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Around this time last year, you could get a sense of the market fervor that the newly christened Crypto.com Arena embodied. A $700 million dollar naming rights deal had suddenly catapulted a small cryptocurrency exchange from relative anonymity into the global orbit of the house that Kobe built, formerly and often still addressed by fans as the Staples Center.
“In the next few years, people will look back at this as the moment when crypto crossed the chasm into the mainstream,” Crypto.com’s chief executive, Marszalek told the L.A. Times last November.
At the time, AEG—the owner of the arena—put its new partner on full display. Throughout its L.A. Live complex, the crypto exchange bombarded the entertainment district with massive ads on its buildings that looked like cinematic windows into outer space, with “Fortune Favors the Brave,” spelled out on each one.
Yet here we are, more than a year later, and most of the electrical signage at Crypto.com Arena, originally scheduled to be completed by June 2020, is still missing. Whether it’s a Lakers game or the Dinos Alive Exhibit, what has instead welcomed the estimated four million visitors this past year are two large, empty and gritty rail sacks at each of the main entrance corridors. From the street level, the makeshift-looking metallic boards bearing the Crypto.com logo seem out of place amidst the frenzy of L.A. Live’s electronic billboards, and far below something that should adorn a local landmark.
Sure, there’s an Instagram reel available of the aerial signage, which appears to have been completed for the Lakers opening season in the fall. However, unless you’re flying over the arena, the flimsy boards are the only real marquees from any other vantage point.
As such, some members of the DTLA Town Square group on Facebook have expressed frustration, and confusion as to what the missing signage even means. “I have to wonder if people who don’t know what Staples Center was or where Crypto is, how do they know they’ve arrived.” Ginny Brideau, a close-by neighbor of the arena said, “what a loss…”
Ernie Pearl, another member of the group, believes it represents some financial turmoil for Crypto writ large. “You’d think Crypto would jump at the start with their signage and brand being promoted in the nation’s second largest [commercial real estate] market…”
But, with the total value of all cryptocurrencies losing more than 70% of their peak value in the last year alone, it appears that AEG is coming to terms with not only a company, but an industry playing out of its league.
The lack of signage even bears similarity to other companies reeling from the crypto fall out. Last year, Esports team owner Team SoloMid (TSM) suspended its partnership with embattled cryptocurrency exchange FTX after the company filed for bankruptcy.
According to Michael Roth, Vice President of Communications at AEG, however, Crypto.com has made all their necessary payments to fund the signage. He attributes the delays to the global supply chain problem, unforeseen engineering setbacks, and a rush to build. “I'll be quite honest,” he told me on a phone call, “the deal came very quickly when we announced it…it was overly optimistic.”
Roth added there are currently no issues with funding or payments, “they have been exceptional partners…we are very proud to partner with Crypto.com.”
Though the current street-level marquees appear to be a major downgrade, and were probably designed to be temporary, Roth insisted that they were manufactured for the arena, and filled the necessary gap for the time being. He also mentioned the electrical signage that will replace them is “en route,” and will be seen in the very near term, though no exact timeframe was given.
For now though, Crypto.com Arena and its lack of permanent signage, remains a near-constant reminder of how far we’ve come from the optimism surrounding crypto at the beginning of the naming rights deal. And serve as yet another reminder that the crypto winter is here until further notice.
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The impending winter seems to have Crypto.com shivering.
Los Angeles remains mostly immune to the seasons – We’re talking about a “crypto winter,” the term that’s come to represent the massive downturn in the cryptocurrency industry that's erased $2 trillion in value since its peak last November.
Although month-over-month trading volumes were up 16% last month, there’s no clear sign of stability to be found and some crypto exchanges are still feeling the chill. That's especially true for Crypto.com, the company that paid $700 million to reskin the Staples Center (sorry, no amount of money will make this Angeleno stop calling the stadium by the name it had for over two decades) and much of Downtown Los Angeles’ L.A. Live district.
Crypto.com saw a huge initial burst of momentum after the arena deal last December, and its marketing afterwards was bombastic to say the least. It courted stars like LeBron James and Matt Damon to do a series of ads themed around the tagline “fortune favors the brave,” encouraging people to take on financial risk in the hope of a moonshot payout. After the Staples Center deal was announced, Crypto.com’s CRO coin jumped 25%. But it appears to be losing momentum – in the last month, CRO is down nearly 10%.
