An Obscure Crypto Company Is Sponsoring a Pro Cycling Team

The week leading up to the Tour de France always brings a frenzy of sports marketing. New products from the bike industry, new team sponsor deals, and other announcements come in a rush as everyone tries to capitalize on the biggest event in pro cycling.

This year, one of the most noteworthy press releases was that the Qhubeka-Assos team had a new co-title sponsor, called NextHash, which had joined in a five-year commitment to replace Assos.

This was ostensibly fantastic news. Qhubeka-NextHash, as it’s known now, is one of the few pro racing teams with a larger positive mission. Through its longtime sponsor Qhubeka, a charity, the team supports bicycle donations in Africa, complete with mechanic training and a repair-parts supply chain. Additionally, since its founding, the team has focused on developing African cyclists.

Team budgets in pro cycling are closely guarded, but it’s widely understood that Qhubeka-NextHash is one of the lowest-budgeted teams in the WorldTour, the sport’s top level. The team nearly folded last year until clothing partner Assos agreed to increase its financial commitment for 2021, a deal that saved the team but was explicitly short-term. So the emergence of a replacement sponsor, and on a five-year term (most naming rights deals are two to three years) offered some much-needed structural and financial support.

As the news was dutifully reported in the cycling press, a few folks asked, what’s NextHash? That’s when the questions really began.

NextHash is a cryptocurrency company. It doesn’t help matters that crypto, in general— despite its professed value of transparency—is an opaque mystery to most people. NextHash itself has several product lines: it claims to operate an over-the-counter cryptocurrency marketplace for institutional traders; a payment processor; a retail exchange called Nexinter; and a crypto “token” called NIXT (more on that shortly).

But things got murkier when journalists probed NextHash’s background. First, Kate Wagner reported in CyclingNews that Ana Benčič, NextHash’s founder and CEO, founded a number of businesses (none of them crypto-related) in her native Slovenia that failed, sometimes in bankruptcy, and that a broken investment promise by NextHash was linked to the bankruptcy of another company. Then, Iain Treloar followed up in CyclingTips by looking at NextHash itself, and found a slim assets ledger that didn’t seem to support the idea that the company could afford the $2- to $5-million annual commitment that’s required to be a second-line naming partner to even an average-budget WorldTour team.

Pro cycling has a bumpy history when it comes to team finances. Last year, the Mitchelton-Scott team (now BikeExchange) briefly entered into a sponsorship agreement with an obscure outfit called Manuela Fundación before the deal collapsed over media questions about the foundation and disagreements between the parties about the terms. In 1995, le Groupement, sponsored by a company that was alleged to be a pyramid marketing scheme, abruptly folded right before that year’s Tour. In 2003, the Coast team of Jan Ullrich nearly met a similar demise before bike sponsor Bianchi stepped in to save it.

And most notoriously, in 2005, Fassa Bortolo team boss Giancarlo Ferretti was catfished into believing he’d hooked Sony Ericsson as a new title sponsor. Ferretti was actively signing rider contracts for the next season when Sony Ericsson caught wind of the scam that October and announced that Ferretti had been unwittingly dealing with an imposter. The team promptly collapsed.

I spent the better part of a week investigating NextHash, pulling corporate documents from registries in six countries, looking up past businesses founded by Benčič, and talking on the record and on background with sources in cycling and corporate finance, all with an eye to answering one question:

Is a tiny company that many people in crypto have never heard of, whose public finances appear meager, fronted by a founder with a checkered business background, and which lists a man known as “Bitcoin Jesus” as a key advisor, really going to pony up seven figures a year for five years to back a pro cycling team?

Is it weird for a crypto company to sponsor a cycling team?

Although NextHash is the first crypto company to sponsor a top-level cycling team, the idea itself is perfectly rational. That NextHash is not even four years old is not, in itself, a concern. Companies in crypto can grow big, and fast. And many of them are moving into sports marketing, creating a boom, Daniel Roberts, editor-in-chief of the cryptocurrency news and education site Decrypt, told Bicycling.

Last April, FTX announced a 19-year arena naming-rights contract with the NBA’s Miami Heat, worth $135 million. It and other big crypto companies have also done deals in the NFL, NHL, and MLB, respectively. Just two weeks ago, Crypto.com, the company that linked up with the Montreal Canadiens, also signed a $100 million sponsorship agreement with Formula 1.

Cycling has gotten into the crypto game too. Earlier this year, Colnago released the first cycling-related NFT (non-fungible token, a one-off certificate of ownership listed in a blockchain) of a C64, which sold for $8,600, more than a physical frameset would cost. And super-sprinter Mark Cavendish, who is on a tear at this year’s Tour, is doing his own NFT series.

