In the spring of 2022, 500 basketball enthusiasts bought tokens to become shareholders of their favorite club. Without news of their chips, the dream turns to disillusion.
This Wednesday, September 28, 2022, Jérôme Tapie connects to the Counterpointe Sports Group interface to confirm the information: “No trace of my tokens”. This YouTuber and speaker of sports events is one of the 500 subscribers to the sale of digital securities tokens (STO for security token offering) carried out in April 2022 by the American group CSG, then majority owner of the French basketball team l ‘Elan Bearnais. To date, no subscriber has reportedly received the promised tokens.
On paper, this sale was nevertheless promising: a professional sports club was going to open its capital to supporters via a security token offering. The idea had been presented by this group of American investors CSG, welcomed with great fanfare in the spring of 2021 by the city of Pau and its basketball club, then in great financial difficulty.
In June 2021, François Bayrou details at the town hall of Pau a project supposed to “make the ambition live up to the legend of this club, and this, for the years to come.” The mayor of Pau announces a “commitment” made “with CSG, to increase the budget to the sum of 7 million euros from the first season, an increase of almost 20% compared to the budget for this year.” He continues and presents “among the means that CSG wishes to give itself, (….) a very important real estate investment around the sporting vocation and the defense of the environment”. For this, the city of Pau plans to “provide a plot near the Palais des Sports which will allow CSG to set up a hotel, a residence for young athletes and finally a course centered on the defense of the environment. and the decarbonization of economic activities”. If the American owners are by videoconference, club president David Bonnemason-Carrère is present alongside the mayor. It is he who already evokes the future possibility for “supporters to become shareholders [du] club through tokens”. An opportunity presented as “a first in Europe”.
225,000 euros collected in a few days
But one year to the day after the enthronement of the group of investors at the town hall of Pau, it is the debacle: the DNCCG, the French policeman of sport, refuses to the Elan Béarnais access to the elite. Worse, the club should be relegated to the amateur ranks. At this time, our colleagues from Sud-Ouest reveal that “Counterpointe Sports Group (CSG) has lost just over 3 million euros in just ten months” and that its CEO David Otto has not contributed the sum of 1 .1 million euros promised to the French authority.
On the spot, it is amazement, especially since the group has gone to the end of its idea of selling tokens, the Pau Basketball Tokens. Between April 26 and May 5, 500 lots of 500 tokens were sold to the French public, mostly Pau. Price of the lot: 450 euros. It is therefore 225,000 euros collected by the club via a sale which has generated legitimate enthusiasm with regard to the announcements of Elan Béarnais: according to a press release (removed from the site but still readable in the archive), “buyers of tokens will receive a seat on the club’s board of directors” and they “will also have an interest in the CSG real estate project. This project called Climate Technology Park will be a sustainable real estate complex, built in collaboration with companies committed to the environment. It will host a training center, restaurants, a fan zone, a hotel, accommodation, etc.” A park made possible by the provision by the city of Pau of a plot of land. Too good to be true ?
From the moment of the sale of tokens, the buyers notice anomalies. “It was not developed at home. For example, it took several days for my transaction to be recognized,” recalls youtubeur Jérôme Tapie. Payments are made in cryptos or by bank transfer. The first RIB displayed on the interface of the sale belongs to a bank in Seattle, in the United States; the city where Greg Heuss, vice-president of the CSG, lives. Hardly practical for French buyers. In fact, the RIB of a local branch of Crédit Agricole appears after a few hours. According to our information, confirmed by our colleagues from La République des Pyrénées, the American group used this money to pay the salaries of the players, who were in arrears.
Players also interested in the sale of tokens, according to the token management and distribution contract still online: an amount of 2.5 million tokens was allocated to them, under certain conditions. Contacted by the JDN, the American player Brandon Jefferson is still waiting “the equivalent of 15,000 euros in chips, after the victory in the Coupe de France and the good results in the league”. Somewhat annoyed, he confides “having heard nothing from CSG yet”. Today, no player received any tokens.
Where are the tokens?
Besides, would these tokens have any value? It is possible to doubt it, especially since nothing indicates their real existence. To know if these tokens have been minted, you must be in possession of the blockchain address of the smart contract (the program executed to generate the tokens). However, to date, no one is in possession of this address. General manager of the club last year, the American Tom Huston kicked into touch when the JDN contacted him: “I would like to help, but unfortunately I do not have the information you are looking for”, he said. he answered. “I suggest you try to contact Greg Heuss at CSG.”
Unfortunately, neither Greg Heuss nor David Otto, CEO of CSG, responded to our requests. Ditto on the side of the American technical service provider, Securitize, where subscribers’ wallets are supposed to be managed. However, “without the address of the smart contract, it is impossible to find the token”, recalls Manuel Valente, research director of the French cryptocurrency platform Coinhouse.
In reality, everything suggests that the tokens were not even issued: “I tried from the start to withdraw these tokens to my own Avalanche wallet (the blockchain used for these tokens, editor’s note) in order to produce an explanatory video for the other purchasers of these tokens, but the promise to export them to a wallet has never been kept”, laments Jérôme Tapie.
Beyond the financial management of the club during their stay, are the American leaders guilty of deception? This is the sentiment of investors gathered under the decentralized and international entity Krause House, a DAO whose motivation is to buy a professional sports team. During our research, we discovered that from February 2022, negotiations took place between CSG and this collective for the latter to return to the capital of the club. After several exchanges, Krause House opposed an end of inadmissibility. “We have chosen not to work with CSG”, tells the JDN the pseudonym Commodore, co-creator of Krause House DAO. According to Giovanese, one of the pseudonymous French members of the DAO, “the process was really not clear, even suspicious with CSG. We even met Securitize, their service provider in the United States. I don’t even know if they were paid.”
“Negligence on both sides”
The case disgusted subscribers and first supporters of the project. Lawyer for the firm FieldFisher, quoted as group counsel for the legal structure of the STO, Arnaud Grunthaler does not “want to speak about CSG, which are no longer [ses] customers”. Leader of Blockchain-Ez and blockchain strategy consultant for Elan Béarnais in 2020, Arnaud Broustail deplores “a sad affair and negligence on both sides”. The case could have consequences. According to the prosecution of Paris, the Autorité des Marchés Financiers has made a report, which is currently being analyzed.According to another source, a complaint against X has also been filed, without the JDN being able to confirm its author.
Contacted by the JDN, the new owner of the club Sébastien Ménard is scalded: according to his press officer, “he does not want to hear about” CSG tokens and “he will soon receive the owners of tokens to learn about their situation”. In the meantime, Jérôme Tapie, in his capacity as a crypto popularizer, receives despite himself the complaints of the robbers. “People contact me regularly to find out where it is and to recover their funds, but I can’t do anything about it,” he sighs.
