Crypto mogul Brock Pierce is angling to seize control of the company that publishes Sports Illustrated – claiming he was thwarted by management as he tried to sell off a massive stake earlier this year that has since tanked in value, according to a lawsuit.
The Puerto Rico-based investor — who as a kid starred as Gordon Bombay in the “Mighty Ducks” franchise before building a bitcoin fortune reportedly worth more than $1 billion — claims he bought $17 million worth of convertible stock in The Arena Group, which in addition to SI owns a slew of sites including Men’s Journal and TheStreet.
Pierce’s investment firm Warlock Partners became Arena’s second-largest shareholder after scooping up its shares between 2020 and 2021 at an average price around $10 a share, Pierce claimed in an exclusive interview with The Post.
Nevertheless, 42-year-old Pierce alleges in the complaint, filed in New York State Supreme Court last week, that when he tried to sell his shares last year as they traded above $14, he got stonewalled by Arena as well as its CEO Ross Levinsohn – the former interim CEO of Yahoo, short-lived publisher of the Los Angeles Times and ex-president of Fox Digital Media.
“Ross gave lots of excuses, he paid me lip service,” Pierce told The Post in the interview.
According to Pierce’s complaint, “Defendants engaged in a pattern of delay, obfuscation, misstatements, and non-cooperation that wrongly prevented Warlock from acting upon its rights as a stockholder and depriving it of the right to freely market its Arena shares.”
In the meantime, Levinsohn sold 82,861 shares at $7.08 per share on March 6, yielding $586,655.88, according to the filing.
Arena’s stock price was helped by the fact that Warlock was not allowed to sell its shares in the market, the suit alleged.
“Arena caused Warlock to suffer a tremendous trading loss, and is liable to Warlock for tens of millions of dollars in liquidated and consequential damages as a result,” the suit claimed.
Representatives for Arena pushed back on Pierce’s assertions.
“We strongly disagree with the claims in the complaint. The complaint contains fundamental errors, including the claim that Mr. Levinsohn sold shares in the company,” the spokesperson said.
“Since he joined the company in 2019, Mr. Levinsohn has not sold company shares. He has purchased shares and he has forfeited shares pursuant to tax withholding.”
Arena was trading at $3.25 on Monday, giving it a market cap of $77 million.
The stock price has been impacted by the digital advertising slowdown, and that Arena carries $118 million in debt, Pierce said.
A ruling in Pierce’s favor could help him wrest control of Sports Illustrated — which publishes the annual Swimsuit Edition — and Arena’s other publications from Levinsohn, the crypto kingpin said.
“The company is not in a position to settle this,” Pierce told The Post. “If it ended up being resolved with stock that would make me the largest shareholder.”
In August, Levinsohn agreed to sell a 65% stake in the company to Manoj Bhargava, the founder of caffeine brand 5-Hour Energy. The deal has not closed.
“I don’t know whether or not Ross disclosed his liability. If it wasn’t disclosed, this suit could have a big impact on the merger,” said Pierce, who has tapped litigator Alex Spiro of Quinn Emmanuel — whose other clients include Elon Musk and Alec Baldwin — to handle his case.
Bhargava did not return calls.
Arena, formerly known as TheMaven, made headlines in 2019 when it reached a deal to publish Sports Illustrated for Authentic Brands Group. A few months later Arena closed a deal to buy TheStreet.com, co-founded by Jim Cramer, for $16.5 million. Cramer is no longer involved with TheStreet.
Pierce, a digital currency pioneer, has raised more than $5 billion for companies he has founded. He is the Chairman of the Bitcoin Foundation and co-founder of EOS Alliance, Block.one, Blockchain Capital, Tether, Mastercoin (first ICO), and Lighthouse NFT Smart Gallery, the first physical NFT smart gallery.
In 2020, Pierce ran for president as an Independent, receiving just under 50,000 votes
This story originally appeared on NYPost
