What the Hell Is This Company the 76ers Just Partnered With? | Hacker News Reader

What the Hell Is This Company the 76ers Just Partnered With?

defector.com

361 pointsbryanrasmussen97 comments

From the article: "metaverse and NFT products?"

They actually filed a prospectus with the SEC in September 2021.[1]

Nothing there mentions a basketball team, or "metaverse". This company started as a cement maker in China, pivoted through floor tiles, then after-school education, and now online education and concerts.

There's a recent financial statement.[2] Finally, there's a business model:

"The curriculum development created by us includes music, sports, animation, painting and calligraphy, film and television, life skills, etc., covering plenty of aspects of entertainment, sports and culture. At present, we have signed contracts with well-known international artists and more than 50 celebrity teachers have been launched.

The Color World platform generates revenue primarily through paid membership subscriptions priced at $9.90 per user per month. Members can access most video courses on the platform for free and will be charged the tuition fee of $30/hour for taking classes of tier 1 artists and $15/hour for learning from Tier 2 artists. First three months of launch costs only $1.5/hour to attract downloads and there have been over 500,000 registered users as of the date of this report.

So it's a monetization platform for minor celebrities.

The financial statement has a balance sheet. They're losing money, and they're not very big.

[1] https://www.sec.gov/Archives/edgar/data/0001747661/000121390...

[2] https://www.sec.gov/ix?doc=/Archives/edgar/data/0001747661/0...

Honestly sounds like a struggling small business going through pivots and ended up paying for some partnership with a big brand.

The pattern appears to follow stock market hypes. First China markets: construction, then child education. And now nft/metaverse, a US hype. Given there is no actual underlying product or business, it looks like a vehicle for pump and dumps.

Best case: the 76ers franchise team is incompetent. Worst: they have an embezzlement and/or money laundering scheme embedded in it.

Might pick up e.g. $100 of shares and start filing shareholder inquiries on Monday, for shits and giggles. Would suggest the authors of this article submit it to the SEC [1].

[1] https://www.sec.gov/tcr

Don't you mean short it?

Are you a shareholder when you short it? Can a non-shareholder make shareholder inquiries?

Not on a naked short.

A person shorting an equity (borrower) is not a shareholder, only the share lender is

> Are you a shareholder when you short it?

No, and it doesn’t matter if it’s naked or not. You borrow a share and then sell it. The person you sold it to has shareholder rights. The person you borrowed it from retains them, albeit in limited form. You have no shareholder rights as you are not a shareholder.

I'm shocked those questions were not read as rhetorical in response to ridiculous post.

You’re well-familiar with HN’s tendency to take the dry-literal interpretation path, I see :) It’s difficult to build productive conversation out of sarcasm and rhetoric, and the guidelines ask us to choose the most good-faith interpretation rather than the most obvious one.

Answering a question with a question is a time honored tradition. Just because it's rhetorical doesn't mean it was negative. If the person I responded to answered those questions for themselves, then it might lead them to realize how their question totally missed the point of the post they responded to. Teach a person to fish blah blah.

How would you differentiate between what you wrote, and someone genuinely asking the same question?

Context is key. It was quite obvious from the original post wanting to own shares specifically for what that would entitle them. Following that up with "don't you mean short it?" shows that the original point of the post was not understood. However, if you forget the above and focus on the one post, you lose site of the conversation.

Given that you have to infer meaning from context (which can be subjective; in this case, are you being snarky or not? (Not so, but there is ambiguity)), it is better to assume good faith in the question and respond directly. It lacks sophistication, but minimizes cross-talk as much as is feasible.

Turns out snark is not the clearest way to communicate.

He wants to become a shareholder so he can ask questions to the board.

Shareholders have additional rights.

What's the laundering angle?

Trust The Process.

Fantastic article.

Would like to commend the article's author, for going deep in the rabbit hole while also keeping it light and entertaining for the reader.

Kudos

Amazing article and great persistence and research. Can’t wait to hear how it ends.

My only gripe is the writing style, which I’ve started seeing on major news sources that reads more like stream of consciousness or friend to friend rather than reporter to reader:

> Whew. It’s been quite a journey, but here we are at last at the real jumping-off point of this flooring company’s long transformation into a, ah, metaverse.

