Crypto Corner: The Sports Slice

 

Is it doom and gloom for crypto engagement and sports? The answer from top crypto executives is a mixed bag as the Sports Business Journal Dealmakers Conference inquiries from some of the highest ranked sports executives in the business.

Meanwhile, the World Cup heads to knockout rounds and departs group stages with little major fanfare in the crypto space. And FTX’s demise has led Formula 1 to take another glance at the risk profile surrounding cryptocurrency partners.

Each week, we review the biggest stories in sports and crypto with The Sports Slice – let’s dive into the past week of action.

The Sports Slice

SBJ’s Dealmakers Conference Asks Top Sports Execs: Buy, Sell, Or HODL? 

Sports Business Journal sat down with different sports executives at it’s annual Dealmakers Conference, asking many execs if they advocate buying, selling, or holding Bitcoin. The responses varied, but overall expressed a positive sentiment: Monumental Sports & Entertainment’s Ted Leonsis express bullish sentiment around blockchain technology at large – rather than a specific token or chain – while Professional Fighters League Chairman & Founder Donn Davis was less enthused, describing a story of giving his son some money to buy Bitcoin “and it’s all gone.”

Other bullish and bearish sentiment scattered throughout responses: Take-Two Interactive CEO Strauss Zelnick says “run for the exits,” while AEG Global Partnerships COOs Nick Baker and Russell Silvers were practically taken aback at the question, replying “buy… big buy.”

Even a little middle-ground responses made their way, such as WNBA player and WNBPA Secretary Elizabeth Williams expressed that she shies away from the volatility, and fellow WNBA hooper and WNBPA President Nneka Ogwumike said that she simply wants to be more educated on the area before making a real decision on ‘buy, sell or HODL.’

Finally, frequent crypto converser and serial entrepreneur both in and out of sport, Mark Cuban, broke down how differentiated and nuanced crypto can get; Cuban separated the ideas of centralized exchanges, the extra speculative investments, and more blue-chip crypto investments. Cuban closed out in expressing that when a smart contract app brings true utility, we’ll see the next big boom; but just like with early internet, it will take time.

Bitcoin (BTC) was a focal point of questioning at Sports Business Journal's Dealmakers Conference this past week. | Source: BTC-USD on TradingView.com

F1 Considers Risk Profile Of Crypto Partnerships

FTX’s ripple effects continue. Sports sponsorship perspective has taken a major hit from the centralized exchange’s downfall; Formula 1 racing has seen a spike in dialogue around the topic, as Mercedes F1 team saw it’s FTX sponsorship collapse, it’s a stark reminder that crypto partnerships carry a risk profile.

Other perspectives have emerged this past week as well: SBJ Marketing’s blog posted a piece expressing that it will take time for momentum to re-emerge; Playfly Premier Partnerships CEO Randy Bernstein was quoted in the piece as saying that “crypto overheated so quickly…  there was irrational exuberance on both the buy and sell side.”

Finally, another article from the Dallas Morning News headlined “Crypto is done” expressed a less optimistic perspective on the matter: the article cites Jonathan Jensen, a former sports marketing executive at Omnicom and Publicis Groupe, who states that “the vetting process is, ‘Who’s going to pay the most?… most do not undergo a great deal of scrutiny.”

Jensen isn’t wrong and FTX is a prime example. However, this is far from being exclusive to the crypto industry. Just take a look at Houston Rockets past jersey partner, ROKiT, which was exposed on Reddit for it’s questionable business presentation. The jersey patch partnership was terminated a short time later.

As Bear Market Persists, Candy Digital Makes Cuts

Candy Digital, the NFT platform with a major sports focus, partnerships with the likes of the MLB and Netflix, and backing from Gary Vee and others, has laid off “a large part of it’s staff,” according to reports throughout last week.

According to the story, first released by Sportico, roughly one-third of the team’s 100-person staff has been laid off. The news comes following layoffs from fellow sports NFT platform Dapper Labs and from broader NFT marketplace OpenSea, among others, in recent months.

Russia’s Largest Digital Asset Deal Denominated in Chinese Yuan – Finance Bitcoin News

 

 

A Russian company has announced the country’s first authorized transaction with digital financial assets (DFAs) involving a foreign currency, China’s yuan. The deal, reportedly the largest made to date under the current Russian DFA law, covers the issuance of tokens secured by commercial debt.

