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NFTs approved by celebrities leave some investors “financially crippled”

When Floyd Mayweather started presenting an obscure NFT project on Twitter this year, Tyler threw himself into the investment opportunity.

Mayweather, a boxing legend, had already served as Tyler’s “greatest inspiration” in his martial arts training. But Tyler was also looking for investment opportunities and reckoned that Mayweather, who often calls himself “Money May”, was worth listening to.

“What I need everyone to do right now: Go and buy a Bored Bunny NFT,” said Mayweather, wearing a Louis Vuitton vest with a diamond bracelet, necklace and gold watch. “You hear it from the only Floyd ̵[ads1]6;Make-That-Money’ Mayweather.”

Tyler, 35, a property manager whose family runs a small Miami-based trucking company, said he raised about $ 12,000 with the help of his mother and bought the non-fungible tokens, or NFTs, digital tokens that convey ownership of digital photos. In this case, the project was a series of images of rabbits similar to the popular Bored Ape Yacht Club images that contributed to a boom in NFT art projects.

These NFTs are now worth far less than Tyler paid.

“This initially crippled me financially,” said Tyler, who asked to be identified by his first name only because he fears online trolls who ridicule failed NFT investors. Now, especially with inflation, Tyler said, he’s struggling to afford gas for his car and groceries to eat. He said he felt Mayweather and the other promoters “took their payouts and moved on while everyone who came by to invest in their future was robbed.”

The Bored Bunny team promised in their marketing materials that buyers could make “2x, 5x, maybe even 10x the value of [their] investment,” but the value of the NFTs associated with the images was nose-dipped after a short peak and has not yet recovered. The floor price of a Bored Bunny NFT is now 0.05 ethereum (currently $ 104.09), down from the 0.4 ethereum coin price (about $ 1,504.54 at the time).

It’s a pattern that cryptocurrencies, watchdogs and even some influencers point to as an ongoing problem: digital investments running on a wave of NFT enthusiasm and backed by high-profile endorsements that are rapidly losing value. In some cases, in the crypto world, it is what is known as a “carpet cover”. But more generally, experts warn about ad transparency, Public figures often promote NFTs without doing due diligence or warning fans about the serious financial risks.

Bored Bunny’s founders, who refused to give their real names, denied any wrongdoing. Mayweather’s publicist declined to comment.

Lots of celebrities and influencers have taken the chance to send NFTs to their fans. Many of them do not disclose that they were paid to do so and do not acknowledge (or, in some cases, actively underestimate) the serious financial risks involved, said Bonnie Patten, CEO of the consumer advocacy group Truth in Advertising.

“The message from these celebrities is like the 21st century equivalent of ‘Let them eat cake,'” Patten said. Mixing the “incredibly volatile” NFT economy and the “wild west” of influencer marketing, she warned, is a sure recipe for disaster. “It has the potential to destroy vulnerable people who look up to them financially.”

The multi-billion dollar marketing industry has long been notoriously greedy, with web stars urging their followers to buy potentially dangerous weight loss products for wellness with snake oil. But the insane shilling of NFTs has raised the stakes to such extremes that instead of effective regulation, influencers and some celebrities have begun to shout at each other’s behavior.

Richard Bengtson, the founder of the FaZe Clan, known as the FaZe Banks, tweeted screenshots of alleged messages from the Bored Bunny team offering him $ 500,000 to $ 750,000 to post about their NFTs. He said he “did not make this mistake” because he had “taken the time to educate myself.”

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

Bored Bunny said in written direct messages that the team “is actively working to make this project great”, but that it “is not responsible for investors not selling” at the optimal time. It said the team had received death threats from angry Bored Bunny buyers, which led them to cut communication with the community, and to develop initiatives “to expand the project to the best of our ability.”

Other influencers, such as founder Gary “Vee” Vaynerchuk, have specifically drawn attention to the trend of public advertising NFTs, despite having little understanding of how they work or the risk buyers face.