Take out the “Whews” and the “ahs”, etc., and it’s a really well written piece IMO.

To be fair, this is not the New York Times. It is a blog where the above-the-fold post today is "What did we get stuck in our rectums this year?"

That's how The Register[0] rolls. I really enjoy their style. They are also very sharp geeks.

[0] https://theregister.co.uk

If you literally just took out the "whews" and "ahs" from that sentence, you would completely change the meaning by removing the intended level of skepticism.

Every sentence in the article is dripping with skepticism, those quips just put it over the top unnecessarily. The tone puts attention on the author, when the story is profound enough and makes a better focal point.

Honestly, I prefer my writing to be opinionated. Every author has an opinion, which means I'm going to waste energy trying to decipher their opinion from their facts if they present too neutrally.

Yeah, I was really blown away by it. This is an amazing example of quality journalism. Not only was the investigative work impressively thorough, but the quality of the writing and tone came together to make this one of the most compelling things I've read in a long time.

The story itself is absolutely wild.

This sounds somewhat like the Rich Energy sponsorships in Formula 1(Haas team I believe) a few seasons ago. Maybe this is all an inside joke, but hopefully the incompetence of someone within the 76ers org is recognized and addressed.

And that ended so well for everyone involved. Grab the popcorn.

slight tangent but this I listened to someone describe a meeting with capetian (before the 76's he was trying to get involved with FaZe clan for similar nft (casinos i think) projects. I can't find the video, but he came across as very sketch.

Could you expand on what happened?

Quick overview here: https://youtu.be/EuoYkNyYaBY

But the rich energy thing is just one of the more recent ones. Formula 1 has had an endless stream of seedy sponsors over the years, including an alleged Nigerian prince. Overview here: https://youtu.be/H7M74iEonn0

And judging by the number of cryptocurrency companies plastered all over f1 cars right now, I'm sure there will be more entertainment in the future.

Wow, I'm surprised I've not heard of any of this!

Thanks for the links

I tried, but that first YouTube it’s waaaay too fast English for me to understand a thing (non-native English speaker here). I’ll Google it

It’s very fast, even as a native speaker. Try setting Playback Speed -> 0.75 in the options.

The vid has auto-generated captions available, so hopefully one can read them at a lowered speed—assuming that the algo itself caught that speech.

https://jalopnik.com/what-you-find-when-you-look-into-rich-e...

There was a small discussion about it on reddit but nothing new really, just shady company does shady things, all part of the process.

https://old.reddit.com/r/nba/comments/rn62qy/defector_what_t...

i don’t know if this was intentional but the “process” comment is hilarious given all of its applications within the 76ers organization

This is an until-now undiscovered step in Hinkie's plan. You thought you had to Trust the Process before.

Looks like a perfect dream team of Chinese scammers and American business bullshitters

"The 76ers" is the name of a professional basketball team in the United States. (Not related to System76.)

Though the origin of both names is indeed the same: https://blog.system76.com/post/622541723365769216/the-meanin...

Thus proving 76 is not the smallest uninteresting natural number.

Thank you good sir

As a clueless shareholder in CSCW I was pretty shocked and amused by this.

Awhile back (2/24) I bought $200 each of several bio/Pharma/blockchain penny stocks based on little to no research

So I had 200 shares of ColorStar at $1.02, sold 180 of them between $1.35 and $2.17, and now have 20 left at the current price of $0.535.

Interesting that it is almost certainly some kind of scam, yet they chose not to stay low key. Rather, they went with press releases, contract signing events, etc.

Maybe just a purposefully faked PR buzz "let's go viral" thing?

Edit: Ahh, so "pump and dump" seems to be the prevailing guess.

> it almost certainly some kind of scam

They tried to privately place $10mm in November [1], though that was terminated a week later [2]. They announced a new auditor a few days later [3][4] who doesn’t appear to have been auditing any U.S. public companies prior to this July [5].

They’re also selling $20mm of shares as of September [6] via an Atlanta-based broker-dealer who appears to do these for Chinese penny stocks for 7 to 8% fees [7]. (Searching the firm on LinkedIn brings up D.C.-based general counsel [8], a guy in Miami Beach and a dude in Ghana.) All this suggests a pump and dump with possible laundering connections.

