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How cryptocurrencies work
As cryptocurrencies and related technologies reach into politics, intertwine with the larger economy and impact the environment, everyone could use a sense of what they are and how they work.
NEW YORK (AP) - How the mighty have fallen.
Cryptocurrency companies grabbed the spotlight during the 2022 Super Bowl, with commercials from a handful of newcomers to advertising’s biggest stage: FTX, Coinbase, Crypto.com and eToro. Some marketing experts dubbed it the "Crypto Bowl."
A year later, the industry has been humbled by a massive downturn in crypto prices, as well as the bankruptcy of several well-known companies.
The dramatic turnaround harkens back to 2000, when dot-com companies such as Pets.com ran Super Bowl ads, only to go out of business within a year or two.
This year, crypto companies have "zero representation," said Mark Evans, executive vice president of ad sales for Fox Sports.
Here’s a look at the crypto companies that advertised in last year’s Super Bowl and where they stand now:
FTX: BANKRUPT
Cryptocurrency exchange FTX was one of biggest advertisers in last year’s Super Bowl, featuring ads that included celebrity comedian Larry David. While at the time FTX was the world’s second or third largest crypto exchange, it didn’t operate a large business in the U.S.
Within 10 months of the Super Bowl, FTX was bankrupt. The Bahamas-based company collapsed after investors started pulling their deposits on concerns about the company’s balance sheet. The company filed for Chapter 11 bankruptcy protection on November 11.
FTX's founder and CEO Sam Bankman-Fried was arrested and charged with defrauding customers out of billions of dollars. He is scheduled to go on trial in October.
David, along with other celebrities such as football star Tom Brady and basketball star Stephen Curry, was named in a lawsuit that argued their celebrity status made them culpable for promoting the firm’s failed business model.
CRYPTO.COM: HUMBLED
While Crypto.com still is operating, the company is significantly less healthy than it was a year earlier.
The Singapore-based company announced in January that it was laying off 20% of its workforce, on top of layoffs implemented in late 2022. The company also disclosed that a significant part of its assets were tied up in low-quality cryptocurrency coins like the Shiba Inu Coin.
Like FTX, Crypto.com tried to make a name for itself through sports sponsorships. The company spent $700 million for the naming rights to the former Staples Center, where the Los Angeles Lakers play. It's now the Crypto.com Arena. The company's 2022 Super Bowl ad featured basketball superstar LeBron James, with the tagline "fortune favors the brave."
Crypto.com said its layoffs were due to a "confluence of negative economic developments" but its CEO placed a significant amount of blame on the collapse of FTX.
COINBASE: IN LEGAL HOT WATER
Coinbase had one of the weirder ads at least year’s Super Bowl, involving a floating QR code that would take users to a promotion where the company was giving away millions of dollars’ worth of cryptocurrencies. Marketing experts named it one of the more successful ads of the game, since it took people by surprise and stood out, though many viewers found it confusing.
Shares of publicly traded Coinbase have fallen by more than 70% since last year’s game. With digital currencies such as bitcoin plunging, the company has seen trading revenues dry up as investors have avoided buying crypto altogether.
The company also announced layoffs equal to about 20% of its workforce and the company’s CEO has said the company is bracing for what they are calling "a crypto winter."
Further, Coinbase has drawn the attention of U.S. regulators. The company had to pay $100 million to settle a New York State investigation into whether it was allowing users to sign up for accounts without adequate background checks. The Securities and Exchange Commission is also looking into whether to ban the cryptocurrency practice of "staking," which had been big business for Coinbase in the past.
ETORO: NO NEWS IS GOOD NEWS?
The fourth crypto company to have a Super Bowl ad last year was eToro. The company, based in Israel, ran an ad promoting "social investing."
Unlike FTX, Coinbase and Crypto.com, eToro has largely avoided any negative news in the past year. The company expanded its offerings beyond crypto to allow users to buy stocks and options as well as non-fungible tokens, better known as NFTs.