Celebrity-approved NFTs leave some investors ‘financially handicapped’

    When Floyd Mayweather began promoting a mysterious NFT project on Twitter this year, Tyler jumped at the investment opportunity.

    Mayweather, a boxing legend, was already the “biggest inspiration” for Tyler in his martial arts training. But Tyler was also looking for investment opportunities and discovered that Mayweather, who often calls himself “might be the money,” is worth listening to.

    “What I want everyone to do now: go get a Bored Bunny NFT,” said Mayweather, wearing a Louis Vuitton jacket with a diamond bracelet, necklace and gold watch. You hear it from Floyd’s only “Make-That-Money” company.

    Tyler, 35, a property manager whose family runs a Miami-based pickup trucking business, said he raised about $12,000 with the help of his mother and purchased non-fungible tokens, or NFTs, digital tokens that transfer ownership of digital photos. In this case, the project was a series of rabbit photos similar in nature to the famous Bored Ape Yacht Club photos that helped spark a boom in NFT art projects.

    The value of NFTs is now much lower than what Tyler paid.

    “It basically paralyzed me,” said Tyler, who asked to be identified only by his first name because he fears online trolls who mock unsuccessful NFT investors. Tyler said that now, especially with inflation, he’s struggling to find fuel for his car and groceries to eat it. He said he feels that Mayweather and the other promoters have “taken their payout and carried on while everyone who has resorted to investing in their future is being robbed.”

    The Bored Bunny team promises in their marketing materials that buyers can achieve “2x, 5x, and possibly 10 times the value of [their] investment,” But the value of the NFTs associated with the images is dipped in the nose after a short hike and has not yet recovered. Bored Bunny NFT base price is now at 0.05 ETH (currently $104.09), down from the mint price of 0.4 Ethereum (about $1,504.54 at the time).

    It’s a pattern that cryptocurrency critics, observers, and even some influencers refer to as an ongoing problem: digital investments that are riding a wave of enthusiasm in NFT and backed by high-profile endorsements that are rapidly losing value. In some cases, in the crypto world, this is known as “pulling the rug”. But more broadly, ad transparency experts warn, Public figures often promote NFTs without due diligence or warning their fans of the serious financial risks.

    The Bored Bunny founders, who declined to reveal their real names, have denied any wrongdoing. Mayweather’s publicist declined to comment.

    Huge numbers of celebrities and influencers have jumped at the opportunity to send NFT to their fans. Bonnie Patten, executive director of consumer rights group Truth, said that propaganda.

    “Messages from these celebrities are like the twenty-first century equivalent of ‘let them eat cake,’” Patten said. “Mixing the “incredibly volatile” NFT economy and the “Wild West” of influencer marketing is a sure recipe for disaster,” Patten said. The financially vulnerable people they look up to.”

    The multibillion-dollar influencer marketing industry has long been notorious for being greedy, with online stars urging their followers to buy potentially dangerous weight-loss products to snake oil wellness treatments. But the frantic shilling of NFTs has maxed the stakes so much that instead of effective regulation, some influencers and some celebrities are beginning to advocate the behavior of the other.

    Richard Bengson, founder of FaZe Clan, better known as FaZe Banks, Tweet clips From purported letters from the Bored Bunny team offering them $500,000 to $750,000 to post about their NFTs. He said he “didn’t make that mistake” because he “took the time to educate myself.”

    FaZe Clan did not respond to requests for comment. Bored Bunny refused to confirm how much it paid its “business partners,” citing a confidentiality agreement.

    Bored Bunny said in written direct messages that the team is “actively working to make this project great” but “is not responsible for investors not selling” at the optimum time. She said her team has received death threats from angry bored rabbit buyers, cutting off communication with the community, and that it is developing initiatives to “grow the project to the best of our ability.”

    Other influencers, such as businessman Gary “Vee” Vaynerchuk, have drawn particular attention to the trend of NFT ads for public figures although they have little understanding of how it works or the risks buyers face.

