Save articles for later
Add articles to your saved list and come back to them any time.
About 10 months before he was arrested on fraud charges, cryptocurrency mogul Sam Bankman-Fried posed for a photograph at the 2022 Super Bowl in Inglewood, California.
On one side of him were Orlando Bloom and Katy Perry, the celebrity couple. On the other was actor Kate Hudson. Standing in the centre, with his arm slung over Bankman-Fried’s shoulder, was a lesser-known figure: Michael Kives.
Michael Kives, a former Hollywood agent, connected FTX’s founder to the likes of Kate Hudson (pictured), Orlando Bloom, Bill Clinton and others. Credit: Getty Images
Kives, a Hollywood agent turned investor, played an unusual role in Bankman-Fried’s business empire: super connector. He and his business partner, Bryan Baum, helped the young founder cultivate relationships with Bloom, Perry and former President Bill Clinton, and offered 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 beneficial. Bankman-Fried invested $US700 million ($1.05 billion) in Kives’ venture capital firm, court records show, an extraordinary level of support for a fund with a short track record of startup investments. Kives, the founder and face of the firm, and Baum each received $US125 million as part of the deal.
The crypto super connectors
Kives, 42, and 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 cryptocurrencies 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 crypto industry’s collapse offers a window into how those promotions came together, revealing the text messages, dinner parties and friendly introductions that fuelled this world of fame, power and big-money deal-making.
On Thursday, FTX’s bankruptcy lawyers sued Kives’ firm, K5 Global, to recover the money that Bankman-Fried had invested. The $US700 million was among the largest sums the FTX founder contributed to any group; the lawsuit said he had made the investment “to burnish his own political and social influence.”
Bankman-Fried agreed to invest as much as $US3 billion over three years in K5, according to the lawsuit and a version of the crypto mogul’s contract with Kives and Baum that was reviewed by The New York Times. The complaint argued that Bankman-Fried had done no meaningful due diligence and “excessively” overpaid Baum and Kives, describing the transactions as a fraudulent scheme to enrich executives.
Sam Bankman-Fried on stage with former UK prime minister Tony Blair and former US president Bill Clinton.
Federal prosecutors have charged Bankman-Fried, 31, with a sweeping fraud in which he siphoned billions of dollars from FTX customers to make charitable donations, political contributions and large investments. He has pleaded not guilty.
A spokesperson for K5, Elizabeth Ashford, said that the lawsuit was “without merit” and that K5 had believed it was entering a legitimate, long-term business relationship with Bankman-Fried. A spokesperson for Bankman-Fried declined to comment.
Hollywood to Wall Street
A former aide to Clinton, Kives started working for Creative Artists Agency in 2003, representing actors such as Bruce Willis and Arnold Schwarzenegger. At Kives’ 2019 wedding in Palm Springs, California, Perry sang “Hava Nagila,” a Jewish folk song, and two writers on The Office delivered a roast.
Kives started K5 in 2018. He was later joined by Baum, an entrepreneur who had co-founded a software company that was acquired by Lyft. K5 has invested in startups including SpaceX and Boring Co., which are run by Elon Musk, amassing a portfolio of 148 companies.
As they built K5, Kives and Baum touted their connections, including with billionaire financier Warren Buffett.
In an interview, Buffett said Kives was a “name-dropper” who “might pitch that he has a connection to me, but he doesn’t.” Buffett said he had known Kives from his time at Creative Artists Agency. Since then, he said, Kives has contacted him about a few investment opportunities, which he declined.
In late 2021, Kives used his network to forge a relationship with Bankman-Fried, who was rising in prominence as cryptocurrencies boomed. They got in touch over email, the lawsuit said, and Kives introduced Bankman-Fried to the musician Sia.
Credit: Illustration by Diego Patiño / New York Times
Two days before the Super Bowl last year, Bankman-Fried attended a party at Kives’ home in Beverly Hills, California, where he spent time with Perry and Bloom, four people familiar with the matter said. During a karaoke session, three of the people said, Perry performed a song that incorporated lyrics about FTX. The next day, she wrote on Instagram that she was quitting music to become an FTX intern.
