A cryptocurrency investment company backed by MPs, Lords and a Premier League footballer appears to have disappeared, leaving investors fearing they have lost tens of thousands of pounds.
Phoenix Community Capital started last year as a cryptocurrency project and investment scheme, and at one point claimed to be worth $800m (£665m).
The company offered a cryptocurrency called fire, with 10 tokens giving investors a “nest.” Each of them was said to give a return of 0.225 fire tokens per day, allowing investors to supposedly recover their original investment within 45 days.
Phoenix cultivated links with politicians by sponsoring an All-Party Parliamentary Group (APPG) on blockchain.
Its founder, Luke Sullivan, also spoke at an event organized by a second APPG and regularly appeared at panel events at the Palace of Westminster as an “expert” on cryptography.
Then, in September 2022, the company appeared to disappear: its website closed and its investors, believed to number around 8,000, were left without access to their accounts, known as “nests.”
Luke Sullivan, co-founder of Phoenix Community Capital, has been a regular attendee at parliamentary events. He told a panel he lives in Kent.
One investor, former Premier League footballer Alan Rogers, said he had lost an investment worth around $50,000 (£41,700) and believed the company’s founders were no longer involved.
A second investor said he had lost around £5,000 and said: ‘I got greedy buying the nests. To be honest, the profits were ridiculous.”
When the Guardian contacted Sullivan to ask what had happened to his company and his investments, he said he would only respond if the newspaper flew to the Philippines to discuss the matter with him in person.
He claimed the newspaper had made “a number of factual errors” and said he had not been given the opportunity to “clarify the actual facts”, before refusing to respond to further requests for comment.
According to the report, some assets owned by Phoenix Community Capital have apparently been sold to a new company run by an individual named ‘Dan.’
It has told investors that it had no obligations at the time but would still try to make some profits. He has also sent amounts ranging from $100 to $1,000 to some of the hardest-hit investors.
The new company, led by Dan, claimed that an estimated 1,000 investors had made profits worth $57 million, while 7,400 suffered a loss of about $87 million.
Phoenix Community Capital paid £5,000 to APPG on blockchain and was listed on its website as a “corporate sponsor”.
Phoenix offered a cryptocurrency called fire, with 10 tokens it gave investors a ‘nest’
The group is run by a London think tank called Big Innovation Centre, which has now distanced itself from the crypto company. Its SNP president, Martin Docherty-Hughes, denied knowing or having any contact with Phoenix.
Phoenix had links to a second APPG in the metaverse and web 3.0. chaired by Manzila Pola Uddin, an unaffiliated peer who was suspended from the Labor Party after he was required to repay £125,349 of parliamentary expenses.
Lady Uddin hosted Mr Sullivan at a breakfast earlier this year, where she praised him in introductory remarks as “an expert and I know he is deeply committed to community empowerment”.
The mysterious fate of Phoenix raises new questions about the role of APPGs, which are informal groups created by parliamentarians and peers to discuss issues of shared interest.
While they must be chaired by parliamentarians, they are often run and funded by lobbyists and corporate sponsors.
Professor Birgitte Andersen, of the Big Innovation Centre, said it was “a mistake to include APPG in the Phoenix Community Capital controversy”, adding: “There is no connection.”
He said the company “did not participate in APPG’s blockchain evidence sessions to my knowledge” and that the APPG and its secretariat “behave transparently and ethically, and our evidence and expert speakers contribute to informed decision-making.” in evidence for policymakers.
Sullivan spoke at several parliamentary events organized by the Big Innovation Center think tank.
Mr Docherty-Hughes said: “I have spoken on several occasions in this House and elsewhere about the pernicious use of opaque funding in our politics and the loopholes that still exist which allow individuals and companies to influence the political process without the scrutiny needed 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 in 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.”
Of her decision to organize a company-sponsored breakfast, Lady Uddin said: “I was informed by the organizer that Mr Sullivan was an expert in his field of work and was involved with schools and committed to improving technology education in the community. I simply reiterated the information I was given at the meeting.’
Last month, the Speakers of both Houses of Parliament called for a crackdown on APPGs, insisting they were too easy to set up and lacked independent scrutiny.
They recommended that a ‘gatekeeper’ approve any new special interest association and, crucially, members had to explain who was funding it.
One investor, former Premier League footballer Alan Rogers, said he had lost an investment worth around $50,000 (£41,700).
In addition, someone external would have to chair their annual meetings, and groups could be eliminated if they do not submit reports and accounts.
It comes amid growing concern about the activities of APPGs, of which there are more than 700 ranging from the aerospace sector to zoos.
They have no formal status and can be funded by lobby groups, private companies or even foreign states and are seen as a covert way of gaining access to ministers.
Many offer trips abroad and there have been lurid stories of such “joys” leading to marathon drinking sessions and excursions to brothels.
Phoenix’s apparent demise coincides with a broader collapse in the crypto industry, including the collapse of FTX, a major exchange.
Its founder, Sam Bankman-Fried, has been indicted on a series of criminal charges, including alleged conspiracy to make more than 300 illegal political donations.
The value of the largest cryptocurrency plummeted more than 50 percent last year.