Victims of the FTX bankruptcy are seeking compensation from celebrities who have become “advertising towers”. Larry David, Tom Brady, Shaquille O’Neal, etc. But Taylor Swift averted this crisis. She asked basic questions about a reported $100 million ($13.5 billion) sponsorship offer and then avoided embarrassment or legal trouble.
During the negotiation process, Swift asked FTX representatives, “Can you say these[crypto assets that were listed on FTX]weren’t unregistered securities?”・Adam Moskowitz told the web media “The Block”.
I haven’t been able to confirm the truth, but there’s a lot to learn from this episode. In addition to her musical talent, Swift has already proven herself to be a bright and astute businesswoman. For example, he went to great lengths to obtain the mastering rights to his songs.
Swift’s question about unregistered securities was surprisingly prescient in the face of an aggressive regulatory crackdown on cryptocurrency exchanges.
However, the sale of unregistered securities did not destroy FTX. FTX was an old-fashioned scam. It’s not like Swift asked, “Is your company’s management secretly sending user funds to affiliated hedge funds?”
So what ultimately caused Swift and FTX talks to fall apart? My guess is that the common scenario is that Swift and its associates weren’t satisfied with the way FTX handled these issues. A chaotic or inconsistent response might have signaled an organization that might be deeply troubled.
Despite the lawyer’s statement, it cannot be said with certainty that this actually happened. FTX and Swift talks were reported by the Financial Times in December 2022. The deal was that Swift would get $100 million by promoting FTX at a concert. However, there was some skepticism within FTX due to the astronomical amount of money. FTX paid $135 million for the naming rights to the NBA’s Miami Heat stadium.
But the lesson to be learned from this episode is that you may not need to know all the risks an investee faces. What Swift did right was asking challenging and critical questions, not specific questions about law or securities.
A truly smart investor will not only focus on answers to difficult questions, but also on responses to them. It is a basic and important evaluation method in business and investment.
My impression, at least, is that Taylor Swift smelled shady in her answers to questions about securities law. She avoided trouble by avoiding her risks.
｜Translation: coindesk JAPAN
｜Editing: Takayuki Masuda
｜Original: What Taylor Swift Can Teach You About Investing