Crypto Firm With Ties To Parliamentary Groups Appears To Be Disappeared | House of Lords

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A cryptocurrency investment firm linked to two All-Party Parliamentary Groups (APPGs) appears to have disappeared, leaving some investors to fear they may have lost tens of thousands of pounds and raising the prospect of fresh questions about the role of APPGs in parliament .

Phoenix Community Capital established itself last year as a cryptocurrency project and investment program, which it said at one point was valued at $800 million ($665 million). It was a sponsor of an APPG, and its co-founder, Luke Sullivan, spoke at an event for a second APPG, as well as appearing as a panelist at peer-organized events. in parliament.

However, the company appears to have disappeared in September last year, with its website going offline and investment portfolios, known as nests, becoming inaccessible to around 8,000 investors after that date.

Some investors, including a former Premier League footballer, claim to have lost tens of thousands of pounds each.

Some of the company’s assets and its name appear to have been sold to a new company run by an individual called Dan, who told investors he had no obligation to them, but would always try to make them returns.

Ad for a discussion of the metaverse and smart cities, featuring Luke Sullivan. Photography: Grand Innovation Center

Asked what happened to the company and its investments, Sullivan said he would respond if the Guardian traveled to the Philippines to discuss it further. He criticized the Guardian for making a number of factual errors and said he had no opportunity to clarify the true facts, then said he could not respond to another request for comment.

The company had promoted itself online by referring to its links with the House of Lords, APPGs and parliamentarians.

The situation is likely to fuel concerns that corporations are using parliament and the APPG system to lend themselves prestige and access to politicians without too much scrutiny.

APPGs are informal groups in parliament formed of MPs and peers to discuss topics of particular interest, from countries to economic sectors. They must be chaired by MPs, but are often run or funded by lobbyists and corporate donors seeking to influence government policy or gain credibility.

It also highlights the rise in lobbying of MPs and peers by the crypto industry as the government plans to bring it under regulation. The sector is largely unregulated and the Financial Conduct Authority has repeatedly warned investors that they risk losing all their money.

Phoenix Community Capital, which was based in the United States, donated $5,000 last year to the APPG on blockchain, the technology behind cryptocurrencies but which also has other uses.

The company was listed on the APPG website as one of its business partners. The group is co-chaired by Martin Docherty-Hughes, a Scottish National Party MP who said he had no contact or knowledge of Phoenix.

Separately, Phoenix Community Capital had links to the APPG on Metaverse and Web 3.0, chaired by Manzila Pola Uddin, an unaffiliated peer who previously served as a labor councilor.

Sullivan was a guest speaker at an event hosted by the APPG at a place called Magna Carta Island in Surrey in the summer of 2022.

Earlier in the year, Lady Uddin was parliamentary patron of a breakfast hosted by the society on the terrace of the House of Lords, where people from industry received awards.

In a video shot on the terrace, Sullivan was praised in opening remarks by Uddin, who said he was an expert and I know he is very deeply committed to community empowerment.

The terrace of the Houses of Parliament. Photograph: Mark Kerrison/Alamy

He also made appearances at two non-APPG panel events at the Palace of Westminster alongside people connected to APPG for an event called Metaverse Week, one of which was organized by Tim Clement-Jones, a Liberal Democrat peer. .

The founders of Phoenix Community Capital, including Sullivan, who was based in the UK, appear to have left the company in September and a now-deleted post on its Twitter feed said it was under new management. Some investors claim to have lost over $100,000 each.

The new incarnation of the company, controlled by Dan, posted a message on an internet forum in October last year stating that around 1,000 investors had made positive returns totaling around $57 million, while around 7 400 were in the red to the tune of $87 million.

The new company did not respond to requests for comment, but Dan told investors he would try to give them feedback even though he is under no obligation to do so, and dropped small amounts of money. worth $100 to $1,000 to some of the most affected investors. .

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In the case of Phoenix Community Capital, investors bought tokens of a cryptocurrency called fire and 10 tokens earned investors a nest.

Each nest offered a return of 0.225 fire tokens per day, meaning they would recoup their initial investment in 45 days and continue to accumulate more. Fire tokens were highly valued at the start of 2022, but by the summer they had become almost worthless, and in any case, investors can no longer access their accounts to sell the tokens.

Under the project structure, the company used seven out of 10 fire tokens from each nest to pay out rewards to other investors and two out of 10 to invest in new crypto projects, while one out of 10 entered a liquidity pool. He insisted that this approach was sustainable, but the investment projects did not appear to have produced any returns when the company’s website went offline.

One investor, former Premier League footballer Alan Rogers, said he lost an investment of around $50,000 and believed the founders were no longer involved.

Former Premier League footballer Alan Rogers. Photography: Mark Thompson/Getty Images

Another investor told the Guardian: I lost about 5,000 I became greedy to buy the nests. To be honest the feedback was ridiculous… Obviously people kept buying more nests with the feedback rather than cashing in.

A third investor, Jonathan, who did not want his last name published, said he was an early investor and got out early without losing any money, but some of his friends and parents had invested and lost tens of thousands of pounds.

Luke always used to say he had been homeless and now he just wanted to get as many people to eat at the big table as possible… I know some people have lost over $100,000 each. People were very badly burned.

The blockchain APPG, whose secretariat is a think tank called the Big Innovation Center, distanced itself from Phoenix Community Capital, though it acknowledged sponsoring 5,000 people.

Professor Birgitte Andersen of the Big Innovation Center said it was wrong to implicate APPGs in the Phoenix Community Capital controversy, adding: There is no relationship. She said that the company has not participated in the APPG blockchain evidence sessions to my knowledge and that the APPG and its secretariat behave in a transparent, ethical manner, and that our evidence and expert speakers add to the evidence-based decision making for decision makers.

Docherty-Hughes said: I have spoken many times in the House and elsewhere about the pernicious use of opaque funding in our policy and the loopholes that still exist that allow individuals and corporations to influence the process policy without prior review. It has been clear to me for some time that the APPGs are one of those back doors that have been left wide open, giving access and privileges around parliament to people who really don’t deserve it.

[] The vast majority of APPGs, including those of which I am a member, would have nothing to fear from stricter regulation ensuring transparency and accountability in the process of funding this vital work.

Clement-Jones said he was asked to chair the meeting in parliament because of his interest in the Metaverse, that it was not an APPG meeting, and that Sullivan was one of the nine speakers.

In hindsight, it’s unfortunate that he was on the panel, but I don’t know what due diligence you’re insinuating is necessary or feasible in the circumstances, he said.

On behalf of the APPG on the Metaverse, Uddin said: Mr. Sullivan was at no time involved with our APPG and certainly did not seek permission or inform us before referring to the APPG on the Metaverse and Web 3.0. When asked for additional comment on Sullivan’s appearance as a speaker at an APPG event, she said she made introductory remarks at the start and was not part of any tables. round with other speakers.

Hosting a company-sponsored breakfast, she said: I was informed by the organizer that Mr. Sullivan was an expert in his field of work and involved in schools and committed to improve technological education in the community. I have only repeated this information which was given to me during the meeting.

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