Celebrities and NFTs

questions that play with these kinds of celebrity endorsements. Today I'm joined by Bloomberg Reporto Mr Lena a gulf of Polo for a look at what's behind the buzz with celebrities interests in crypto investments. Mr Lenna, thank you so much for joining us. It is such a delight to have you here. Thank you for having me. I am gonna ask you abou to questions about non fungible tokens,

starting from what exactly isn't an f T? So the simplest way to describe an n f T would just be to say that it's a digital image, uh that someone can purchase, uh. And own on the blockchain, and so there is an address that you own as the owner of the n f T And it essentially started with images JPEG's um but you know, it's now something that you can find in the form of a song or an animation or really any sort of art. I would say, so an n f T if I'm if

I'm hearing you correctly, there's a couple of parts. There is the address and then there is the assets at the end of that address. Is that fair? Yep, that's exactly it. And what you've been reporting on is that some of these assets that are largely images, largely illustrations have been selling for tons of money, millions millions. Why well, I think it's most easily explained as demand and supply.

There is a lot of demand for particular collections of n f t s that we're the first sort of collections to launch, and so Crypto Punks is one of them, which is this digitized avatar that you can purchase board Eate Yacht Club is another collection that was among the originals. And you know a lot of these communities of n f T s sort of always are backed by a lot of hype, right, So the more hype you can create for an n f T collection, the more its

value will go up. And that's where we've seen a lot of celebrities play a very crucial role, because you know, if Justin Bieber buys a board eate yacht club, which he did, I think a lot of the community takes that as a stamp of approval, as this legitimizes the collection in some sense, because if someone as important as Justin Bieber to the eyes of so many people, to the followers, to the millions of followers that he has joins in, then that means this is an asset that's

worth something. So it's almost like you know, a Sneaker drop or a supreme drop or somebody else where you're like this, this person who is influential in my life and what I consider to be interesting and what I consider to be valuable. We're seeing the dynamic play out in n f T s. That's exactly it. It's very much the same. I think the problem with n f T s is no one really knows how to define them, right, Like are they just a picture or are they a

security security? A financial asset funded by a pool of investors who intend to profit from that assets managers given the fact that they do trade in a market and its price goes up and down based on several factors you know, that impact it. And so I think that's one thing that's really become a challenge for a lot of regulators, but also for celebrities that are jumping in

on this. What is an n f T and if it is a security which hasn't been defined in any cases yet by the SEC, but if it is the security because it's price goes up and down, you know, does this mean that celebrities who are jumping in on n f T s should be subject the same rules that they would be if they were promoting, uh, you know,

a stock. Right, So you mentioned something that's really important to understand, which is, like many other parts of crypto, the regulatory framework is shall we say, ambiguous at best.

But in that context, you know, I don't think in general celebrities who are surrounded by PR people and lawyers are the most risk tolerant people out there, necessarily, like they get a lot of guidance on this is good for your brand, this is bad for your image, given you know, some of the shadier parts of crypto why are so many celebts so comfortable getting involved in these endorsement deals? Yeah, I mean because no one really checks

up on them. I think that's a reason, right, Like I know you said managers, And I want to bring in the example of Madonna here, right, I mean, Madonna has an agent and the same agent represents her, but also the board at Yacht collect Action a parent company, um, and here she is sort of jumping in and buying

one of her own. I think it's really important that people know that a lot of thought, on conversation went into creating these videos, and you know it really we're not saying she did anything wrong, but it really does raise that sort of um conflict of interest. Is Madonna's agent, who's representing both her and the company that she invested in sort of giving her guidance on the back end that we don't know about, and she really doesn't have to disclose it. Neither does does he, because again the

regulation has not caught on. And so if Justin Bieber buys a board at yacht Club, which he did for one point five million dollars at the time, the um it's around that now as well? You know, does this mean that he essentially paid it for it himself or did he get the money from somewhere else. And if you look at the wallet transactions that we found that are open in the black chain, you'll see that there was a really big amount of money that was transferred

into his account before he made this purchase. So the money he used to buy the n f T was actually given to him by another n f T collection.

And when we asked that n f T collection, their spokesperson to tell us why they were paying Justin Bieber, what they said was because he was a promoter of the n f T collection it's called the in between Ers, and that wasn't really disclosed to anyone before we sort of reported on it, and so I think that's, you know, we're a conflict of interest here becomes very crucial because if Justin Bieber is posting this n f T project called in between Ers all over his Instagram, all over

his Twitter, making people believe that he believes in the project but is actually being paid on the back end to do so, that should be disclosed. But it actually

shouldn't because the regulation doesn't expire him to do it. Yeah, So when when we talk about while it's you know, I find fascinating that crypto exists in the space both of as you accurately describe, intense transparency and intense obfuscation at the same time, because looking at a crypto walls is like being able to look directly into someone's bank account, at least for crypto, like this is what's going in, this is what's going out, unbelieve double amounts of transparency.