“I do not understand what these influencers are doing. First, they do not reveal “that they are being paid,” Vaynerchuk said on the podcast “Full Send” during a discussion on NFTs in mid-January. “Every time you promote someone s — that you have no idea what that is, it is a bad deal. ”

The Federal Trade Commission, which deals with consumer protection regulations, requires sponsored content to be “honest and not misleading”, to “represent the exact experience” of the approver and “clearly and conspicuously” reveal that it is a paid advertisement. But the agency usually does not enforce these rules when it comes to individual celebrities and influencers, said Patten, who said the lack of enforcement was largely due to its limited criminal jurisdiction and bandwidth in the face of such a pervasive issue. While spokeswoman Juliana Gruenwald declined to comment on any specific cases, she confirmed that the agency has not announced any law enforcement decisions related to NFTs.

The Securities and Exchange Commission, which oversees investor protection, has not yet provided public guidance on whether NFTs are considered securities; SEC spokeswoman Aisha Johnson also declined to comment. As securities, NFTs will be subject to the same marketing rules as equities, for which sponsored endorsements must disclose “the nature, source and amount of compensation paid.”

Patten said: “This is still fairly new. The law has not caught up with the technology.”

The lack of regulatory regulation has also led some independent crypto-watchdogs to try to promote transparency in the NFT trading arena, educate consumers and hold bad actors accountable on their own. Among the most productive is ZachXBT, a self-proclaimed “rug pull-survivor” -who became a blockchain- “sleuth” who prefers to be identified by his 227,000 followers Twitter alias due to privacy concerns. He regularly publishes publicly funded surveys that reveal alleged cryptocurrency scammers and unscrupulous NFT promoters, including deep dives into Boring rabbit failure and Mayweather’s history of crypto-shilling, which he called “very irresponsible.”

‘It’s crazy how much [celebrities and influencers] can do, “he said, adding that beginners in NFT investors all too often rely on figures who” do not have their interests at heart “and” only erode the desire to get rich without learning about the industry. “

With few other options, a handful of burned investors have turned to the courts to try to recover their losses. Mayweather and Kim Kardashian are being sued for using their influence to increase EthereumMax tokens and profits “at the expense of their followers and investors,” according to a class action lawsuit.

Court records do not identify a lawyer for Mayweather, and his publicist, Kelly Swanson, also refused to provide a contact. Mayweather has not provided a response in court. Michael Rhodes, Kardashian’s chief lawyer, said he believed the charges against his client were “unjustified” and said: “We will defend the case vigorously.”

Despite losing money, it also does not look like fans of Mayweather or other celebrities will give up NFTs or crypto.

Tyler Lengyel, 29, a Bored Bunny investor from Texas, spent around $ 6,000 on Bored Bunny NFTs when tokens were minted in January. It was around that time that he left his job in sales management for personal reasons. Within weeks, he suddenly had no income, an exhausted savings account and NFTs that were almost worthless. He found temporary work at an Amazon warehouse and then started driving for Uber. This month, while Mayweather boasted his $ 42,500 winnings from another $ 10,000 boxing bet on Instagram, Lengyel had to sell his car to help cover the bills through July.

‘I grew up looking up to some of them [the Bored Bunny promoters]. I’ve seen Floyd box. To me, being someone who has followed these people and thinks they are real, was like, ‘Oh sh–, are they jumping on this project? Well, I want a rabbit. I do not want to miss that. ‘ยป

Although he still feels bad financially, the experience did not make Lengyel a crypto. He hopes to eventually start a career in the industry. Mayweather, meanwhile, has not seemed to meet the growing criticism from former fans who hold him at least partly responsible for their financial problems. He has already gone on to market his own NFT, “Mayweverse”.

“Mr. I-Don’t-Lose-At-Nothin ‘is back, and if you’re in the NFT world and bet on me, you’ll never lose,” he declares in one video while leading a mini-tour through his mansion.

“I’m the money man,” he begins another video, double-fisting stacked bundles of $ 100 bills. “But guess what? Be a part of the story, own a part of my legacy, and you can make money too!”

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