    “I don’t understand what these influencers are doing. They don’t first reveal that they’re getting paid,” Vaynerchuk said on the “Full Send” podcast during a discussion on NFTs in mid-January. An idea of ​​what it is, that’s a bad deal.”

    The Federal Trade Commission, which deals with consumer protection regulations, requires that Sponsored Content be “honest and not misleading,” “represents the exact experience” of the endorser, and “clearly and conspicuously” disclose that it is paid advertising. But the agency doesn’t usually enforce those rules when it comes to celebrities and influencers, said Patten, who said the lack of law enforcement is largely due to its limited punitive power and bandwidth in the face of such a wide spread. problem. While spokeswoman Juliana Gruenewald declined to speak about any specific cases, she emphasized that the agency had not announced any law enforcement decisions related to NFTs.

    The Securities and Exchange Commission, which oversees investor protection, has not provided general guidance on whether NFTs are considered securities; SEC spokeswoman Aisha Johnson also declined to comment. As securities, NFTs will be subject to the same promotional regulations as shares, whose endorsements must disclose the “nature, source and amount of any compensation paid.”

    “All of this is still fairly new,” Patten said. “The law hasn’t caught up with the technology.”

    The lack of government regulation has also led to some independent crypto watchdogs trying to promote transparency in the NFT trading arena, educating consumers and holding bad actors to account themselves. Among the most prolific It is ZachXBT, a self-proclaimed “rug-pull survivor” – turned into a “hacker” blockchain who would rather be recognized by him. 227,000 Followers Nickname Twitter due to privacy concerns. He regularly publishes crowdfunded investigations exposing alleged crypto scammers and unscrupulous NFT promoters, including diving deep into Bored bunny failed Mayweather’s history of cryptocurrency trading, which he described as “extremely irresponsible.”

    “It’s so crazy [celebrities and influencers] He said, adding that novice investors in NFT often place their trust in personalities who “do not put their interests at heart” and “only exploit their desire to get rich without knowing more about the industry.”

    With few other options, a few exhausted investors have taken to the courts to try to make up for their losses. Mayweather and Kim Kardashian are being sued for exercising their influence to boost EthereumMax tokens and profit “at the expense of their followers and investors,” according to a class-action lawsuit.

    Court records do not identify Mayweather’s attorney, and his publicist, Kelly Swanson, declined to provide a contact as well. Mayweather did not file a response in court. Michael Rhodes, Kardashian’s senior adviser, said he believed the allegations against his client were “baseless” and said, “We will vigorously defend the case.”

    Despite losing money, it also doesn’t look like Mayweather fans or other celebrities will give up on NFTs or cryptocurrencies.

    Tyler Lengyel, 29, a Bored Bunny investor from Texas, spent about $6,000 on Bored Bunny NFTs when the coins were minted in January. At that time he left his sales department job for personal reasons. Within weeks, he suddenly had no income, a depleted savings account and unexpected accounts that were nearly worthless. He found temporary work at an Amazon warehouse and then began driving for Uber. This month, while Mayweather bragged about his $42,500 winnings from $10,000 worth of different boxing He bet on Instagram, Lengyel had to sell his car to help cover his bills through July.

    “I grew up looking for some [the Bored Bunny promoters]. I’ve seen Floyd Box. For me, being someone who just followed these guys and thought they were real, it was like: ‘Oh sh–, they’re jumping on this project? Well, I want to have a rabbit. I don’t want to miss that. “

    Although it still hurts financially, the experience didn’t stop Lengyel from coding. He hopes to eventually launch a career in this industry. Meanwhile, Mayweather did not appear to address the growing criticism from former fans who held him at least partially responsible for their financial problems. He’s already moved on to marketing his NFT, “Mayweverse”.

    “Mr. I-Don’t-Lose-At-Nothin is back, and if you’re in the NFT world and you bet on me, you’ll never lose,” one video While he was driving a small tour through his palace.

    Started in “I’m a Money Man” else Video, $100 denomination double-stacked fisting. “But guess what? Be a part of history, own a part of my heritage, and you can make money too!”