By Jesselyn
Cook
When Floyd Mayweather started promoting an obscure NFT project on Twitter earlier this year, Tyler jumped at the chance to invest.
Mayweather, a boxing legend, had already been Tyler's "biggest inspiration" in his martial arts training.
But he, too, was looking for investment opportunities and thought it was worth listening to Mayweather, who often calls himself Money May.
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“What I need everyone to do right now: go get a Bored Bunny NFT,” said Mayweather, dressed in a Louis Vuitton vest with a diamond bracelet, necklace and gold watch.
“You are told by the one and only Floyd 'Make-That-Money' Mayweather,” he added.
Tyler, 35, a property manager whose family runs a small trucking company based in Miami, Florida, raised about $12,000 with the help of his mother and bought the NFTs (non-fungible tokens, in Spanish), digital formats that allow a certificate of authenticity to be associated with any virtual object, such as an image or an animation.
In this case, it was a series of rabbit images similar to the popular Bored Monkey Yacht Club images, which helped fuel a boom in NFT art projects.
Bored Apes exhibitors at the Bored & Hungry restaurant in Long Beach, California, United States, on Thursday, April 21, 2022. Bing Guan / Bloomberg via Getty Images
Those NFTs are now worth much less than what Tyler paid.
“That move has crippled me financially,” said Tyler, who asked to be identified only by his first name because he fears internet trolls who ridicule unsuccessful NFT investors.
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With inflation, he has difficulty paying for gas in his car and filling the fridge.
He feels that Mayweather and the other promoters "took their payments and moved on while everyone who managed to invest in their future was robbed."
The Bored Bunny team promised in their marketing materials that buyers could earn “2, 5, or even 10 times the value of [their] investment,” but the value of NFTs attached to images plummeted after a brief spike. and has not yet recovered.
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The minimum price of a Bored Bunny NFT now stands at 0.05 ethereum (currently $104.09), down from its minimum price of 0.4 ethereum (about $1,504.54 at the time).
It's a pattern that crypto critics, watchdogs and even some
influencers
point to as an ongoing problem: digital investments riding a wave of NFT hype and backed by high-profile people rapidly losing value.
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In some cases, in the world of cryptocurrencies, it is what is known as “pulling the blanket”.
But advertising transparency experts warn that public figures are promoting NFTs often without doing their due diligence or warning their fans about the serious financial risks.
The Bored Bunny founders, who did not provide their real names, denied any wrongdoing.
Mayweather's publicist declined to comment.
Many celebrities and influencers have jumped at the chance to promote NFTs to their fans.
Many of them don't disclose that they were paid to do so and don't acknowledge (or, in some cases, actively downplay) the serious financial risks involved, according to Bonnie Patten, executive director of the consumer advocacy group Truth in Advertising.
“The message from these celebrities is the 21st century equivalent of 'Let them eat the cake,'” explained Patten.
The mix of the “incredibly volatile” economy of the NFT and the “wild west” of influencer marketing, he warned, is a sure recipe for disaster.
“It has the potential to financially destroy the vulnerable people who look up to them,” he added.
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The multibillion-dollar industry of influencer marketing has long been notoriously greedy, with online stars urging their followers to buy potentially dangerous weight-loss products to snake oil wellness remedies.
But the frenzy to sell NFTs has raised the stakes to such extremes that, instead of effective regulation,
influencers
and some celebrities have started calling out each other's behavior.
An NFT QR code displayed at the BitKub booth at the Thailand Crypto Expo 2022 in Bangkok, Thailand, on Sunday, May 15, 2022. Andre Malerba/Bloomberg via Getty Images
FaZe Clan founder Richard Bengtson, known as FaZe Banks, tweeted screenshots of alleged messages from Bored Bunny's team offering him between $500,000 and $750,000 to post about his NFTs.
He said he "didn't make this mistake" because he had "taken the time to study."
FaZe Clan did not respond to requests for comment.
Bored Bunny declined to confirm how much he paid his "business partners," citing a confidentiality agreement.
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Bored Bunny said in written direct messages that the team is "actively working on making this project big" but is not "responsible for investors not selling" at the optimal time.
He said his team had received death threats from angry Bored Bunny buyers, causing him to cut off communication with the community, and that he is developing initiatives "to grow the project in the best possible way."
