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BY E-MAIL May 19, 2022

Swift Media Entertainment

5340 Alla Road, Suite 100
Los Angeles, CA 90066

Re: Summary of Findings Concerning Peter Zhang

Dear Michelle:

Simpson Thacher & Bartlett LLP conducted an investigation into the

allegations of improper conduct by Zhang “Peter Zhang” Yi (hereinafter “Mr. Zhang”), who

at the time of his termination on March 18, 2022, was the Head of Player Development at

Team SoloMid (“TSM”). This letter summarizes our findings.

TSM is a professional esports organization in the United States. TSM fields

players and teams to compete in popular video games such as League of Legends,

VALORANT, Fortnite, Apex Legends, Dota 2, Super Smash Bros., and others. This

investigation concerns TSM’s League of Legends team.

Mr. Zhang, a Chinese national, first joined TSM in November 2018. He

initially served as the Head Coach of the TSM Academy team, which trains and tests new

talent. In December 2019, Mr. Zhang became the Head Coach of TSM’s main League

Championship Series roster. After bouncing back and forth between the two squads for the

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May 19, 2022
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next year, Mr. Zhang became TSM’s Head of Player Development in December 2021. Mr.

Zhang worked in TSM’s headquarters in Los Angeles.

On March 18, 2022, TSM terminated Mr. Zhang based on allegations of

conflict of interest and unethical practices made by, among others, TSM’s players and staff

members. On March 23, 2022, Swift Media Entertainment, the parent company of TSM,

retained our firm to investigate the allegations that had been made against Mr. Zhang. As

part of our investigation, we interviewed twelve witnesses and reviewed voluminous

documents, including WeChat and Discord communications and bank transfer records.

Despite our multiple attempts, we have not been able to interview Mr. Zhang, who left the

United States for China on or around March 27, 2022.

Based on our investigation of the facts, we have concluded that the following

allegations made against Mr. Zhang are supported by the evidentiary record to date:

First, Mr. Zhang diverted approximately $250,000 in total from salary

payments to two TSM players. The players at issue, both Chinese nationals, were supposed

to receive a significant portion of their salaries through a third-party entity in China. The

primary reason for this arrangement was to accommodate the players’ preference to receive

RMB payments in China. The third-party entity, which TSM understands has certain

preferential tax treatment with local Chinese tax authorities, requested that the players

provide a total of seventeen bank accounts due to the large size of their upfront salary

payments. Mr. Zhang inserted himself between the third-party entity and the players, who

he helped recruit and trusted him, and provided the third-party entity with the requested

bank accounts purportedly on behalf of the players. Unbeknownst to the players, TSM, and

the third-party entity, only two of the provided accounts were affiliated with one of the
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May 19, 2022
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players and none of them was affiliated with the other player. As a result, the vast majority

of the players’ salary payments between December 2021 and February 2022, including their

large upfront payments, was diverted to bank accounts not affiliated with the players, of

which (i) one was owned by Mr. Zhang; and (ii) another was owned by WANG “Hanyi”

Hanyu (hereinafter “Hanyi”), a long-time friend of Mr. Zhang and a talent agent whose

agency represents both players. While we do not know the relationship between the owners

of the remaining bank accounts and Mr. Zhang and/or Hanyi, certain evidence suggests that

all of the diverted funds were eventually received by Mr. Zhang, Hanyi, Hanyi’s talent

agency company, and certain other individuals affiliated therewith. Hanyi has taken the

position that his agency was entitled to the diverted funds, in whole or in part, as

commission under separate agreements with the players, of which he refused to provide a

copy.

Second, Mr. Zhang may have provided Hanyi with non-public information

regarding TSM’s recruiting decisions in order to benefit Hanyi and/or himself. Typically, an

esports player hires a talent agent and then the agent tries to secure employment for the

player. But with respect to at least one TSM player, Hanyi was able to obtain a draft

agreement TSM prepared for the player before TSM reached out to the player and he used

the draft agreement to secure an agency agreement with that player, pursuant to which he

receives 20% of the player’s salary. While we do not have conclusive evidence on this

issue, Mr. Zhang’s involvement in the TSM recruiting process, his close relationship with

Hanyi, and the fact that Mr. Zhang has since acted as an intermediary for the player’s

commission payments to Hanyi, suggest that Mr. Zhang may have shared the draft TSM
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agreement and other related non-public information with Hanyi, potentially in exchange for

personal benefit.

Third, we observed evidence indicating other irregularities in connection

with Mr. Zhang’s role in recruiting players from China. In particular, certain

recommendations Mr. Zhang made to TSM may have been motivated by personal gain,

including in connection with the salary diversion scheme discussed above, rather than

recruiting the best players for the team.

Fourth, in October 2021, Mr. Zhang agreed to sell the car of a player who

was leaving TSM to return to Asia and to give the player the proceeds of the sale. Over the

next several months, Mr. Zhang provided the former TSM player with ever-shifting stories

regarding the car. Mr. Zhang initially told the player that he could not sell the car. Then, in

March 2022, Mr. Zhang told the player that a car dealer took the car without giving him the

money. When the player started asking more questions, Mr. Zhang told the player that he

should assume that Mr. Zhang purchased the car from the player for $80,000. After the

former player threatened to publicly disclose Mr. Zhang’s misconduct, Mr. Zhang repaid

$35,000 to the former player. The $45,000 balance has not been repaid to the player.

Finally, between January 18, 2022 and March 18, 2022, Mr. Zhang

attempted to borrow money from eight TSM players and staff members, including players

over whom he had managerial responsibility, allegedly to pay for, among other things, his

grandmother’s medical treatment in China. The amounts of loans Mr. Zhang attempted to

solicit ranged from RMB10,000 to RMB150,000. Two players lent Mr. Zhang a total of

RMB95,000 (approximately $15,000), of which Mr. Zhang has since repaid approximately

RMB68,282 (approximately $10,500). The Company became aware of Mr. Zhang’s

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solicitation for loans on or around March 18, 2022 and took immediate actions to stop more

money being lent to Mr. Zhang including reversing the players’ scheduled wire transfers.

The Company’s prompt action prevented approximately $20,500 to $54,000 from being sent

to Mr. Zhang. To date, approximately $4,500 remains unreturned to the players.

In view of the findings set forth above, we believe that (i) Mr. Zhang engaged

in unethical and potentially illegal conduct and (ii) TSM, by immediately terminating Mr.

Zhang after learning about his misconduct, acted in a timely fashion to protect the team and

its players and staff members.

Chet Kronenberg
Bryan Jin
Ziwei Xiao