Investing Education

A recent article in the Wall Street Journal captivated me with its blend of betrayal, eccentric characters, the contrast between opulence and collapse, and the modern-day parable of a crypto catastrophe. In addition to its spellbinding narrative, it reminded me of my mother’s advice to make your friends before you make your money.

The  background

According to the Wall Street Journal, Taylor Thomson, a 66-year-old eccentric billionaire heiress from Canada’s wealthiest family (with ties to Thomson Reuters), formed a deep, decade-long friendship with Ashley Richardson, a 47-year-old free-spirited social-media designer. They bonded over shared interests in spirituality, animals, and apparently, ADHD. Their relationship was marked by lavish trips, intimate gatherings, and mutual support following the 2016 death of a close friend. That friendship soured, however, in 2021 when Richardson introduced Thomson to cryptocurrency investments, particularly the token Persistence (XPRT), inspired by a psychic’s recommendation. Some of you will stop reading at this point.  Enough said, right?

Perhaps in an attempt to make her own way in the world, Thomson was reportedly seeking independence from her family’s financial controls. Sadly, she was also said to be influenced by astrologers and invested over US$40 million through Richardson. For her part, Richardson had no financial expertise and acted informally without pay. At the peak of her financial ‘shepherding’, Richardson held US$140 million of Thomson’s money without any rules, controls or a failsafe. The 2022 crypto market crash rendered Persistence worthless, resulting in Thomson’s alleged losses of over US$80 million. Accusations flew: Thomson sued Richardson and Persistence for fraud and misleading “whale” investments, claiming unauthorised risky trades and a secret kickback; Richardson countersued for defamation, insisting all actions followed Thomson’s instructions and no fee was received. The fallout destroyed their bond, leaving Richardson in financial ruin (driving Uber, applying for food stamps) and Thomson feeling betrayed, with ongoing legal battles and no reconciliation, even over shared ashes of their late friend.

Lessons from a billionaire’s crypto catastrophe

In financial markets, fortunes can multiply or evaporate in an extremely short space of time, and the tale of Taylor Thomson’s ill-fated venture into cryptocurrencies serves as a cautionary tale. Without the requisite experience, heirs and business moguls are often pushed, forced or goaded into situations requiring due diligence of opportunities that promise exponential returns. Thomson’s experience – detailed in the Wall Street Journal exposé – highlights a litany of avoidable errors that, in that case, turned a trusted friendship into a courtroom nightmare and vaporised tens of millions.

Drawing on Thomson’s missteps in betting on the now-worthless Persistence (XPRT) token, here’s my no-nonsense advice to protect your assets and sanity when dipping a toe into the volatile crypto waters. Remember, nobody is immune to hype; if anything, having greater resources makes wealthier individuals and families prime targets for folly.

1.Never outsource due diligence to psychics or gut feelings

Seems obvious. The wealthy can fall into the trap of believing those in their inner circle are all the very best at what they do and therefore offer some special insights or have a special skill. Thomson relied heavily on celebrity psychics, astrologers, and intuitive advisors for investment guidance, forwarding their “high readings” on coins like Persistence as validation. One even weighed in on her Xanax use alongside crypto picks! Financial markets aren’t a spiritual quest; they’re speculative, rife with scams, pump-and-dumps, and regulatory pitfalls. If you must invest in cryptocurrencies, engage professional financial advisors with successful experience, blockchain experts, and independent auditors before committing a cent. They should use tools like on-chain analytics (e.g., via Etherscan or Dune Analytics) to verify liquidity, holder distribution, and smart contract security. Psychics provide entertainment not financial advice.

2. Formalise all arrangements

What started as a bohemian bond between Thomson and her friend Ashley Richardson devolved when money entered the equation. According to the Wall Street Journal, Richardson, a social-media designer with no financial credentials, handled trades for Thomson informally, stashing crypto wallets in underwear drawers and executing thousands of high-risk trades without contracts or oversight. The result? Accusations of unauthorised activity and massive losses. Lesson: Never mix personal relationships with portfolio management. If a friend introduces an opportunity, thank them with a bottle of wine (if it’s successful!) – not control over your capital. Insist on formal agreements, non-disclosure agreements(NDAs), and fiduciary responsibilities. Hire successful licensed wealth managers and crypto custodians to execute and monitor trades. Diversify across assets and within asset classes. If reports are correct, Thomson’s all-in bet on a single token amplified the downfall.

3. Avoid whale traps and hype – size investments conservatively

Thomson was reportedly lured as a “whale” – a big investor whose public buys could inflate token value and attract others – pouring in sums that ballooned to over US$140 million in holdings. When the 2022 crypto market crashed, Persistence tanked from US$13 to just cents, erasing Thomson’s wealth. Billionaires are magnets for promoters and capital raisings, promising moonshots, but resist the ego boost of being the saviour of any obscure project. And question the motivations of anyone asking you to consider the project in the first place. Always cap asset allocation to a percentage of your portfolio. Rebalance back to the original exposure as the investment becomes successful. And when it comes to more speculative ventures, never risk more than you are willing to lose entirely. With any investment, scrutinise the economics: Is there real utility, or just buzz? Zip up your wallet if the promoter shows you a massive total addressable market (TAM) and asks: ‘If we can capture just X per cent of this market…”. According to the Wall Street Journal, Thomson ignored red flags like low liquidity, which forced micro-trades to avoid price swings.

4. Build in accountability and exit strategies

According to the Wall Street Journal, post-crash, Thomson’s response was lawsuits alleging fraud and kickbacks. Richardson countersued for defamation, claiming all was per instructions. This messy unravelling highlights the need for pre-emptive safeguards. Implement regular audits and transparent reporting; Thomson waited until losses mounted to demand an accounting, leading to 450,000+ disputed trades. Having clear exit triggers like stop losses or time-based milestones will protect your reputation as well as your wealth.  And spreading unproven accusations (as Thomson allegedly did in social circles) can backfire legally and socially. If things go south, consider discreet recovery firms, avoiding aggressive tactics that escalate tensions.

5. Wealth isn’t worth wrecking lives

Beyond the dollars, Thomson’s reported saga reveals the isolating toll of extreme wealth: paranoia about “takers,” family estrangements over money, and fractured friendships. Richardson, once financially independent, now drives Uber and fights for food stamps, blaming the “catastrophe of having money.” Prioritise mental health, trusted inner circles without financial entanglements, and philanthropy that builds rather than buys loyalty. Investing can be a tool for innovation, but only if approached with humility, not hubris.

6. Alternatives to directional crypto bets

If you are going to invest in Cryptocurrencies, ask yourself whether the investment requires you or the promoter to successfully predict the direction of the underlying asset. There are funds that don’t need to predict the direction of a currency, instead they profit from arbitrage – the certain convergence of the spread between the spot currency and its derivatives. Seek those out instead. For more information, call us.

Thomson’s Wall Street Journal story isn’t just about a bad bet; it’s a blueprint for how unchecked impulses and poor governance can amplify risks in less emerging markets. Irrespective of how much you are investing, one needs to remain vigilant, diversify wisely, and remember: True wealth preservation demands discipline, not divination. If you’ve dodged similar bullets or have any tips, share in the comments below.

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