As Roberts—who has covered crypto since 2011, including in past stints at Fortune and Yahoo Finance—notes, one of the primary principles of cryptocurrency is what’s called DeFi, or decentralized finance: banking and financial services that aren’t denominated or governed by a country or specific financial institution. “The initial promise of bitcoin was that it would help the unbanked or underbanked,” he says.

That’s compelling in underdeveloped regions especially. In sub-Saharan Africa, for instance, 66 percent of the population is unbanked, but almost 50 percent (and growing) have mobile phones. DeFi, and crypto, offer a way for unbanked and underbanked people to receive paychecks and save money, pay for goods and services, even make investments. In that frame, Qhubeka is the perfect partner for a savvy up-and-comer like NextHash that wants to charge into the market.

But when the Qhubeka-NextHash deal was announced, a cycling fan reached out on Twitter to Daniele Mensi, listed as the company’s recent CEO, for some insight on this company no one had ever heard of. Mensi’s reply: “I have nothing to share, I’ve just left because in extreme disagreement from all standpoints.” A second tweet added, “They’re just crooks. Don’t spend any further time chasing anything, worthless.”

So, who are the people behind NextHash?

The people behind NextHash appear to be mostly Benčič, a former human resources professional and serial entrepreneur. NextHash has a few other employees, but Benčič is the founder, CEO, and the controlling shareholder in all of its businesses. Back in Slovenia, as Wagner reported, Benčič had an uneven track record. According to Slovenian media reports and corporate registries, she founded at least nine companies over the past decade, across a diverse array of industries, some of which went bankrupt. Several others have no active bank accounts. Almost half of them list as a partner company at least one other entity Benčič controls.

One of her most troubled outfits was ABF Turist, a vacation property manager that went bankrupt. In 2017, several properties ABF Turist owned were seized by Slovenian authorities and sold to settle tax debts. And in 2013, a separate company she owned—a temp employment agency also called ABF—was involved in a regulatory inquiry regarding whether contract workers placed with a company in Maribor, called Žito, were working illegally in the country and being underpaid. (Benčič claimed in contemporaneous media accounts that the issue was a misunderstanding and that workers had been paid at least the minimum wage. There are no media reports on how the case was resolved, but ABF went bankrupt in 2017.) The only companies that seems to suggest Benčič’s path to finance are the two most recent: a dormant NextHash and a a company formerly called Konsultfin.

After starting NextHash in London in late 2017, around the time of ABF Turist’s troubles, Benčič again made the news two years later, when NextHash’s announced £2.5 million investment in a 15-year-old British software training and conference company, Skills Matter, failed to materialize. Skills Matter went into administration (the United Kingdom’s version of bankruptcy) shortly after. Benčič told reporters that NextHash did not follow through with the investment based on due diligence on Skills Matter’s financials, but Skills Matter officials said at the time that NextHash’s failure to make its promised investment was to blame for the company's struggles.

Benčič isn’t the only person in NextHash’s orbit with a colorful history. There’s also Roger Ver, who became an advisor to NextHash in 2019. A former U.S. citizen, in the early 2000s Ver served time in federal prison for selling explosives on eBay. A longtime crypto enthusiast and investor, and now chairman of crypto portal bitcoin.com, he is sometimes referred to as “bitcoin Jesus,” and is widely regarded as a polarizing figure in the community.

How does NextHash make money (or not)?

The addition of Ver as an advisor was part of a broader announcement by NextHash of a major new product: the NIXT token that would be a centerpiece of its Nexinter exchange.

Tokens are a different asset class than so-called native cryptocurrencies like Bitcoin or Ethereum, which function like liquid investments. A token, particularly a utility token like NIXT, exists within a specific company’s crypto ecosystem. It’s a unit of value for future services, but only with the company that created it. If its issuer goes away, so does whatever value the token had—assuming the issuer executed the Initial Exchange Offering (IEO).

While fiat currencies, like dollars or pounds, and cryptocurrencies have many differences, one similarity is that their relative worth is whatever the market collectively decides. Which means there must be a market.

According to the 2019 presentation touting NIXT’s IEO, NextHash could have made as much as $26 million from the deal, set to take place that fall. But since the press release and presentation, there’s no proof that NextHash ever actually launched the token.

No sudden jump in income is listed in its corporate accounts documents for 2020, for instance. And NIXT doesn’t appear on Coinbase, Binance, Uniswap, and Coinmarketcap, which are four of the biggest exchanges of the major crypto databases that comprehensively list currencies and tokens. Even on its home Nexinter exchange, the very ecosystem in which it should be most visible, there is no trace of its existence.