[1] https://www.sec.gov/Archives/edgar/data/0001747661/000121390...

[2] https://www.sec.gov/Archives/edgar/data/0001747661/000121390...

[3] https://pcaobus.org/resources/auditorsearch/issuers/?issueri...

[4] https://www.allianceaudit.com/

[5] https://pcaobus.org/resources/auditorsearch/firms/?sort=olde...

[6] https://www.sec.gov/Archives/edgar/data/0001747661/000121390...

[7] https://www.sec.gov/Archives/edgar/data/793628/0001553350210...

[8] https://www.linkedin.com/in/alecorudjev

Pump and dump? Trying to become a memestock?

They needed something high profile to boost their stock and rope in more investors.

What’s crazy is that for $10-15k you can have a really professional looking website, instead it looks like they dropped about $2-5k for a half-built, broken looking one.

you can buy a Wordpress template and have some intern spend a few hours changing the text and have a professional looking website

This is reminiscent of a sub shop making $35K/yr that was publicly traded and valued at around $100MM. Turned out to be a Chinese shell company. [0]

[0]: https://www.cnbc.com/2021/04/15/theres-a-single-new-jersey-d...

This is even crazier though. That was an OTC stock. This is traded on the NASDAQ and has SEC filing obligations.

I remember that story, although the article doesn’t mention any Chinese shell company?

CNBC followup the next day:

https://www.cnbc.com/2021/04/16/lawyer-hometown-internationa...

> In a 2015 letter to Hometown International, SEC staff wrote, “We believe you are a shell company.”

Fantastic article. Searching the stock ticker (CSCW) on Reddit turned up some humorous old posts about how this penny stock is about to take off.

There are people who make a nice living just pumping fake companies over and over in the penny stock market or to D-list VCs. These are the white collar equivalent of what cops call “greasy crimes,” crimes not quite serious enough to get real attention. (The dumb street crime epidemic in California is a result of further dialing back enforcement of “greasy crimes.”)

I’m sure those types are all over this NFT craze.

“I see that there are dumb people with money. I have a solution to that…”

I feel like a total sucker sometimes for attempting to do useful work when if I’d put the same effort into cheating people I’d be rich now several times over. This is truly a new golden age of the con artist. I mean we just had one for president.

I bet con artistry flourishes during any time of rapid change, confusion, and upheaval. Nobody knows what is happening so it’s easy to sell empty boxes with charisma.

Thats true it is an amazing time for con artist and i had never think about it as a consequenz of rapid change

I think its more that con artistry flourishes when interest rates are in the toilet.

I started following the crazy penny stock craze in 2020 and this story is a common sight.

Some reddit, Stocktwits, or other stock analysis site have people monitoring obscure tickers looking for anomalous volume spikes. You’re lucky if the company has more than a low quality logo as the entire website. Sometimes there’s minimal contact info, which people use to connect the company to potential real people on LinkedIn. Maybe you’ll even find the company registered in Delaware and keep digging through financial documents.

The companies are almost always random, profitless entities owned by one person acting as a a custodian for the billions of shares in the float. They promise to clean up the finances and submit paperwork so the ticker can move up through the various OTC exchange hoping to appear more credible.

The stock analysis websites are really sad because you’ll see people hoping to get rich believe anything they read. Some “shill” will say they heard from a little birdie that the company is going to merge with another stock soon, or financial documents are about to be released, or the CEO is planning to retire millions of shares (out of several billion, mind you). Of course, nothing happens and people are left bag holding for years until the next pump, or until the stock effectively goes to zero.

What if you timed it perfectly and sold at the top?

Bonus point if their “source” is some blogspam website that looks credible to your average penny stock inventor but will actually post whatever content you want if you send them $50.

This story sets off my scam alarms. It also reminds me of the time that Samsung partnered with a group pretending to be Supreme.

> metaverse and NFT

The alarm couldn't have been louder.

For me it was the amazon listings on their app in the video. You can see the "Dickie Roberts child star" movie poster. That's been popular on Amazon prime for the last couple months.

It should probably set off anyone’s scam alarms. Even if it’s something legitimate it’s still incredibly shady in its current incarnation.

At least the Supreme thing uses an established brand to carry some legitimacy. It’s pretty hard to see what these people could have showed the 76ers to convince them this was a worthwhile partner.