Digital Financial Assets for 58 Million Yuan Issued by Russian Platform

A licensed firm has finalized Russia’s first deal with digital financial assets denominated in foreign fiat. The transaction involved the issuing of DFAs worth 58 million Chinese yuan (approx. 516 million rubles or $8.26 million) secured by commercial debt.

It took place on a platform developed by Lighthouse, which was approved by the Bank of Russia in March as one of the “information systems operators” allowed to manage digital financial assets. Russia’s largest bank, Sber, and the tokenization service Atomyze were also registered as such.

While Russian authorities have been working to adopt a more comprehensive legal framework for all digital assets, including cryptocurrencies, the law “On Digital Financial Assets,” which was enforced in January of 2021, regulates some transactions with coins or tokens that have an issuer.

Officials in Moscow now want to legalize crypto payments in cross-border settlements and expand the use of the ruble and the national currencies of partners like China in foreign trade. The main reason is to circumvent restrictions imposed by the West over the war in Ukraine and reduce Russia’s dependence on the U.S. dollar and the euro.

Quoted by Russian crypto news outlet RBC Crypto, Lighthouse pointed out that the first DFA operation involving foreign currency has also become the largest placement of this kind in the country’s market for digital financial assets.

The maturity of the tokens issued is 29 days and the interest rate is 4%, the fintech company detailed, highlighting the advantages of DFAs over short-term lending in rubles, which comes at a 9 – 10% annual rate. It also noted that DFAs reduce the risks for issuers of losses from currency fluctuations.

Lighthouse General Director Denis Iordanidi believes that the new financial instrument will provide an opportunity to make cheap short-term investments without competing with the traditional bond market that offers long-term financial investments. According to a survey conducted in November, 37% of Russian companies are ready to enter the DFA market as issuers, the report added

 

Elon Musk and Matt Taibbi release Twitter docs on Hunter Biden tapes

WASHINGTON — Elon Musk promoted a series of tweets Friday that shows Twitter executives struggled with handling tweets surrounding a report on Hunter Biden’s laptop before the 2020 presidential election as the company took steps to block it. 

“This will be awesome,” Musk, CEO of Twitter, wrote before the release of what he billed “The Twitter files” – a lengthy Twitter thread by journalist Matt Taibbi detailing internal documents that Musk apparently fed Taibbi. 

Musk, who last month urged his followers to vote for Republicans, seemed to push the material to expose what he claims is the political left’s grip over Big Tech. 

Taibbi said he had to “agree to certain conditions” to report on the story but did not disclose what they were. USA TODAY was unable to verify the authenticity of screenshots of emails and other documents that form the bulk of Taibbi’s reporting. The White House declined to comment. 

The emails focus on the debate within Twitter whether censoring tweets promoting a 2020 New York Post story on Hunter Biden’s laptop was the right call. The Post story provided sensitive information that news organizations including USA TODAY could not verify at the time.

Biden, his allies and former intelligence officials said the story was likely Russian disinformation. However, then- Director of National Intelligence John Ratcliffe said the emails targeting the younger Biden weren’t connected, even as federal authorities continued to review whether the material was part of such a campaign.

According to Taibbi, Twitter blocked tweets from former Trump administration officials publicizing the article prompting them to contact and admonish the company for its actions. Meanwhile, members of Biden’s campaign reported specific tweets to Twitter and requested they be blocked. 

USA TODAY has since verified the contents of the reported tweets by the Biden campaign through open-access tools and found they were pornographic in nature or alluded to Hunter Biden’s sexual activities.

Here’s what the documents show – and what they don’t:

Biden campaign flagged tweets in lead-up to the election 

  • Taibbi’s report reveals requests from President Joe Biden’s campaign in the days before the 2020 election for Twitter to remove tweets the campaign flagged.  An email from a Twitter employee dated Oct. 24, 2020 includes six links to tweets. “More to review from the Biden team,” the employee wrote. Another Twitter worker replied, “Handled these.”
  • Taibbi goes on to write, “Requests from both Donald Trump’s White House and the Biden campaign were received and honored.” He does not provide examples of tweets the Trump team flagged to Twitter.

