About 10 months before he was arrested on fraud charges, cryptocurrency mogul Sam Bankman-Fried posed for a photo during the 2022 Super Bowl in Inglewood, California.
On one side of him sat Orlando Bloom and Katy Perry, the famous couple. On the other hand, the actress Kate Hudson. In the center, with his arm over Mr. Bankman-Fried’s shoulder, stood a lesser-known figure: Michael Kives.
Mr. Kives, a Hollywood agent turned investor, played an unusual role in Mr. Bankman-Fried’s business empire: superconnector. He and his business partner, Bryan Baum, helped the young founder build relationships with Mr. Bloom, Ms. Perry and former President Bill Clinton, offering introductions to a who’s who of celebrities and business leaders, from Leonardo DiCaprio to the governor of Saudi Arabia. -Arabia. The public investment fund of Arabia.
The relationship was mutually beneficial. Mr. Bankman-Fried invested $700 million in Mr. Kives’ venture capital firm, court records show, an extraordinary level of support for a fund with a short track record of start-up investments. Mr. Kives, the founder and face of the company, and Mr. Baum each received $125 million as part of the deal.
Mr Kives, 42, and Mr Baum, 34, were part of an invisible network of intermediaries who introduced celebrities and other powerhouses into the once booming crypto industry. Before cryptocurrencies crashed last year, a drum roll of endorsements from Hollywood stars, professional athletes, corporate titans and politicians created an aura of credibility around the volatile and largely unregulated market.
Now, the legal ramifications of the crypto industry’s collapse offers a glimpse into how those promotions came together, revealing the text messages, dinners and friendly introductions that fueled this world of fame, power and making big cash prizes.
On Thursday, FTX bankruptcy lawyers sued Mr. Kives’ company, K5 Global, to recover the money that Mr. Bankman-Fried had invested. The $700 million was one of the largest amounts of money the FTX founder has contributed to a group; according to the lawsuit, he had made the investment “to polish his own political and social influence”.
Mr Bankman-Fried agreed to invest a whopping $3 billion in K5 over three years, according to the lawsuit and a version of the crypto tycoon’s contract with Mr Kives and Mr Baum that was reviewed by The New York Times . The complaint alleged that Mr Bankman-Fried had not done meaningful due diligence and had “excessively” overpaid Mr Baum and Mr Kives, describing the transactions as a fraudulent scheme to enrich executives.
Federal prosecutors have charged Mr. Bankman-Fried, 31, with large-scale 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 spokeswoman for K5, Elizabeth Ashford, said the lawsuit was “baseless” and that K5 believed it was entering into a legitimate, long-term business relationship with Mr Bankman-Fried. A spokesperson 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 actors such as Bruce Willis and Arnold Schwarzenegger. At Mr. Kives’ wedding in Palm Springs, California, Mrs. Perry sang “Hava Nagila,” a Jewish folk song, and two writers from “The Office” brought a roast.
Mr. Kives started K5 in 2018. He was later joined by Mr. Baum, an entrepreneur who co-founded a software company that was acquired by Lyft. K5 has invested in start-ups including SpaceX and Boring Company, which are run by Elon Musk, and has built a portfolio of 148 companies.
As they built K5, Mr. Kives and Mr. Baum touted their connections, including billionaire financier Warren E. Buffett.
In an interview, Mr. Buffett said Mr. Kives was a “name-dropper” who “could say he has a connection with me, but he has not.” Mr. Buffett said he knew Mr. Kives from his time at Creative Artists Agency. Since then, he said, Mr. Kives has contacted him about a few investment opportunities, which he declined.
At the end of 2021, Mr. Kives his network to forge a relationship with Mr. Bankman-Fried, who rose to prominence as cryptocurrencies boomed. They got in touch via email, the lawsuit said, and Mr. Kives introduced Mr. Bankman-Fried to the musician Sia.
Two days before last year’s Super Bowl, Mr. Bankman-Fried attended a party at Mr. Kives’ Beverly Hills, California, home where he spent time with Ms. Perry and Mr. Bloom, four people familiar with the matter said. During a karaoke session, three of the people said, Ms. Perry sang a song with lyrics about FTX. The next day, she wrote on Instagram that she was quitting music to become an FTX intern.
