CEO of Fan Token Firm Socios Accused of Crypto Market Manipulation

UTC by Bhushan Akolkar · 3 min read
CEO of Fan Token Firm Socios Accused of Crypto Market Manipulation
Photo: Shutterstock

Advisors to Socios, who owned Chiliz, said that they were not paid in a timely manner by the founder. Interestingly, some of the Socios employees also complained of unfair practices and breach of contract.

Alexandre Dreyfus, the CEO of fan token firm Socios lands himself in trouble. As per the latest report, Dreyfus faces charges of price manipulation of the Chiliz tokens (CHZ) by withholding payments. Chiliz is the native cryptocurrency used by the Socios community.

Socios offers fan tokens tied to real-life sports teams, artists, and creators. It also gives token holders access to exclusive fan clubs to vote on decisions within the community. So far, Socios has partnered with 100 fan teams to generate fan tokens and provide prizes.

In the case of Socios, the users buy the Chiliz tokens for purchasing fan tokens and representing different teams in football, soccer, motorsports, and more. A report from Off The Pitch notes that Socios CEO failed to pay some of his advisors an agreed-upon share of Chiliz against endorsing the cryptocurrency.

An unnamed tech executive said that Dreyfus has stopped all communication with advisors from September 2020. He further added that he only got “some portion of what was promised”.

One of the reasons cited for Dreyfus to hold up the payments was that he didn’t want the Chiliz price to tank. In one of his messages, Dreyfus writes:

“We also need to protect the investors. When you give free tokens, people can sell at any price — it doesn’t matter for them”.

He further added that “real investors” who bought Chiliz could be losing money if the advisors decided to sell the crypto.

Staff Members Faced Problems from Cashing Out

It was not just the investors but also the staff members who have suffered coz of untimely payments. Socios was offering some part of its employee salary in Chiliz (CHZ). One of the employees said that they were unable to cash out the $10 million which Dreyfus owed them in CHZ.

Chiliz then, entered into a new contract replacing the previous one signed by the employees. This ultimately resulted in a smaller allotment of the crypto. As a result of the new agreement, the employee who demanded $10 million was only given $60,000. The company also fired one of the staff members who spoke about this issue to the press. Speaking to Off The Pitch, one of the Chiliz spokespeople said:

“We regret that some advisers that have worked with us in the past were not paid in a timely manner and we have rectified this with them directly and maintain good relationships today,. The agreements were made when the company was pre-start up and at that time we were not able to award CHZ directly as it wasn’t listed on any exchanges. To be clear, this delay is unacceptable and not the way we want to run our business, and falls short of the standards to which we hold ourselves today.”

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Bhushan Akolkar

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

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