1. Money

    Harry Clynch

    Football’s dangerous love affair with crypto

    Football’s dangerous love affair with crypto
    Inter Milan are now sponsored by online fan token creator Socios (photo: Getty)
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    The value of cryptocurrencies like Bitcoin, and digital assets more generally, is a controversial topic at the moment. Some dismiss decentralised finance as nothing more than a fad and a bubble, while for others we are on the cusp of a ‘monetary revolution’. For what it’s worth, my own view of crypto is somewhere down the middle. The blockchain technology which underpins crypto could be potentially transformative if used properly. But often this innovation is tarnished by the many dodgy cryptocurrencies that have emerged which have no real usefulness or value. Often issued by shady cryptoexchanges with questionable business practices, these are nothing more than high-risk speculative assets – if not outright scams – which almost inevitably lead to vulnerable consumers losing their money.

    And there is a particular problem with these companies and products at the moment. A worrying trend has emerged recently. Faced with widespread regulatory pressure, many cryptoexchanges are investing in staggeringly expensive marketing campaigns – and their focus has often been on the world’s top footballers and elite clubs.

    The agenda of these cryptoexchanges is pretty obvious. They want to glamourise what is often a dangerous industry, legitimise products which largely remain completely unregulated, and persuade fans – especially young men – to gamble their money on highly speculative products which they probably don’t fully understand.

    Binance, by far the world’s largest cryptoexchange, is leading the field on this. Barely a day goes by without the company announcing a new partnership with some titan of world football. Binance Uruguay posts videos of Luis Suarez using the platform. Binance Colombia proudly boasts that national hero James Rodriguez is an apparent user – while skirting over the fact that the platform has been suspended in the country.

    In Spain, World Cup winner Andres Iniesta recently partnered up with the cryptoexchange – a move which has been condemned by the National Securities Market Commission. The Spanish watchdog pointed out that he has a duty to remind fans that ‘cryptoassets, as non-regulated products, have some relevant risks.’ The amount paid to these footballers to endorse Binance is not known, but the payouts are likely to be enormous.

    Binance is a company that has been dogged by controversy. It has been banned by the Financial Conduct Authority (FCA) from carrying out regulated activities in the UK, potentially because of concerns related to money laundering and a lack of consumer protection. In May, the company was also investigated by the US Justice Department. The company operates in the US using a quasi-independent network of corporate structures that seem designed to help the company evade regulators. More criminal funds reportedly pass though Binance than any other cryptoexchange. Binance denies any wrongdoing and says: ‘We take our legal obligations very seriously and engage with regulators and law enforcement in a collaborative fashion.’

    But is this really a company that the world’s top footballers – who have a particular responsibility to the millions of children and young adults that idolise them – should be encouraging their fans to deal with? Should they really be advertising financial products to their millions of followers, with absolutely no mention of the very high possibility they will lose their money? I wonder how much money Luis Suarez has personally invested in Dogecoin. There’s something quite grim about ultra-wealthy footballers egging on those with much less money to make highly speculative bets on a platform that has been widely criticised.

    But this problem is wider than just Binance, or individual footballers. In fact, the entire footballing world seems to be getting in on the act. Wolves, for example, is being sponsored by the cryptoexchange Bitci.com. In Italy, Inter Milan has just ended a 26-year partnership with Pirelli to partner with the online fan token creator Socios.

    These companies are not under as much scrutiny as Binance, but the whole thing does have the whiff of crypto companies ‘sportswashing’ – using the prestige associated with elite football to divert attention from the many question marks that remain over the industry, and the risks associated with their platforms.

    The cryptoexchange Socios has also teamed up with Manchester City and Arsenal to offer ‘fan tokens’ $CITY and $AFC. On the surface, these appear to be digital assets that are traded on similar markets to other cryptocurrencies. They are listed on various exchanges and have a fluctuating value that makes them seem like legitimate tradeable assets. But they’re nothing more than gimmicks. $CITY is advertised as ‘giving you the power to help make the right decisions’ and ‘access VIP experiences’ – which is clearly complete nonsense. These tokens are presented as an opportunity for fans ‘to get even closer to the club they love’, cynically taking advantage of fans’ loyalty. Shouldn’t the football industry be more responsible than to endorse risky, unregulated financial products – let alone than to flog these products themselves?

    The relationship between football and cryptoexchanges like Binance is corporate greed and irresponsibility at its very worst. The world’s leading footballers and clubs are often giving cover to dodgy financial products and companies, encouraging (often young and impressionable) fans into high-risk schemes.

    There is already a blanket-ban on the advertisement of tobacco products on football shirts, and strict rules are in place regarding how products related to gambling and alcohol can be advertised in sporting events. We should be looking at applying similar principles to crypto. But it’s a shame that the football industry has again demonstrated such disregard for the wellbeing of the fans that keep them in business and whose loyalty they depend on.