Mr. Bankman-Fried later raved that Mr. Kives was one of the most connected people he had ever met, the lawsuit said. He reserved space for Mr. Baum in an apartment complex in the Bahamas where FTX was located, the lawsuit said. And he gave K5’s partners access to FTX’s internal messaging channels.
In April 2022, Mr. Bankman-Fried hosted a four-day crypto conference in the Bahamas. Mr. Bloom and Ms. Perry attended the event at the Baha Mar resort in Nassau, where they dined with Mr. Bankman-Fried and other high-profile visitors.
Also present was another public figure who had introduced Mr. Kives to Mr. Bankman-Fried: Mr. Clinton, who appeared on a panel with the founder of FTX.
By then, FTX had signed formal endorsement deals with celebrities like Tom Brady and Larry David. Ms Perry has also held talks with FTX about an official approval, three people familiar with the matter said.
Ms Perry’s manager, Martin Kirkup, declined to comment on the approval talks, saying her Instagram post was a “joke”. Representatives for Ms. Hudson and Mr. Bloom said FTX had not compensated the actors in any way. And Ms. Ashford, K5’s spokeswoman, said the company had not brokered FTX’s formal endorsement deals.
But for months, the K5 partners acted as Mr. Bankman-Fried’s guides through the corridors of fame and power.
At Mr. Kives’ Super Bowl party, Mr. Bankman-Fried also met Bobby Kotick, the CEO of the video game company Activision Blizzard, a person familiar with the matter said. Mr Kives tried to nurture the relationship by passing on a dinner invitation from Mr Kotick to Mr Bankman-Fried in April 2022, according to reports viewed by The Times.
That month, Mr. Kives mr. Musk too, urging him to join forces with Mr. Bankman-Fried on the acquisition of Twitter, where Mr. Musk aspired to. “It would be cool to do this with Sam Bankman-Fried,” Mr. Kives wrote in a post released last year as part of another lawsuit.
Last June, Mr. Bankman-Fried at a charity gala at Casa Cipriani in New York. Mr. DiCaprio was also at the event. When Mr. Kives found out, he texted the actor, encouraging him to talk to Mr. Bankman-Fried, a person familiar with the matter said.
Around the same time, Mr. Kives mr. Bankman-Fried contacted MasterClass, a site for celebrity tutorials, said three people familiar with the matter. Mr Bankman-Fried filmed a lesson on cryptocurrencies last summer, people said. His segment was dropped from the final cut.
Representatives for Mr. Kotick and Mr. DiCaprio declined to comment.
Also mr. Baum used his network. Last year he arranged a meeting between Mr Bankman-Fried and Nelson Peltz, the billionaire activist investor, four people familiar with the matter said. Mr. Peltz was so impressed with the founder of FTX that he invited Mr. 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. (Mr. Bankman-Fried was not present.)
Months later, Mr. Baum mr. Bankman-Fried and his younger brother Gabe in planning a meeting in Miami with Florida Governor Ron DeSantis, according to three people familiar with the matter and reports viewed by The Times.
He then arranged in October for Mr Bankman-Fried to appear at a conference in New York with Larry Fink, the CEO of investment firm BlackRock, three people familiar with the matter said. Later that month, Mr. Kives to Mr. Bankman-Fried – who traveled to the Middle East to raise money – with Yasir al-Rumayyan, the leader of the Saudi Public Investment Fund, according to reports obtained by The Times.
Representatives for Mr. DeSantis, Mr. Fink and the Saudi fund declined to comment.
In November, FTX imploded after a run on deposits exposed an $8 billion hole in its accounts. Mr. Baum and Mr. Kives reached out to private equity firms and billionaires to help Mr. Bankman-Fried raise money to save the company, the lawsuit said.
No one came to the rescue of FTX. Mr. Kives and Mr. Baum have not said anything publicly about their relationship with Mr. Bankman-Fried since FTX filed for bankruptcy.
Mr. Kives has continued to network. In May, he and his wife, Lydia, hosted a dinner party at their Beverly Hills home, according to reports reviewed by The Times. The A-list invitees included Hillary Clinton, Kris Jenner, Olivia Wilde, Mr. DiCaprio and Ms. Perry.
Kelly Browning reporting contributed. Research contributed by Kitty Bennett, Susan C. Beachy, Alain Delaqueriere And Sheelagh McNeill.
