Tribune: I’m not a CEO, I just play one on TV

Actor Stephen Harrison has issued an apology to the investors who lost an estimated $1.3 billion in the HyperVerse cryptocurrency Ponzi scheme.1

Harrison was hired as a “corporate presenter,” which his agent explained to him was simply acting out a role to represent a business. He became suspicious after reading the scripts for the videos, but after doing some online searches he felt “everything seemed OK, so I rolled with it.”

During recording, he was asked to use the name Steven Reece Lewis. In the videos, Harrison talked about investment opportunities with HyperVerse. The final version of the videos referred to him as CEO, and also included his “credentials”: degrees from Leeds and Cambridge universities and more than 10 years of experience in the fintech industry. The problem was, neither university nor any fintech firms had ever heard of Steven Reece Lewis, which piqued the interest of the SEC.

As part of his apology, Harrison made it clear that he had not benefited in any way from the scheme itself; he was paid around $5,000 for his performance and given a free wool and cashmere suit, two business shirts, two ties, and a pair of shoes.

Crypto scheme losses

Generally, if a cryptocurrency drops in value and the investor experiences a loss, the investor can sell the poorly performing cryptocurrency and offset other gains, or if the losses exceed gains, take a deduction of up to $3,000 per year until the loss is used up.2

However, in order to take a capital loss, the investor must sell or exchange the asset.3 This is impossible when an exchange files for bankruptcy, shuts down, and all trades are halted.

Further, although the IRS has stated that cryptocurrency is property, federal law has still not addressed whether cryptocurrency is treated as a commodity or a security.4 This means that the deduction for worthless stock does not currently apply.5 Plus, bankruptcy doesn’t automatically mean the total debt is worthless, so any bad debt deduction would have to wait until the loss is certain.6

In order for the theft-loss Ponzi scheme rule to come into play, the investor would have to prove that the exchange had an intent to bilk the investors out of their money.7