What you don't necessarily know is who the people are that I'm moving money in into into walls and out of something they don't even necessarily have to disclose, whether they're the actual owners of a wallet or not. So I might think that this wallet is justin Bieber's wallet because it's called justin Bieber's n f t S, And when I go into it, I can see that, you know, it has a lot of the n f t s

that he's been posting about. But is he the one that is actually managing that wallet behind you know, the computer and is actually doing the transactions, or is it a team of his that is managing his sort of entire portfolio. And so there's no way to know. But what we do know is that they have major influence and so every time they decide to jump in on one of these projects, it influences the way consumers also

decide what to jump in on. And I know when we look at whenever we have intense periods of volatility like we did when Luna and and Tear crashed. You know, that is also another really big example of a large community of cri don't influencers coming in and telling people, hey, look at this really cool project that you should invest in a lot of investors got into it, and you know, after the stable coin crash, I think it was a learning lesson for a lot of people. I hope it's

a learning lesson. We hope it's a learning lesson for a lot of people that you know, first of all, influencers, celebrities, whoever has power in the crypto community in the form of followers has some responsibility um but also investors, individual crypto investors who look to these people for tips on what to buy next should just be very cautious to

use the crypto phrase do your own research. Do I are exactly back in a moment with miss Relina and to look at how the company moon Pay is carving out its space within the n f T market ms Relina. There's a company that comes up a lot when celebrities and a f T S are mentioned in the same sentence, and it's moon Pay. Why are they always in the conversation?

What's their relationship to this market? Yeah, So, I think the easiest way to explain what moon Pay is trying to do is when it comes to celebrity culture in Hollywood,

is to really redefine what royalties mean. And so what moon Pay, which is essentially a platform where you can buy and sell n f T s, is hoping to do is to help celebrities take rid of the middlemen that have often sort of existed between artists and consumers and make sure that any artwork, movie song that they produce can be directly sold and purchased on a platform without middlemen. And this is where a moon Pay sort of comes in and promises Hollywood to change the way

it has functioned for for a really long time. And there is a lot of promise to that, and you know, there are benefits to consider darring how artists can take ownership of their own work and really be the ones controlling what it should cost and how it should be sold. And this is a big argument in favor of what folks like coal Web three right. It is giving creators a much more direct relationship to their ability to monetize

their work exactly. And here's you know, moon Pay, this company that is trying to sort of center itself in the middle of this debate. And so in their recent funding round that they announced, we saw a long list of celebrities come in and say I will back you. And so a lot of the people that they actually raised money from were artists, producers, actors, even some athletes

in their musicians, rappers, you have the whole list. When I spoke to the CEO of Moon Pay for this story and I asked him, you know, how are you guys making sure that everything that's happening is sort of on par with regulation. They you know, they don't necessarily have an answer yet, and I think for them, it's also part of the broader Web three argument is we

don't really want regulation. We we don't really want to be told by the government what to do, and so they don't even really want the government to come in and tell them how to run. Uh, these ideas that they have out there. We've talked a lot about consumer protection.

But there is a degree to which regulation also protects the creators right, because one of the things is that the very baseline of royalties is the idea of copyright and trademarks and the ability to say I made this, this is mine, and therefore I should be able to derive value from it. And I find it so fascinating that something that is saying, hey, we'll get creatives pay it is simultaneously averse to a regulatory framework that could enforce the mechanism to make sure those creators are paid.

If you know, a hundred different copyright um copycats pop up overnight, Yeah, I mean it's it's it's crazy to see so much uh sort of power and influence congregate in these companies and all these sort of new ways of doing business popping up, and you see that across the crypto community. Yet again, the regulation isn't there to necessarily guide the way these businesses are being handled and

the way these transactions are formed. But again, you know, it's the centralized right, it's supposed to be um untouched and sort of left alone to be managed by the community. That is a part of it. I think that it's only a matter of time before we see how this is actually going to pan out. And you know, and I think going back to the Tara Luna meltdown, that is a great example of of a situation that could

prompt more oversight. And I wouldn't be surprised if we see that, um, you know, regulators coming in and taking in a closer look at stable coins. And maybe that's what needs to happen in the next sort of celebrity and f t up pairing some sort of to Mike meltdown that finally gets people to think about, you know, ways to better manage this. One of the things I find so there's so many things about crypto that you're like, this directly contradicts what you just said five minutes ago.