Elon Musk and Apple:Elon Musk says he met with Apple’s Tim Cook, issue with Twitter ‘resolved’

Do Facebook and Google censor conservati:Trump, Republicans bet claims they do will rally GOP base in 2022

  • Taibbi argues “this system wasn’t balanced” because he says the majority of Twitter’s employees are Democrats. To make that case, he pointed to the Twitter team’s significantly greater campaign contributions to Democrats over Republicans.
  • Notably, Taibbi’s reporting does not show the Biden campaign flagging the 2020 New York Post report that first revealed the existence of Hunter Biden’s laptop. 

‘Caution is warranted’: Twitter debated what to do about New York Post story

  • Twitter removed links to tweets linking to the story, marked them as “unsafe” and blocked the ability to send the story in direct messages. The Twitter team said the Hunter Biden laptop material fell under its “hacked materials policy.”
  • But some at Twitter raised concerns. “I’m struggling to understand the policy basis for marking this as unsafe,” Trenton Kennedy, a Twitter communications official wrote in an email. Kennedy advised that the company say it is “waiting to understand” whether the New York Post story is the result of hacked material.
  •  “Can we truthfully claim that this is part of the policy?” Brandon Borrman, former vice president of global communications asked in an email. Jim Baker, deputy general counsel for Twitter, replied that “caution is warranted” because it is “reasonable to assume” that materials reported in the story were hacked. 
  • A Democratic congressman, Rep. Ro Khanna, D-Calif., whose district includes Silicon Valley, reached out to a top Twitter executive with concerns the decision to block the story violated “1st Amendment principles.” 

Fact check: Claims that Hunter Biden received $3.5M from Russia are unproven, lack context

‘A Twitter circus show,’ analysts say

Since his $44 billion takeover of Twitter at the end of October, Musk has been trying to find a way to bring more money in.

In November, Twitter briefly offered verified checks through an $8-per-month “Twitter Blue” subscription and has discussed other ways to attract advertisers such as relaunching the short-form video platform Vine. Musk has also gutted the staff through mass layoffs. 

The financial pressures come after Musk saddled Twitter with $13 billion in debt to finance the deal, meaning the company must pay more than $1 billion annually in interest alone, the New York Times reported.

Neuralink:Elon Musk’s Neuralink wants people to control computers with their minds. How close are they?

Wedbush Securities analyst Daniel Ives calls Taibbi’s Twitter thread a “Twitter circus show,” with Musk using his new ownership and his showmanship to create as much political noise as possible to drum up engagement on the platform which has foundered in recent years.

“At the end of the day, there are 44 billion reasons that Musk needs to increase engagement on Twitter. This will go down as the most overpaid M&A transaction in the history of tech, and I think Musk realizes the challenges ahead.”

Jared Holt, senior research manager at the Institute for Strategic Dialogue, wrote that it’s common practice for political campaigns to complain to social media companies and that Taibbi offered no evidence that Twitter gave the Biden campaign special treatment. “We already know that major social media companies debate internally about their moderation policies and are inconsistent with applying their decisions,” he wrote. “So, what is exactly new about Taibbi’s revelations? I would argue almost nothing, so far.”

Musk’s political views shift to the right

Musk’s push to bring the Biden story back in the spotlight comes after the billionaire has shown signs of aligning more closely with the political right.

On Nov. 7, Musk tweeted a recommendation to vote for a Republican Congress in the midterms, “given that the Presidency is Democratic.” He went on to say that he agrees “with some of the Democrat and some of the Republican policies, but not all.”

In a Nov. 25 tweet, Musk confirmed that he would support Ron DeSantis, a Republican, in 2024. In May, he acknowledged that he had previously voted Democratic but now believed it to be “the party of division & hate.”

Twitter has also invited right-wing accounts back onto the platform under Musk, including former president Donald Trump. Trump later was banned from the platform in Jan. 2021 due to risks he would incite further violence following the Jan. 6 attack on the capitol by his support.    

What politicians are saying and what could be next

  •  Republicans seized on the material as proof Twitter sought to hide a story unfavorable to Biden ahead of the election. “We’re learning in real-time how Twitter colluded to silence the truth about Hunter Biden’s laptop just days before the 2020 presidential election,” House Republican Leader Kevin McCarthy said. He vowed Republicans will “get answers for the American people” when they take control of the House next year.
  •  Democrats said there was no story. “Here is the BIG REVEAL,” U.S. Rep. Ted Lieu, D-Calif. “Twitter got complaints from lots of folks, including the Biden campaign, the Trump White House and your cousin’s friend. Sometimes Twitter listened and sometimes it didn’t.”