Once a strong competitor to other crypto exchanges like FTX, Coinbase or Binance, Crypto.com today does not rank in the top 10 – it's currently ranked No. 18 by exchange analysts. Crypto.com’s most recent daily trading volume was roughly a modest $207 million – compare that to Binance, which had a global 24-hour trading volume of over $10 billion, or FTX, which topped a $1 billion trading volume today.
The digital graveyard of crypto coins and exchanges gone seemingly grows by the day. A quick glance at Deadcoins.com will show you over 1,700 crypto currencies that have failed. Now both supporters and haters of Crypto.com are wondering if the platform will meet its demise and put, uh, the crypt in crypto.
In June, Crypto.com started laying people off, and cut about 40% of its workforce. By August, dot.LA was already questioning the viability of long-term crypto sports deals, and others continued to wonder if Crypto.com’s big marketing bets would work. The exchange poured money into sponsorship deals it thought could be lucrative, including new L.A. women’s soccer club Angel City FC, but it later defaulted. Lawyers for the soccer team told AdAge last week Crypto.com reneged on the deal after refusing to pay.
Crypto.com also became a sponsor of Twitch’s esports league, but AdAge reported it decided to end the deal.
Crypto.com pushed back on reports it was walking back sponsorship deals.
On Monday Crypto.com spokesperson Al D’Agostino told dot.LA via email, “reports of any sort of pull back on our partnerships are completely inaccurate, and we have submitted requests for corrections to the story referenced. We have a strong balance sheet and will continue to invest in our industry-leading products, engineering, and brand partnerships.
One big event Crypto.com is set to sponsor is the 2022 FIFA World Cup in Qatar. AdAge speculated this might not go as planned, noting a former employee told the magazine that Crypto.com downsized the count of hospitality packages it was planning to offer. The company also reportedly dismantled an entire marketing team of 10 people within four months of hiring them; a sign it’s probably over-invested in marketing efforts that literally haven't paid off.
All this could point to—if not a downturn in Crypto.com’s operations—at least a restructuring. The company appears to be less dedicated to pushing new products, like its Visa cards or rewards for staking crypto.
The Crypto.com arena naming rights deal is a 20-year contract, so it’s entirely possible the company could fall to tatters long before that marquee is taken down. Or perhaps they’ll look to sell out their stake in the arena to another firm looking to make a splash in L.A., and cut their losses. It’s too early for anyone to predict exactly what might happen – and who knows, maybe in three months we’ll see a drastic turnaround in the market and I’ll be eating my words as crypto executives do a joyous May dance to celebrate the arrival of a market thaw. But for now, if Crypto.com continues on the trajectory it's been headed on, it runs the risk of losing valuable ground to crypto exchanges with way more customers. – Samson Amore
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Between 2020 and 2021, a cryptocurrency boom led several crypto-oriented companies to ink deals with athletic organizations like the NBA and UFC. One of the bigger deals was blockchain giant Crypto.com signing a $700 million deal with the Staples Center—one of the world's largest sports and entertainment venues—in Los Angeles. The Singapore-based company also signed agreements with the UFC and Formula 1 for promotion at various sports venues and on athletic equipment.
Crypto.com wasn't the only crypto company to extend its reach into sports or entertainment. In exchange for naming rights to the Miami Heat's arena for 19 years, FTX, a cryptocurrency derivatives exchange, paid $135 million. And in an exclusive deal, Coinbase became the exclusive cryptocurrency exchange for the WNBA, NBA, and NBA G League.
Rolling into 2022, there was little warning that crypto winter was coming.
Winter Is Here
In May, the major stablecoin TerraUSD lost its peg to the US dollar. In one day alone, TerraUSD lost $60 billion in value. After that, major crypto lender Celsius suspended withdrawals, citing liquidity problems. The company followed up by filing for bankruptcy.
They were just among the first dominos to topple in the crypto world, and many others soon fell. As a National Research Group (NRG) report about the state of the cryptocurrency industry noted, the market has gone "down over 70% from the highs it reached towards the end of 2021, and many of the most popular coins are trading at less than half of where they were at the beginning of the year."