And so an example of that is these folks were buying into you know, Terra and Luna. We're partly doing it because they're like, this is not like other currencies. It has none of the disadvantages of central banks and etcetera, etcetera. And then when it collapsed, partly because it had none of the advantages of central banks, various folks who lost money are you know, sending Twitter messages, etcetera to some of those influencers that you mentioned saying how are you

going to help me get my money back? Right, and that the idea of getting your money back is something baked into traditional finance, right, that there there's deposited insurance, there are ways to make claims, and you know, the crypto has this sort of have its cake and eat it two vibes sometimes where they only want the best of the things and the and are unwilling to accept

any of the constraints. Definitely, I think that when you invest in something that has the word you know, stable in it, you assume that there is some sort of stability in it. And I think that, you know, I don't. I think that's okay. I think that a lot of people go into a lot of these investments not necessarily understanding the way they function. And hey, I get it. It's not easy. I mean, understanding the way Tara and Luna actually functions is quite complicated for your average investor,

even for sophisticated one. Yeah, I mean I had to report on this story and just to get to the bottom of like what it actually all is and how it functions, I mean, was a challenge just for us trying to do our jobs, you know. And so I think that um, going into different investment or asset classes that you don't necessarily understand, uh is a very sort

of difficult um part of investing in crypto. And I think that you know, you have a lot of these influencers that have remained quiet since the Terra Luna meltdown, which I think is you know, again something you're gonna have to see change eventually because there needs to be

you know, repercussion. There's no accountability right now or accountability for anyone who has openly said like, hey, this is the coolest project that you should be investing in right now, you do so, and and then when it all goes you know, down the drain, um, where what is the accountability that these people should be facing and how responsible are there um? And so I think those are things

that investors going into the space should be considering. And going back to n f t s, you know, if your favorite celebrity buys an n f T UM know that it could go well, but it also couldn't. So one of the things I hear in crypto is there's this kind of difference between like crypto kick statas, which is a bunch of people get together and they try to buy the Constitution. And then there is you know, I remember a story. There's this group of writers who are you know, trying to create an n f T

of a novel. Yeah, Jenks, Jenkings is really cool. That's a great example of an n f T And so essentially, the easiest way to explain it is, these two former writers bought one of the Board eight Yacht Club um n f T s made it into this character called Jenkings. They really thought he looked like a valet because of

his accessories, so they named him Jenkings the Valet. And then essentially they started selling more n f t s that were adjacent to to Jenkings, and whoever bought an n f T um of that Jenkings collection sort of based on how much money they spend, became a writer into a broader Jenkings the Valet book that is meant to come out later on in a few years, I think, And based on how much money they spent would have voting power that would help sort of take the plot

of the book in a certain direction. And so you choose your own adventurous exactly. And so here's how you know, you are, your fans are able to sort of purchase something that they think is valuable because it's something you created, their owners of something that you created, and they're able to participate in it in a way that they haven't

been able to before. Right. And so there's obviously that part of n f t s that's extremely interesting for celebrities and for artists, which is transforming the way they do business. But I would argue another one is just,

you know, the popularity of it. I mean, these are n f t s that are being talked about across the world, that are the constant talk of town, across social media platforms, and so it's essentially being part of the cool club, right, And they want to show that they're on top of Web three, they want to show

that they know how the world is evolving. And so this is both, you know, something that not only raises their profile in terms of awareness and in terms of coolness level, but also it helps them understand the way that they can do business in the future. Thanks so much, miss really enough for joining us. You can find more of her porting on the Bloomberg terminal at Bloomberg dot com and on Twitter at ms Relina that's m I S Y R L E n E. Thanks again for

joining us on the next episode of Bloomberg Crypto. In March, hackers stool about six hundred million dollars from a crypto network. It was one of the biggest exploits to hit the asset class to date and left many investors shaken. Tomorrow a roundtable discussion with Bloomberg reporta Olga Karif and Bloomberg opinion writer Pommy Olson on what these massive hacks might mean for the market. I'm Stacy Marie Ishmael and this is Bloomberg Crypto, a daily podcast from Bloomberg and I

Heeart Radio. For more shows from I Heart Radio, visit the iHeart Radio app, Apple Podcasts, or wherever you get your podcasts. Email your comments, questions or suggestions to Crypto at Bloomberg dot net and follow us on Twitter at Crypto. The producer and editor of this episode is Vicky Vergelina. Our engineer is Desto wonder At. Original music by Leo Sidron. Bloomberg's head of Podcasts is Francesca leav