The Nexinter exchange itself may not even be operational. The exchange dashboard looks like a hub of activity, but it’s just listing trading values and volumes in common cryptocurrencies like Bitcoin or Ethereum. It has no fee structure listed. While NextHash claims that Nexinter is a regulated exchange, there is no record of NextHash or Nexinter in the financial supervisory authority databases in the U.K., or in Estonia and Cyprus, where Nexinter is registered separately from NextHash.

“The lack of findings there is very telling,” notes Decrypt’s Roberts, adding that companies often turn to utility tokens as a way to avoid regulatory concerns, claiming they’re not investment securities, Sometimes, they never get off the ground. “There are a lot of projects that say, ‘Here’s our token,’ but when you drill down into the white paper and materials, it hasn’t launched yet,” he says.

Is there actually any money being made?

Attempting to pin down exactly where and how NextHash operates is even harder than trying to find signs of its NIXT token. The business structure is a confusing web of more than a dozen similarly named companies, registered in far-flung locations like Cyprus, Serbia, and America's own tax haven, Delaware, all of which point back to one person: Ana Benčič.

NextHash lists an array of international offices on its web site, but it looks more impressive than it actually is; few appear to be more than a mailbox. And corporate records for its businesses in Estonia, Slovenia, Switzerland, and Malta show little financial activity. Its Singapore registration was de-listed.

Most of the action appears to be in the U.K., where there are three NextHash entities, all founded between 2017 and 2018. As with every other corporate entity I found, Benčič is the majority shareholder and controlling officer in all three.

Two of the U.K. corporations are largely dormant, with less than £25,000 in total financial activity between them in their most recent statements. NextHash Tech Limited, the primary entity, is the oldest, founded in September 2017 as Konsultfin Limited until a name change a year later. This is different than the Slovenian Konsultfin, which itself was recently renamed FinTechInvest, and which is itself in bankruptcy.

NextHash Tech Limited also has the most activity. Documents from Companies House—a public registry of companies that are incorporated in the U.K.—have only limited financial information, and in NextHash’s case, they are unaudited. But what’s there for the company isn’t a sign of financial health. In its 2019 ledger, the year the £2.5 million Skills Matter investment was announced, NextHash Tech Limited listed just £15,377 in assets, against £970,098 in liabilities, most of that shareholder equity.

In 2020, it suddenly listed £1 million in new assets, all of it classed as intangible fixed assets—typically intellectual property like patents, trademarks, and the nebulous category of “goodwill” for a brand’s reputation.

There are also some curious debts. In 2020, NextHash’s statements said it owed creditors nearly £5 million. There are invoices ranging from £3,000 up to £1.4 million, almost always owed to other companies that Benčič controls. In some cases, like ABF Turist, they’re the same Slovenian companies with past major financial difficulties. The debts largely carried over from 2019 to 2020. Two corporate finance experts I had review the documents said this was possibly a tax avoidance strategy; it’s not necessarily illegal. The rest of the liabilities, some £3 million, is shareholder equity.

Even at face value, then, the evidence on NextHash suggests that there is not more than a few million pounds of total claimed shareholder value, and no income streams to speak of. There’s no pile of money from the NIXT IEO. And its cash accounts are paltry: with just £40 on hand, NextHash could barely afford to buy lunch for the founder of the WorldTour team it now sponsors.

As Roberts told me, while crypto as a category is a large and promising industry, there are scam or worthless products (often called “shitcoins”) and companies. “There’s a lot of shady companies in this space,” he says, referring to the category broadly. “That’s true in a lot of corners of tech, but especially in crypto. There is no guarantee that just because a company signed a deal that it’s a legitimate, above-board company that will be here in five years.”

How did the Qhubeka sponsorship come together?

The speed of the NextHash deal didn’t catch just cycling fans and media by surprise.

According to an Assos spokesperson who replied to questions via e-mail, the deal that saved the team last winter emerged from a collaboration between the clothing company and the team “that would enable them to meet their minimum funding requirements.” Assos knew that team officials were looking for a replacement sponsor, but was not actively involved in the search. Assos always planned to step back to its equipment partner role if a replacement was found before the season ended. But, according to the spokesperson, the original deal “would provide Assos title co-naming rights with Qhubeka through at least the Tour de France.”

As it happened, the company only had a few days’ notice before the announcement that it was being replaced, right before the Tour, where most sponsors get the bulk of the media exposure that they need. Although it’s no longer a title sponsor, Assos is still the team’s clothing supplier, and said it’s proud of what the team accomplished and will remain a supporter of both the team and the Qhubeka charity.

