Monday, September 25, 2023

‘Fan Token’ Company Socios Accused of Crypto Price Manipulation

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Alexandre Dreyfus, the CEO and founder of the fan-token site Socios, has been accused of withholding payments to maintain the price of Chiliz (CHZ), the cryptocurrency used by the Socios community, according to a report by Off the field

Fan tokens are linked to real sports teams, creators or artists and give token holders access to exclusive fan clubs where they can vote on decisions within their community. In the case of Socios, the platform revolves around sports, with users buying Chiliz to buy the fan tokens that represent different teams in football, soccer, motorsport and more.

As reported by Off the fieldDreyfus reportedly failed to pay some of his advisers an agreed-upon share of Chiliz in exchange for approving the cryptocurrency. An unnamed tech executive told: Off the field that he only got “some of what was promised” and claims that in September 2020 Dreyfus “started avoiding all communication with the advisers”.

His reason for not paying advisors? An internal message from Dreyfus viewed by Off the field indicates that Dreyfus did not want Chiliz’s value to fall. “We also need to protect the investors,” Dreyfus writes in the screenshot post. “If you give free tokens, people can sell at any price — they don’t care.” He then noted that the “real investors” who bought Chiliz might lose money as a result of selling the currency through advisors.

The tech executive referred to Off the field to three other advisers who also allegedly remained unpaid and received confirmation from one of them. Curiously, that one advisor again reached out to Dreyfus – the context of their conversation unknown – and reported back to Off the field that all four advisors were ultimately paid in full. It is unclear if any other Chiliz advisers remain unpaid.

“We regret that some advisors who have worked with us in the past have not been paid on time and we have rectified this directly with them and are maintaining good relations today,” said a Chiliz spokesperson. Off the field† “The agreements were made in the pre-startup of the company and at that time we could not award CHZ directly because it was not listed on a stock exchange. To be clear, this delay is unacceptable and not the way we want to run our business, and does not meet the standards we hold ourselves to today.”

Employees, who would also receive part of their salary in Chiliz, were less fortunate. When Chiliz’s value skyrocketed, an employee claimed they couldn’t cash in on the $10 million Dreyfus allegedly owed. Chiliz later ushered in a new contract to replace the one previously signed by employees, resulting in a smaller allotment of crypto, Off the field reports. The employee who owed $10 million would only have made about $60,000 as a result of the new agreement. Another staff member was reportedly fired after speaking to the press about the matter.

The edge reached out to Chiliz with a request for comment, but didn’t hear back immediately.

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