Where You Lead, I Will Follow: Professional Athletes

Volume 31 Issue 1 Article 4 2-12-2024 Where You Lead, I Will Follow: Professional Athletes' Ability to Influence Loyal Fans' Cryptocurrency Investments and the Broader Need for Cryptocurrency Regulation Anna D'Eramo Follow this and additional works at: https://digitalcommons.law.villanova.edu/mslj Part of the Banking and Finance Law Commons, Entertainment, Arts, and Sports Law Commons, and the Securities Law Commons Recommended Citation Anna D'Eramo, Where You Lead, I Will Follow: Professional Athletes' Ability to Influence Loyal Fans' Cryptocurrency Investments and the Broader Need for Cryptocurrency Regulation, 31 Jeffrey S. Moorad Sports L.J. 143 (2024). Available at: https://digitalcommons.law.villanova.edu/mslj/vol31/iss1/4 This Comment is brought to you for free and open access by the Journals at Villanova University Charles Widger School of Law Digital Repository. It has been accepted for inclusion in Jeffrey S. Moorad Sports Law Journal by an authorized editor of Villanova University Charles Widger School of Law Digital Repository. WHERE YOU LEAD, I WILL FOLLOW: PROFESSIONAL ATHLETES’ ABILITY TO INFLUENCE LOYAL FANS’ CRYPTOCURRENCY INVESTMENTS AND THE BROADER NEED FOR CRYPTOCURRENCY REGULATION I. Y our F avorite A thlete is N ow Y our N ew F inancial A dvisor : A n I ntroduction to the C ombined S ports and C ryptocurrency A tmosphere Tom Brady and Steph Curry are recognized as two of the world’s most skilled professional athletes.1 While their talents indisputably attract many dedicated fans, it is these athletes’ high-profile endorsements that grow their fan base even more.2 Cryptocurrency companies recognized that Brady and Curry, along with many other professional athletes, were the key to expanding their investor bases.3 However, just as quickly as professional athletes and sports franchises lent their names and reputations to these investments, 1. See Dustin Lewis, Former Buccaneers QB, NFL Star Tom Brady Signs Multi-Year Media Deal, FanNation (Feb. 25, 2023, 12:52 AM), https://www.si.com/nfl/buccaneers/ news/former-buccaneers-qb-nfl-star-tom-brady-signs-multi-year-media-deal [https://perma.cc/P8UH-KEQD] (discussing Brady’s record-breaking twenty-three year career, which included seven Super Bowl championships); see also Zion Olojede, Here’s Why Steph Curry is a Top 10 NBA Player of All Time, Complex (June 17, 2022), https://www.complex.com/sports/steph-curr y-top-10 [https://perma.cc/ K8RA-Z6PJ] (listing Curry’s significant achievements in NBA, including four NBA championships). 2. See John Duffley, Tom Brady’s Net Worth: How He Made More Money than Any NFL Player Ever, FanBuzz (Feb. 1, 2023), https://fanbuzz.com/nfl/tom-brady-networth/#:~:text=Beats%20by%20Dr.,on%20his%20TB12%20lifestyle%20brand. [https://perma.cc/Z8RW-RY7C] (commenting on Brady’s profitable endorsement deals); see also Nick DePaula, Stephen Curry Signs New Long-Term Under Armour Agreement, ESPN (Mar. 30, 2023, 10:00 AM), https://www.espn.com/nba/story/_/ id/36002760/stephen-curry-signs-new-long-term-armour-agreement [https:// perma.cc/87QB-AHK6] (reporting extension of Curry’s endorsement deal with Under Armour, which could result in more earnings than from his NBA contract); see also Blake Lawrence, Why Big Brands Spend So Much on Athlete Endorsements, Opendorse (Aug. 8, 2013), https://biz.opendorse.com/blog/why-big-brands-spendso-much-on-athlete-endorsements/ [https://perma.cc/4GFM-5S2M] (finding increased consumption by consumers when athletes are viewed as achieving certain results from endorsed products). For further discussion of what cryptocurrency is, see infra notes 6–12 and accompanying text. 3. See Daniel Kaplan & Bill Shea, Weighing Whether Cryptocurrency, Sports and Fans Are a Good Combination, Athletic (May 20, 2022), https://theathletic.com/ 3318870/2022/05/20/cr yptocurrency-bitcoin-nfl-mlb-nba-mls/?redirected=1 [https://perma.cc/55SX-5FJA] (discussing widespread endorsement of cryptocurrency by professional athletes and sports teams). (143) 144 J effrey S. M oorad S ports L aw J ournal [Vol. 31: p. 143 the cryptocurrency world came crashing down.4 Volatility of cryptocurrencies is nothing new, but the November 2022 collapse and bankruptcy of cryptocurrency platform FTX Trading Ltd. (“FTX”), which was endorsed by several reputable athletes, forced a new look into whether athletes should promote speculative investments to loyal fans.5 A. Cryptocurrency 101 Cryptocurrencies are digital assets that rely on secure communication technologies to allow person-to-person transactions.6 After decades of theorizing cryptocurrencies in varying ways, the invention of Bitcoin in 2008 established the first official digital currency.7 Bitcoin’s popularity skyrocketed in part due to its lack of a centralized authority and private transactions.8 Shortly thereafter, alternatives 4. See How FTX Built Its Network of Stars, Fin. Times (Feb. 8, 2023), https://ig.ft. com/ftx-shareholders/?emailId=b0cc2c0b-8fa5-4c0b-a7e4-109fa56ae886&segmentId=13b7e341-ed02-2b53-e8c0-d9cb59be8b3b [https://perma.cc/EE45-XD9S] (observing endorsements from celebrities and professional athletes was driving factor behind FTX’s shot to widespread popularity). 5. See Kaplan & Shea, supra note 3 (challenging whether athletes’ promotion of such risky asset is worthwhile and responsible). 6. See Geoffrey R. Peck, Victor S. Liang, & Mara K. Alioto, Security Interests: Bitcoin and Other Cryptocurrency Assets, Thomas Reuters Practical Law (Feb. 2, 2022), https://assets.contentstack.io/v3/assets/blt5775cc69c999c255/blt9325d27a59eee59a/6273eff20cffdf1eb136b572/220202-bitcoin-other-cryptocurrency-assets.pdf [https://perma.cc/HRU6-Y88W] (describing cryptocurrency characteristics that make it more secure than other transactions). Cryptocurrencies operate on blockchain technology which keeps the transactions secure and maintains ledger entries of all exchanges. See id. (adding that blockchain avoids using centralized database by spreading information and transactions across network of computers). 7. See A Short History of Cryptocurrencies, Kriptomat, https://kriptomat.io/cryptocurrencies/history-of-cryptocurrency/ [https://perma.cc/527Y-4NP8] (last visited Jan. 4, 2023) (highlighting history of cryptocurrency, specifically origins of Bitcoin); see also Bernard Marr, A Short History of Bitcoin and Crypto Currency Everyone Should Read, Bernard Marr & Co., https://bernardmarr.com/a-short-history-of-bitcoinand-crypto-currency-everyone-should-read/ [https://perma.cc/8LVW-NCB9] (last visited Jan. 4, 2023) (listing previous attempts at digital currencies prior to Bitcoin). B-Money and Bit Gold are two examples of early formulations of digital currencies. See id. (noting B-Money and Bit Gold failed to develop fully). Early formulations of cryptocurrency arose at the same time the internet and other technologies became more present in peoples’ homes. See John Hyatt, Decoding Crypto: What Was the First Cryptocurrency and (...truncated)