Other influencers, such as entrepreneur Gary
Vee
Vaynerchuk, have specifically drawn attention to the tendency of public figures to advertise NFTs, despite misunderstanding how they work or the risks buyers face.
“I don't understand what these
influencers
are doing .
First of all, they are not disclosing” that they are being paid, Vaynerchuk claimed on the
Full Send
podcast during a discussion on NFTs in mid-January.
“Any time you promote something that you have no fucking idea what it is, it's bad business,” he added.
The Federal Trade Commission, which handles consumer protection rules, requires that sponsored content be "honest and not misleading," "represent the accurate experience" of the promoter, and "clearly and conspicuously" disclose that it is of a paid ad.
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However, the agency does not typically enforce these rules when it comes to individual celebrities and influencers, according to Patten, who said the lack of enforcement is largely due to its limited punitive authority and bandwidth in the face of such a pervasive problem.
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Although spokeswoman Juliana Gruenwald declined to discuss specific cases, she confirmed that the agency has not announced any enforcement decisions related to NFTs.
The Securities and Exchange Commission, which oversees investor protection, has yet to offer public guidance on whether NFTs are considered securities;
SEC spokeswoman Aisha Johnson also declined to comment.
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As securities, NFTs would be subject to the same promotion rules as shares, for which sponsored guarantees must disclose "the nature, source and amount of any compensation paid."
Patten recalled that all of this "is still quite new" and that the law "has not caught up with the technology."
The lack of government regulation has also prompted some independent cryptocurrency activists to attempt to foster transparency in the realm of NFT trading, educate consumers, and hold bad actors to account on their own.
Among the most prolific is ZachXBT, a self-proclaimed “rug-pulling survivor” turned blockchain “sleuth,” who prefers to be identified by his Twitter alias, where he has 227,000 followers, for privacy reasons.
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He regularly publishes crowdfunded investigations exposing suspected cryptocurrency scammers and unscrupulous NFT promoters, including deep dives into the Bored Bunny fiasco and Mayweather's story of crypto shilling, which he called "highly irresponsible."
"It's crazy how much [celebrities and influencers] can earn," he said, adding that fledgling NFT investors too often put their trust in figures who "don't have their best interests at heart" and are “simply taking advantage of their desire to get rich without learning about the industry.”
With little choice, a handful of burned-out investors have gone to court to try to recoup their losses.
Mayweather and Kim Kardashian have been sued for exerting their influence to boost EthereumMax tokens and profiting “at the expense of their supporters and investors,” according to a class action lawsuit.
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Court records do not identify an attorney for Mayweather, and his publicist, Kelly Swanson, declined to provide a contact.
Mayweather has not filed an answer in court.
Michael Rhodes, Kardashian's lead attorney, believes the accusations against his client are "meritless" and said, "We are going to vigorously defend the case."
Despite losing money, it doesn't look like fans of Mayweather or other celebrities are going to give up NFTs or cryptocurrencies either.
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Tyler Lengyel, 29, a Bored Bunny investor from Texas, spent about $6,000 on Bored Bunny NFTs when the tokens were minted in January.
It was around this time that he left his job in sales management for personal reasons.
Within weeks I had no income, a depleted savings account, and NFTs worth almost nothing.
She found a temp job at an Amazon warehouse and then started driving for Uber.
This month, as Mayweather bragged on Instagram about his $42,500 winnings from another $10,000 boxing bet, Lengyel had to sell his car to help cover his bills through July.
“I've grown up admiring some [of Bored Bunny's promoters].
I've seen Floyd box.
For me, being someone who's followed these people and thinks they're authentic, it was like, 'Oh shit, are they jumping on this project?
Well, I want to get my share of the pie.
I don't want to miss that."
Although he continues to suffer financially, the experience has not turned Lengyel away from cryptocurrencies.
He hopes to end up having a career in the sector.
Mayweather, for his part, has not appeared to face mounting criticism from his former fans, who hold him responsible, at least in part, for their financial problems.
It has already gone on to market its own NFT, dubbed Mayweverse.
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"Mr. I-Don't-Lose-For-Nothing is back, and if you're in the NFT world and you bet on me, you'll never lose," he declares in a video while leading a mini tour of his mansion.
"I'm the money man," he begins in another video, clenching two bundles of $100 bills in his fist.
“But guess what?
Be a part of history, own a piece of my legacy, and you can make money too!”