Is Dave Portnoy in hot water for pumping Bitcoin? Unlikely, lawyers say

The Barstool Sports president talked up his $1 million investment in Bitcoin, then abruptly decamped. So what happened?
By Amy Castor

In brief:
Day trader David Portnoy went in big on Bitcoin and then sold.
Some are questioning if he talked crypto up a bit too much.
The CFTC has warned investors about pump-and-dumps in crypto.
arstool Sports’ David Portnoy bought more than $1 million worth of Bitcoin — or so he claimed — earlier this month. Less than two weeks later, the media empire president suddenly announced that he had sold it all.

“I currently own zero bitcoins,” he told his legions of Twitter followers on Friday. “I’m out on crypto because coins don’t always go up.”

Portnoy has established himself as a frat-boy entertainer with 1.7 million followers alone on Twitter. So it’s hard to know exactly what was going on behind the scenes. Did he exit the market because his site sponsorship with BlockFi apparently ended yesterday? Or did his remarks cause BlockFi to dump him?Regardless, his sudden about-face raised some questions. Did Portnoy, who got involved in the risky business of day-trading stocks when the COVID pandemic imposed a time-out on professional sports, cross a line by talking up Bitcoin and then dumping it?

Portnoy’s complaint
During his short love affair with crypto—which began when he hosted founders of the Gemini crypto exchange Cameron and Tyler Winklevoss at his summer home on Nantucket—Portnoy bragged about “pumping and dumping” Bitcoin along with other cryptos, such as chainlink (LINK) and orchid (OXT), which he also purportedly invested in.

Bitcoin, which was $11,755 on August 13, went up more than 7% after Portnoy let the world know that he had leapt into the market wholeheartedly. LINK, however, dumped 30% since Portnoy signaled his confidence in the coin. OXT also dropped in price.

“The thing I like about pump-and-dumps in crypto is it’s encouraged,” he said on his Davey Day Trader stream on August 17. “In crypto, you can pump and dump all day long.”

The day after Portnoy made that comment, Jake Chervinsky, a lawyer and general counsel to decentralized finance startup Compound, tweeted a reminder that manipulating crypto markets is a big no-no.