The Great Crypto Con: why is football falling back in love with the blockchain?
Despite some costly and humiliating failures, Premier League clubs are returning to a murky revenue stream that exposes their fans to financial risk
By Martin Calladine
The last time football allied itself with cryptocurrency – and it wasn’t long ago – many clubs ended up doing business with scammers, fraudsters, and companies that didn’t exist. Some of the products they were flogging didn’t exist, and most of those that did soon became virtually worthless. The cost to investors, and football fans, ran into the billions.
Yet today, Bitcoin, the best-known and most valuable cryptocurrency, is seeing its value rise again, and guess what? Football is back into crypto.
In early January 2024, Chelsea signed a sponsorship deal with BingX, a Singapore-based crypto exchange, to become the club’s official sleeve partner for a reported £12m. It’s not a deal that will likely interest British fans much, given that BingX, quite notably, does not serve the UK (or the US) market. The exchange does, however, do business enthusiastically in Russia.
Given the collapse in crypto prices in late 2022, and the number of big-name crypto firms that have since gone under, often amid allegations of fraud, it might seem like a bold decision by Chelsea – not least when you remember that the club’s previous sleeve-sponsoring crypto partner was WhaleFin. That deal, which was touted as being worth £20m a year, ended after just seven months when the company backed out. How much, if any, of the £20m Chelsea saw was never made public.
The Chelsea-BingX tie-up isn’t the only sign of a crypto resurrection in the Premier League. In October 2023, Spurs became the first English club in nearly two years to sign up with Socios, a ‘fan engagement’ and rewards app that encourages supporters of a club to purchase ‘fan tokens’ using its associated cryptocurrency Chiliz ($CHZ).
Two months after that, the club signed a deal with Fanblock, a new crypto company selling high-priced NFTs of the Spurs pitch. The idea, it seems, is that ‘owning’ virtual squares of the pitch will allow buyers to win prizes based on how many goals or other key actions take place on that square during actual Spurs games.
What’s concerning about these deals is that the cryptocurrency market, and the businesses and products based on them, isn’t substantially different or better regulated than it was when it destroyed tens of billions of pounds worth of investments in the crash of 2022. If prices crater or the companies go under – whether due to fraud or simple business failure – fans will have no protection. Despite this, clubs show no signs that they are doing any greater due diligence than before, let alone facing up to their responsibilities as global endorsers and amplifiers of these schemes.
I know an awful lot about this. In fact, I’ve written a book about it. And the extent of the scamming, and even illegality, is extraordinary.
An industry like no other
Two years ago, if you’d asked who the most high-profile people in crypto were, you might well have been given the names of Sam Bankman-Fried, genius founder of crypto exchange FTX; Do Kwon, creator of the TerraLuna stablecoin; and Changpeng Zhao, founder and CEO of Binance, the world’s largest crypto exchange.
As I write, Bankman-Fried is awaiting sentencing for orchestrating a multi-billion dollar fraud, Kwon is fighting extradition to the US for his role in what prosecutors claim was the fraudulent collapse of his stablecoin and Zhao is awaiting sentencing for his role in Binance’s deliberate disregard of money laundering regulations – which included processing the funds of numerous terrorist organisations and led to Zhao stepping down from Binance and the company paying a fine of over $4bn.
Imagine if, in the 2010s, the founders of Facebook, Twitter and TikTok had all gone to jail for corporate crimes. We’d probably have asked ourselves if, rather than a few isolated cases of white-collar fraud, this might be indicative of a systemic sickness in the industry.
At least in the case of social media, we would have been able to point to its widespread adoption and its huge commercial and social value. But in the case of crypto, for all the wild talk of it replacing fiat currency, banking the unbanked, acting as a hedge against inflation, transforming supply chains and all the other things the blockchain was supposed to do, in the cold light of day what has emerged is a fifteen-year-old technology whose primary use cases remain speculation, money laundering and fraud.
When it comes to crypto, football didn’t ask the right questions before the boom and, even after the crash and the legal fall out, it’s not asking them now. Instead, as Bitcoin has more than doubled in price in the last 12 months, the football industry is showing every sign of wanting to pick up where it left off. It is a remarkable piece of financially motivated amnesia.
Cryptomania, part one
Between 2019 and 2022, England’s largest football clubs got into crypto in a big way. Almost every team signed a crypto partner, while many began selling fan tokens and NFTs. With the crypto crash of 2022, almost all NFTs and cryptocurrencies collapsed in value, while supporters became aware that the fan tokens they had been sold were not a new form of digital engagement with their clubs, but a speculative asset exploiting their fandom.
The crypto crash, and the billions it cost investors, wasn’t the result of the fintech equivalent of an act of God – an unavoidable and devastating event which no one could have seen coming. Quite the contrary. In many cases, football clubs did next to no due diligence. Had their commercial departments interrogated their prospective new partners even briefly, they would have quickly understood that these crypto firms were far from legitimate.
If that sounds hyperbolic, consider the case of Manchester City and 3Key. In November 2021, the club unveiled 3Key as its new DeFi (decentralised finance – in short, crypto) partner. The only problem was the company didn’t seem to exist. It had no phone number, no office address, no company number and all the executives named in the press release had no digital footprint. The company was, in short, a ghost ship. When I contacted City to ask for details of its new partner, the club was unable to provide any, beyond a single email address. When the person operating that address missed several deadlines for supplying evidence that the company existed, City suspended the partnership.
