So, you’re a fan of a professional sports team and excited about their new partnership with the latest and hottest Crypto startup? Hold your horses before sending any money because Bitcoin might be down, but the dark underbelly of Crypto is on the rise.
How do these Crypto Scams Work?
Crypto scams usually work by promising investors huge returns on their investment but failing to deliver on those promises. Sometimes, the scammers will disappear with the money, while others may try to sell investors worthless or fake tokens to prolong the charade and prevent the house of cards from tumbling in.
Many scams make it difficult for victims to get their money back. In some cases, victims may be able to recover their funds through law enforcement or by filing a civil lawsuit, but often they are left out of pocket as the courts don’t always have a firm grip over the technology involved.
Crypto x Sports
In the world of cryptocurrency, there have been several controversies of late involving sports teams. The most recent examples come from Crypto companies DigitalBits/Zytara and StormX.
Both these companies have recently entered into multi-million-dollar marketing agreements with major sports teams like European football giants AS Roma and Inter Milan (DigitalBits/Zytara) as well as the Franchise NBA team The Portland Trail Blazers, only for the teams to come out and cancel the agreements due to non – payment.
In both instances, the narratives alluded to the challenging market conditions for Crypto:
“But crypto companies have taken a hit this year amid the broader market slowdown, with prices of Bitcoin and other cryptocurrencies falling substantially.” as per Geekwire relating to StormX and”The crisis in the digital currency sector, which worsened during the second quarter of 2022, has impacted and continues to impact the results for our club, particularly in terms of the sponsorship agreement with Zytara Labs – Digitalbits.” as per CEO Allesandro Antonello during a recent Inter Milan Shareholders Meeting.
We could probably accept this explanation due to the current Crypto market if it weren’t for several questionable and nefarious business activities in Digitalbits/Zytara’s past that paint an oddly familiar picture.
Crypto firms want to partner with Celebrities and Sports teams because it gives them credibility and social clout. If investors believe in the company, they are more likely to pump more money into your venture.
In 2021 in the Supreme Court of the State of New York, Mark Dorrel, one of the earliest seed funders of Digitalbits, claimed in court papers that its founder, Al Burgio, convinced him that he had created a new Digitalbits Blockchain that was better. Faster than Ethereum, whereafter Burgio furnished him with worthless tokens without utility after the investment.
Dorrel alleged that Burgio went on to create a different set of tokens on Ethereum, which were then used to siphon off Dorrel’s investment of 160 million dollars. Burgio promised to swap the initial tokens for the newly created ones, but this never happened.
Burgio created a new fund with GDA Capital and a suit of companies with the Zytara brand using these funds. Over time it became apparent that what Burgio promised wasn’t delivered. Still, Digitalbits/Zytara kept hyping the company, saying that they have signed significant brands to launch on their platform, among other claims.
Public records show internal Telegram messages of token holders questioning the validity of the operation as tension mounted, and eventually, employees like Rajiv Naidoo came forward and said that he could not live with his conscience and that he urged Burgio to pay back the investor’s money that was owed to them and built the original Digitalbits Blockchain as intended.
At this point, it should be noted that the court dismissed the case in September 2022, but that at the time of writing, in the case of Inter Milan, none of the supposed products, services, or features exists exactly as Dorrel claimed in his court filings.
When you visit the Zytara website, you still see Inter Milan, despite the ruling by the club, and you must wonder about AS Roma. Furthermore, it proudly displays a digital banking experience with world-renowned Deadmau5, but the fine print says, “Zytara is a financial technology company, not a bank. Banking services provided by Sutton Bank, Member FDIC.”
It seems that when it comes to Digitalbits/Zytara, what they say and what they do aren’t always the same thing.
This is a developing story…
Rocco Strydom is the Founder of SGM Holdings – finance, energy and media and is the host of the
SGM podcast based in South Africa