcneil,