City, it seemed, despite being acknowledged as one of the best-run football clubs in the world, had signed a crypto deal without performing even the most basic checks. If you were a junior estate agent who rented a flat to someone on this basis, you’d be fired.
If that doesn’t sound embarrassing enough for City, I was later able to establish that 3Key weren’t simply a tech start-up that had tried to run before it could walk, but rather the new identity of a rolling crypto fraud called Jenco, which was worth as much as £4bn. Crypto consultancy Chainalysis called it one of the three largest global crypto frauds of 2021.
It was a story of corporate failure that was repeated right across football. Barnsley’s front-of-shirt sponsor was, briefly, Hex, a misleadingly marketed crypto investment scheme which had netted its founder as much as $1bn. Barnsley cancelled the deal, following homophobic social media posts by one of the people who brokered the tie-up, and less than 12 months later, the US financial regulator, the SEC, charged that Hex’s founder had ‘misappropriated millions of dollars of investor funds.’
Charlton, meanwhile, joined the NFT craze, endorsing a scheme called Generous Robots, a laughably secretive organisation which – via Twitter DM – refused to tell me where it was based, who owned the company or what its phone number and address were. The scheme’s CEO, who was known only as ‘Tom’, appeared in public only while wearing sunglasses, a hoodie and a mask.
Norwich did at least have a name and an address for its crypto partner, Scallop. This was a firm which was pitching itself as a ‘DeFi bank’ despite not having a working product nor a licence to use the term bank. The partnership lasted only six months, by which time the price of Scallop’s crypto had completely flatlined.
A slightly longer-lived arrangement was West Ham’s deal with Peak Defi, an opaque investment vehicle with some of the characteristics of a pyramid scheme, which advertised crypto seminars in Russian (which it said were solely for Russian-speaking Ukrainians and Kazakhs) and endorsed an unlicenced crypto lottery. If none of that had set off alarms at the London Stadium, Googling the founder’s name would have produced numerous links to claims that he had ties to previous Ponzi schemes. Peak didn’t deny this, but said that the founder had repeatedly been an innocent victim of fraud and had set up Peak to ensure he would not be ‘scammed even one more time’.
These are just a handful of the crypto misselling cases I’ve documented over the last few years. Some clubs signed up with even worse schemes than these and, on occasions, persisted with them despite having unmistakable evidence that they weren’t sound.
any competent commercial department
should have raised questions about the deal
Crucially, in every one of these cases, it wasn’t necessary to understand that crypto was a greater-fool investment which would likely crash. The mechanics of the individual schemes were so obviously questionable – in some cases, blatantly fraudulent – and the operators of them so clearly dubious, that any competent commercial department should have raised questions about the deal. But football – like so many people around the world – was completely taken in by cryptomania and the belief that the technology could make us all rich.
When everything came crashing down, football simply washed its hands and moved on. Players deleted their social media endorsements. Clubs downplayed their fan token schemes. No one said sorry, let alone offered to compensate the people who’d lost money.
The hidden victims
How did they get away with it?
Crypto was virtually unregulated then and is only slightly more so in 2024. But the biggest reason – one which crypto has in common with the so-called ‘Asia-facing’ betting firms (companies with a UK gambling licence which offer no services in the UK and instead use the Premier League to advertise in countries where gambling is illegal) – is that while the commercial deals took place in the UK, the victims were often in the global south. Countries with stagnant economies or weak currencies, where even a small profit of a few tens of pounds on crypto trading could be transformative.
You may have heard of the ‘SquidCoin’ fraud of 2021, where the hype around the hit TV show Squid Game was used by some enterprising crooks to generate masses of free publicity from credulous US and European media outlets and sell worthless crypto. The scam netted its operators just over $3m, making it a pretty small fraud by crypto standards. In all likelihood, however, you will not have heard of the ‘Mirror Trading International’ crypto fraud, despite it running around the same time as SquidCoin and costing investors over $1.7bn. The reason MTI, a fraud over 500 times larger than SquidCoin, is new to you? It took place mostly in Southern Africa, with half the victims in South Africa alone. Out of sight, out of mind.
When the crash came, British football fans generally lost comparatively insignificant amounts on fan tokens or NFTs and so the response to football’s cryptomania has generally been mockery rather than fury. The true victims had no voice and no recourse – and so could be safely ignored by clubs.
Football promoted unregulated investment schemes around the world. With the current Bitcoin bull run, similar schemes are once again courting Premier League clubs.
This time, things will be different, crypto’s promoters will claim. They will talk about regulation and bad actors being removed and new applications being found. But at bottom, they still have no answer to the question: what, other than speculation, can only crypto bring to football fans? Asked another way, why can’t fans access the benefits advertised by a firm like Socios – such as memorabilia and fan voting – without being exposed to predatory crypto traders?
Football, meanwhile, will start cashing those crypto checks again, trusting – even as Chelsea’s commercial partner is facilitating trading in Russia and Spurs’ fan tokens and pitch NFTs eventually slip below their launch price – that no one is any more interested in holding the clubs to account than they were last time round.
Martin Calladine is the author of a new book, ‘No Questions Asked: How football joined the crypto con’. Follow him on Twitter/X @uglygame.