As the NRG report also notes, the crypto market has undergone "dramatic" corrections before. Is the current crypto winter that different? And more importantly, will crypto winter freeze the budding love affair between entertainment, pro sports and cryptocurrency?
According to NRG, "crypto winter" has affected the public view of cryptocurrency in various ways.
For example, NRG reports that "70% of consumers feel they have at least a 'moderate' understanding of cryptocurrencies." If accurate, that’s a notable change from a YouGov survey conducted in June 2021 which found that 69% of Americans agreed with the statement, “I don’t really understand cryptocurrency.”
On the other hand, at least 61% of people surveyed said they were aware of the "crypto crash" or "crypto winter." It seems the heavy and negative news coverage of crypto winter over the last three months has considerably boosted consumer awareness—of the crashing market.
NRG notes, "This isn't a technological novelty anymore; increasingly, having some knowledge of crypto and how it works is seen as an element of baseline financial literacy."
Even though consumers have been exposed to a large number of crypto news stories, however, NRG reports that few bother to do deeper research. Bitcoin remains the most well-known name, and consumer awareness of other coins like ETH, Dogecoin or even popular meme coin Shiba Inu hasn't increased much since the beginning of 2022. Even with the media's attention to TerraUSD de-pegging from the dollar (arguably one of crypto's most significant events in recent memory), only 7% of consumers are familiar with the term "stablecoin."
Crypto Sponsorships Continue… Mostly
Crypto.com’s Al D’Agostino gave a succinct response to dot.LA when we reached out for further comment on the company's association with the Staples Center: "Crypto.com remains fully committed to its sports sponsorships. We are well financed and these are multiyear contracts, which will continue to play a crucial role in our mission to accelerate the world's transition to cryptocurrency."
While the New York Post reported in late June that FTX had backed out of sponsorship negotiations with the Los Angeles Angels, the crypto exchange has taken on new sponsorship obligations with a $210 million naming deal for pro esports team TSM, aka Team SoloMid.
But as recently as August 2, the Voyager cryptocurrency exchange backed out of a multi-year sponsorship deal with the U.S. National Women's Soccer League (NWSL). In addition, the exchange is facing bankruptcy after its CEO made millions at the 2021 peak of the cryptocurrency boom.
In comments accompanying its crypto winter report, NRG's Global Head of Insights, Marlon Cumberbatch, said "that the crypto crash hasn't done much to dampen Americans' enthusiasm toward cryptocurrencies – for investors, the recent crash is just the latest in a long series of ups and downs, rather than the start of a terminal decline."
Cumberbatch also offered advice on how companies as big as pro sports teams and small as local businesses might strategize to survive crypto winter. "Start engaging openly and constructively with policymakers," Cumberbatch said, "continue to invest in educating consumers about the technology and promote practical use cases for crypto…"
Cumberbatch also encouraged better cryptocurrency education for everyone. From the C-suite to the penny crypto investor in the street, people need to understand better what they're getting into. "Recent media coverage has done a lot to increase consumer awareness of crypto," he said, "it's not the same as increasing understanding. It's critical that consumers know enough about the technology to be able to make informed decisions and protect themselves from unnecessary risk."
Cumberbatch did not respond immediately after dot.LA reached out for specific comments about crypto company sponsorships such as the Crypto.com and Staples Center deal.
Where Do We Go From Here?
The NRG report on the general state of crypto did not predict doom and gloom but noted that the crypto landscape "is vast, complex, and constantly in flux."
"More than anything else," the report continued, "recent events in the crypto market have made it clear that there's a need to educate potential investors. Before they buy-in, it's vital that consumers understand the technology on more than just a surface level—and that they know enough about crypto to be able to make informed decisions and protect themselves from unnecessary risk. And today's leading crypto firms will have a pivotal role to play in facilitating that educational journey."
Cryptocurrency exchanges have benefited more from their sponsorships than the sponsored organizations, and at minimum, the crypto winter has put a dent in more multimillion-dollar deals for now. But if the National Research Group's report proves prescient, this may be a temporary lull in cryptocurrency-oriented companies paying big money for widespread name recognition. Crypto.com arena is here to stay…for now. If crypto winter gives way to a crypto spring, we could see more Coinbase stadiums and Bored Ape Yacht Club restaurants soon.
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