Cryptocurrency investment company Phoenix Community Capital, which had ties to parliamentary organisations, seems to have vanished from public view, leaving some investors to fear they may have lost tens of thousands of pounds as a result.
The disappearance of the company - which went public as a cryptocurrency project and investment scheme in early 2022 and was at one point valued at £665 million - has also raised concerns about all-party parliamentary groups (APPGs) in parliament.
APPGs are informal groups in parliament made up of peers and MPs who meet to discuss subjects of particular interest. Though they must be chaired by MPs, they are frequently run or funded by lobbyists and corporate donors in an effort to shape government policy.
Phoenix sponsored one APPG, and its co-founder Luke Sullivan once spoke at an event for a second APPG event. He also participated on panels for events organised by peers in parliament.
Here is everything you need to know about it.
What has happened to Phoenix?
The US-based company’s website appears to have been taken offline in September 2022, with an estimated 8,000 investors no longer able to access their investment portfolios as a result. The firm’s social media pages also fell silent around this time, with an 8 September tweet being Phoenix’s final Twitter post.
The company’s assets seem to have been transferred to a new business run by a man going by the name of "Dan," who has assured investors that although the business has no obligation towards them, it will make an effort to generate some returns.
The Guardian, which first reported on the story, said it had made contact with Phoenix founder Luke Sullivan, who said he would only respond to questions of what had happened to the company and its investments if it flew to the Philippines to discuss the situation further.
The paper’s further request for comment was declined after Sullivan criticised the Guardian for making "a number of factual errors" and claimed he was denied the chance to "clarify the real facts."
Through Phoenix Community Capital, investors could purchase tokens of the cryptocurrency ‘fire’. 10 tokens gave investors access to a "nest”, which they were told would offer a daily return of 0.225 fire tokens. In theory, original investments would be repaid in 45 days, at which point they would begin to make a profit.
One investor told The Guardian: “I lost about £5,000 – I got greedy buying the nests. The returns were ridiculous to be honest... Obviously people just kept on buying more nests with the returns rather than cashing out.” Though fire tokens were valued highly at the start of 2022, by the summer they were almost worthless.
Another investor said Sullivan “always used to say he had been homeless and now he just wanted to get as many people to eat at the big table as possible... I know some people lost over $100k each. People got really badly burned.”
What were Phoenix’s links to parliament?
The situation is likely to increase worries about how easily corporations can gain access to politicians and lend themselves prestige by using the APPG system - as the government considers regulating the cryptocurrency industry, MPs and peers have become targets for lobbying.
In 2022, Phoenix Community Capital gave £5,000 to the APPG on blockchain, the technology that underlies cryptocurrencies, with the company listed as one of the APPG’s corporate "partners" on its website. Martin Docherty-Hughes, an MP for the SNP who has claimed to have had no contact with or knowledge of Phoenix, serves as the group’s co-chair.
Phoenix Community Capital also had connections to the APPG on the metaverse and web 3.0, chaired by non-affiliated peer and former Labour councillor Manzila Pola Uddin. In the summer of 2022, Sullivan spoke as a guest speaker at an event organised by the APPG at a location in Surrey called "Magna Carta Island."
Earlier that year, Baroness Uddin was also the parliamentary sponsor of a House of Lords terrace breakfast event hosted by Phoenix at which individuals from the industry were honoured and presented with awards. In a video from the event, Uddin is seen praising Sullivan and describing him as an “expert” who is “very deeply committed to empowerment of the community.”
On her hosting of a breakfast sponsored by the company, Uddin told The Guardian: “I was informed by the organiser that Mr Sullivan was an expert in his field of work and involved with schools and committed to improving technology education in the community. I merely reiterated that information which I was given in the meeting.”
In a Medium post from Phoenix Community Capital, Sullivan says “These are the guys that go into the panels to discuss the legislation and make the decisions on what’s going to get put into legislation. It’s good to be able to impress my opinion on them.”
Who is Luke Sullivan?
There is little public information available on Luke Sullivan, though we were able to unearth a “Luke S.” LinkedIn page through this post, which lists his work with Phoenix Community Capital as ongoing.
Phoenix, he says, worked on creating “the worlds [sic] first community backed crypto asset management fund, which “works for its investors by leveraging combined investment capital, which elevates into investment options that are not available to the average investor.”
The LinkedIn page also lists him as the CEO and founder of SpectrumNFT. Spectrum’s social media pages claim that it is “the only NFT Marketplace by Artists, for Artists.”
Luke S.’s resume also includes seven years of “Management” at telecommunications company 3 which began in 2012, and a year and nine months as a Sales Manager at Wren Kitchens.