Bankman-Fried later raved that Kives was one of the most connected people he had ever met, the lawsuit said. He reserved space for Baum in an apartment complex in the Bahamas, where FTX was based, the lawsuit said. And he gave K5’s partners access to FTX’s internal messaging channels.
In April 2022, Bankman-Fried hosted a four-day crypto conference in the Bahamas. Bloom and Perry joined the event at the Baha Mar resort in Nassau, dining with Bankman-Fried and other high-profile visitors.
Also in attendance was another public figure whom Kives had introduced to Bankman-Fried: Clinton, who appeared on a panel with the FTX founder.
By then, FTX had struck formal endorsement deals with celebrities such as Tom Brady and Larry David. Perry also held talks with FTX about an official endorsement, three people familiar with the matter said.
Perry’s manager, Martin Kirkup, declined to comment on the endorsement talks and said her Instagram post was a “joke.” Representatives for Hudson and Bloom said FTX had not compensated the actors in any way. And Ashford, the K5 spokesperson, said the firm had not brokered any of FTX’s formal endorsement deals.
But for months, the K5 partners acted as Bankman-Fried’s tour guides through the corridors of fame and power.
At Kives’ Super Bowl party, Bankman-Fried also met Bobby Kotick, the CEO of the video game company Activision Blizzard, a person familiar with the matter said. Kives tried to foster the relationship, relaying a dinner invitation from Kotick to Bankman-Fried in April 2022, according to messages viewed by the Times.
Legendary investor Warren Buffett labelled Kives as a “name-dropper.”Credit: AP
That month, Kives also texted Musk, urging him to join forces with Bankman-Fried on the acquisition of Twitter, which Musk was pursuing. “Could be cool to do this with Sam Bankman-Fried,” Kives wrote in a message that was released as part of a different lawsuit last year.
Last June, Bankman-Fried attended a charity gala at Casa Cipriani in New York. DiCaprio was also at the event. When Kives found out, he texted the actor, encouraging him to speak with Bankman-Fried, a person familiar with the matter said.
Around the same time, Kives put Bankman-Fried in touch with MasterClass, a site for tutorials by famous people, three people familiar with the matter said. Bankman-Fried filmed a lesson on cryptocurrencies last summer, the people said. His segment was dropped from the final version.
Representatives for Kotick and DiCaprio declined to comment.
Baum also tapped into his network. Last year, he set up a meeting between Bankman-Fried and Nelson Peltz, the billionaire activist investor, four people familiar with the matter said. Peltz was impressed enough with the FTX founder that he invited Bankman-Fried to the star-studded wedding of his daughter Nicola and Brooklyn Beckham, the son of David and Victoria Beckham, according to emails obtained by the Times. (Bankman-Fried did not attend.)
Months later, Baum helped Bankman-Fried and his younger brother, Gabe, schedule a meeting in Miami with Ron DeSantis, Florida’s governor, according to three people familiar with the matter and messages viewed by the Times.
Then in October, he arranged for Bankman-Fried to appear with Larry Fink, the CEO of the investment firm BlackRock, at a conference in New York, three people familiar with the matter said. Later that month, Kives offered to connect Bankman-Fried — who was travelling to the Middle East to raise money — with Yasir al-Rumayyan, the leader of Saudi Arabia’s Public Investment Fund, according to messages obtained by the Times.
Representatives for DeSantis, Fink and the Saudi fund declined to comment.
In November, FTX imploded after a run on deposits exposed an $US8 billion hole in its accounts. Baum and Kives contacted private equity firms and billionaires to help Bankman-Fried pull together cash to save the company, according to the lawsuit.
None came to FTX’s rescue. Kives and Baum have said nothing publicly about their relationship with Bankman-Fried since FTX filed for bankruptcy.
Kives has continued to network. In May, he and his wife, Lydia, hosted a dinner at their Beverly Hills home, according to messages reviewed by the Times. The A-list invitees included Hillary Clinton, Kris Jenner, Olivia Wilde, DiCaprio and Perry.
This article originally appeared in The New York Times.
The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.
Most Viewed in Business
From our partners
Source: Read Full Article