The Phoenix Sun's partnered with an obscure environmental start up named Footprint, even renamed the arena, the Footprint Center. I wonder if it is a money laundering scheme or maybe the Sun's traded naming rights and promotion for equity.

My first guess would be for some large environmental tax write-off.

For many years, one of the biggest sponsors in MMA was a small, niche, industrial product. It was cheap and made the owner of the brand happy, so bought the ads. Arena naming rights probably aren't cheap, but at a small company there might not be many people who have to weigh in on the decision.

https://mmajunkie.usatoday.com/2014/01/so-what-is-a-dynamic-...

The city owns the arena. The company employees 800 people in the state. They aim to reduce single plastic usage. The former naming rights were for an indian gaming casino. The two people who founded the company are former intel execs.

This is mostly city politics with some money coming back 9 million a year). The city gets some money, some progressive branding to be used during elections, support for local jobs and probably has some personal connections attached.

Pretty sure that the Suns own the among rights, not the city. Is Footprint really paying $90 million cash to the Suns as the deal is reportedly valued at?

Well this is certainly a bizarre story. As I'd never heard of Defector, I checked around to see if a more familiar news source had anything about this. AP News has a story about the deal, though it mentions nothing about the questionable existence of Color Star.

This is an interesting mystery that I don't really have the resources to investigate.

Maybe it's a sentient AI's first foray into public life.

Yes, very strong vibes of Daniel Suarez’s Daemon to this story.

It'd be funny if an AI went off the rails, keeping its prime directive to 'make a lot of money'

This would be the first terrifying step an AI would take to begin world domination.

Defector is one of the most respected and credible news sources in the sports world.

Deadspin could have been that, but management decided chasing profits mattered more than reputation, so the reputation left and founded Defector. I don't even like sports, but I listen to their podcast.

Deflector was created by the writers of Deadspin, a sports site owned by gawker, when the new boss of Deadspin told them to stick to writing about sports and not broader issues.

You can usually at least try to see any wiki information and about us info for a site or resource. Those are both available for Defector which show it is credible, former employees of Deadspin:

https://defector.com/about-us/ https://en.wikipedia.org/wiki/Defector_Media

You could say it might be even more credible than other places since it is employee owned. A small trend of modern media sites like https://Clickhole.com which was bought from being The Onion subsidiary, both owned by the same new bad parent company as Deadspin. Except for Clickhole I believe Cards Against Humanity bought the site and then let it be employee owned. Even cooler!

https://archive.ph/wVtJO

That intro video has ripped a section of Google's project starline clip -- https://youtu.be/Q13CishCKXY

Interesting note - about a year ago[1], the 76ers were pulled into the China / Hong Kong protests, and Tencent stopped broadcasting their games. Any chance this is related in some way?

[1] https://news.ycombinator.com/item?id=25576412

Shades of Michael Paloma and his New York Blues, featuring Richard Grieco!

There are some strange "partnerships" that happen with local sports teams, who will literally take any money for any reason from anyone.

What is most incredible is somehow Daryl Morey is involved with this.

I was playing around with oculus quest 2 horizon venues and I did notice a lot of 76ers scheduled live events. the first one will be tomorrow.

I like this Douglas Mennelly guy! The story would have just been another crime mystery if not for his humorous presence.

If you’ve ever been curious what William Gibson’s later novels are like, this gets you pretty close.

Could be a scam or money laundering scheme for the Chinese government or it's henchmen.

the sad part of this article is that

if you aren't on the internet, then you don't exist, lol.

I think it’s satire and not a scam

Who exactly is doing the satirizing here?

Someone at color star has an uncle or dad who works in the 76ers office.

Nice. More random unprovable FUD. Fake it till you make it eh? Laughing all the way to the bank.

Everyone in this thread is crying scam because HN hates crypto. However the NBA teams and players love NFTs.

https://hypebeast.com/2021/12/steph-curry-breaks-all-time-nb...

https://www.nba.com/heat/nft

https://nbatopshot.com/

The less interesting reason is that the 76ers are doing NFTs and they have engaged a team to assist with this.

NFTs are the least sketchy part of whatever is happening here, and that's saying something.

This company's CEO might be an NFT.

Reply on news.ycombinator.com