Barstool Sports’ David Portnoy bought more than $ 1 million worth of Bitcoin – or so he asserted – earlier this month. Less than two weeks later, the president of the media empire suddenly announced that he had sold it all.
“I currently have zero bitcoins,” he said told his legions of Twitter followers on Friday. “I’m on crypto because coins don’t always go up.”
Portnoy has established himself as a frat-boy entertainer with 1.7 million followers on Twitter alone. That it’s hard to know exactly what happened behind the scenes. Did he leave the market because his sponsorship of the site with BlockFi apparently ended yesterday? Or did his remarks cause BlockFi to dump him?
However, his sudden over-face raises some questions. Did Portnoy, who was involved in the risky day-trading stock trading business when the COVID pandemic imposed a time-out for professional sports, cross a line by talking up Bitcoin and then dumping it?
Portnoy’s complaint
During his brief love affair with crypto – which began when he hosted founders of the Gemini crypto exchange Cameron and Tyler Winklevoss at his summer home on Nantucket – Portnoy wrote about “pumping and dumping” Bitcoin along with other cryptocurrencies, such as chainlink (LINK) and orchid (OXT), in which he also invested heavily.
Bitcoin, which was $ 11,755 on August 13, went up more than 7% after Portnoy told the world that it had completely jumped into the market. However, LINK dumped 30% since Portnoy signaled its confidence in the currency. OXT also fell in price.
“The thing I like about pumping and dumping in crypto is encouraging it,” he said on his Davey Day Trader stream on August 17th. “In crypto, you can pump and dump all day.”
The day after Portnoy made that comment, Jake Chervinsky, a lawyer and attorney general for decentralized start-up finance companies, tweeted a reminder that manipulating cryptocurrencies is a big no-no.
“I do not know who should hear this, but pump-and-dumps are illegal in crypto, just like in any other market; and if you admit that they do it intentionally on a recorded live stream, then you can expect the video will be played for you as Exhibit A at @CFTC & @TheJusticeDept,” he said.
In fact, the Commodity Future and Trading Commission has previously warned the public about crypto-pump-and-dump schemes, which it defines as “coordinated efforts to create false demand (the pump) and then sell it quickly (the dump) for profit by taking advantage of traders who ‘ are not aware of the scheme. ”
Portnoys restriction
Chervinsky told Encrypt today that, although crypto has gained a reputation for the Wild West, he wants people to be aware that the same laws apply to Bitcoin as other commodities, such as stocks, that are traded on regular exchanges. (Gemini is a regular exchange, but many of the exchanges where bitcoin is traded are not.)
“I saw a clip of Dave saying that pumps and dumps are encouraged in crypto, and although I’m sure he was joking, I do not want his audience to leave with a false impression,” he said.
That said, Chervinsky insists he did net see what to suggest that Portnoy was engaged in a pump-and-dump scheme.
In fact, Portnoy himself talitten he hit his pants down: ‘I think I bought it at eleven-five, it went up to twelve-five, just like we knew when I came in. And then I turned my head for a second and people sold it. But that’s not the one who got me, and that was by far the most money. I was probably 150 hours[000] on Bitcoin at one point, but the LINK people, the ORCHARD people, killed me. “
Preston Byrne, a partner at U.S. law firm Anderson Kill, told Encrypt that there is insufficient information on Portnoy’s crypto-trading activities to determine whether any illegal activity actually took place.
It is not enough to mention that you have a position in a currency as security, he said. “There must be some dishonest behavior like false representations for the trading activity to rise to the level of fraud.”
That said, Byrne added that recording a video of yourself stating that you think about crypto-trading and then calling pump-and-dump schemes in the next breath is a “deeply stupid thing to do, but on its own is probably not a criminal. ”
“Deceiving investors to make a profit is a very different matter,” he said. “But, as far as I can tell, no one is claiming that everything Portnoy said was not true.”
Besides, would it surprise anyone if Portnoy, Portnoy, is Bullish again today on Bitcoin?