Further answers are elusive. I sent a list of questions to Benčič and Matjaz Ivanusa, NextHash’s head of external relations. After a repeated request, Ivanusa sent a brief note that he had been on vacation and promised to reply in more detail; a week later, he sent another note, saying he still planned to reply. He had not as of press time.

In a written response to e-mailed questions, Jean Smyth, a Qhubeka-NextHash team spokesperson, confirmed that the NextHash agreement is for five years, firm, with an option to extend up to two more. She said that it had always been the team’s intention to bring in additional sponsors and possibly replace Assos as its co-title sponsor mid-season.

According to Smyth, the NextHash deal was presented to the team by a “credible sports marketing agency that has worked for many years in motorsport.” (Smyth did not respond to my request for a contact at the agency.) The agreement calls for NextHash to make an annual, up-front payment, in cash, and Smyth said that the company “has met the commitments they agreed on with our team so far.” Smyth did not respond to a request for clarification on whether that meant NextHash made payment through 2021 or further. She said that the team was “made aware” of Benčič’s business history, but directed questions to NextHash.

If NextHash has made an initial payment, it would seem that the team is set, at least through 2021. But in a press release for a video the team recently released, there’s a little Easter egg, where Team Principal Doug Ryder refers to the “name change for the remainder of 2021, with NextHash’s long-term commitment to the team.” If NextHash isn’t a title sponsor past 2021, the team will still need a replacement in 2022, which is essentially the same position they were in before NextHash replaced Assos.

What are the risks for the team?

Over all this looms the specter that suspicions about NextHash’s financial situation are merited, and the company isn’t even a viable lower-level partner. That possibility, if borne out, could be damaging to the team, and jeopardize its work to raise funds and awareness for its title sponsor. (Qhubeka has distributed over 100,000 bicycles since its founding in 2005.) It could also harm the team’s development mission; the team’s Continental-level squad has sent at least six African riders on to the Pro Continental and WorldTour ranks. This year, Qhubeka-NextHash’s Nic Dlamini made history by becoming the first Black South African to race the Tour.

All of which raises the biggest question for, or maybe about, the team itself. Most of what we know about NextHash would be unearthed in a due diligence phase, either by the team or the sports marketing agency that brought the deal to them. And the team and agency would have known that skeptical press might follow. So far, the reaction to the sponsorship deal among fans and the media—which should have been mostly positive—has instead been marked by suspicion. Why, given that, would a team risk all that for a deal that essentially replaced one expiring sponsorship with another?

Pro cycling’s business model is, in a word, awful, and the burden of this dysfunctional system falls heavily on teams. With no share of TV rights from race promoters, no gate revenue from roadside fans who largely watch for free, and scant merchandise sales, they’re largely dependent on generating media exposure for sponsors to remain solvent.

There is no salary or budget cap in pro cycling, which creates huge disparities in team budgets. Some teams rely on deep-pocketed enthusiasts who spend freely. Ineos, the richest in the sport, had a budget of £51 million in 2019. At the other end are teams like Qhubeka, which reportedly run on a quarter of that or less. It’s a massive mismatch, and even with the best of intentions and competent management, teams regularly fold. The stress of finding funding is constant and, as the sport’s history makes clear, can lead to managers accepting questionable sponsorship commitments in a noble effort to keep their teams alive.

Qhubeka-NextHash team officials are adamant that they’ve done the due diligence. They insist NextHash is a viable partner, and that the questions and skepticism are unfounded—even harmful. But the potential stakes if they’re wrong could be nothing less than the existence of the team.

Daniel Roberts, for one, is skeptical that the broader crypto boom in sports will last. “There’s a clear overlap between sports and crypto,” he says, noting that crypto has some of the same gamified elements as sports betting. But he’s not sure that name recognition will actually lead to more business, that “a fan watching the bike race will see the NextHash logo and pull it up on their phone and become a customer.”

When FTX signed its 19-year naming rights deal for the Miami Heat arena, its CEO, Sam Bankman-Fried, boasted that it could pay up in far less than 19 years if it wanted. But things change fast. Bitcoin’s value has halved from its peak just two months ago. Regulators are eyeing exchanges and tokens. There’s froth in the sector, with meme currencies like Dogecoin, which was created as a joke and now has a market capitalization of almost $32 billion. While there’s significant promise in the idea of decentralized finance, crypto right is fairly compared to the wildcat banking era in American history.

How that settles out, no one knows, but there will be a settling. And the question for Qhubeka, and NextHash, isn’t whether they’re still around in five years to talk about a renewal option. It’s whether they’re around next year.

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