Digital currencies

Retired footballer joins boxer, actor and socialite on the gravy train to endorse ICOs’ token sales

PUBLISHED : Sunday, 15 April, 2018, 3:36pm
UPDATED : Monday, 16 April, 2018, 8:02pm

Luis Figo, the retired Portuguese midfielder considered one of his generation’s greatest footballers, has become the latest celebrity to endorse an initial coin offering (ICO).

Figo, whose record 127 appearances for the Portuguese national team was broken only by Cristiano Ronaldo, was appointed the ambassador of STRYKZ, a token by Berlin-based Stryking Entertainment for football fans to use in fantasy football matches, on April 11.

Figo, 45, joins Brazilian football star Ronaldinho, English footballer Michael Owen, boxer Manny Pacquiao, socialite Paris Hilton and Academy Award-winning actor Jamie Foxx among the list of celebrities who’re lending their fame and their legion of fans to token sales.

Explainer: What is an ICO and why is China’s central bank banning it?

Such endorsements may be unlawful - at least in the United States - if the if the celebrities don’t “disclose the nature, source, and amount of any compensation paid, directly or indirectly, by the company in exchange for the endorsement,” according to a warning last year by the US Securities & Exchange Commission (SEC).

“There are risks that some celebrities may not be aware of,” said Hong Kong-based Ben Yates, lawyer at international law firm RPC, who advises on fintech and cybersecurity. “When a celebrity becomes associated with, or endorses a token sale that may legally constitute an offer of securities, they could incur legal liability.”

Under Hong Kong’s securities law, the Securities and Futures Commission (SFC) could potentially take action against overseas-based ICOs that target Hong Kong investors. Last month, the SFC ordered Black Cell, based in The Philippines, to suspend its ICO and return all tokens to investors.

“How easy it will be for them to do so in practice is another question,” said Yates., “We are likely to see an increase in cross-border cooperation between regulators.”

ICOs are a form of crowdsourced funding, by which issuers exchange newly created online currencies called “tokens” for hard currency. The hard currency raised can be used for anything from marketing and business development to acquisitions and mergers. For investors, the main attraction for tokens is if they surge in value, replicating the 1,000-fold surge in the value of bitcoin, the oldest and best-known form of cryptocurrency.

Coin sales have raised more than US$5 billion in cash last ear, according to data by CB Insights. The sales are also fraught with risks, as 46 per cent of the 902 token sales last year turned out to be fraudulent, according to ICO tracking firm Token Data.

China has been tough on ICOs altogether and has ordered the shut down of domestic platforms for ICO marketing. It has also stopped cryptocurrency exchanges from trading in the yuan and has blocked access to foreign sites that promote ICOs.

Owen, the former Liverpool and Real Madrid striker, announced in Hong Kong last month that he would lend his name to a token sale by Singapore-based Global Crypto Offering Exchange (GCOX), which claims to be the world’s first crypto token exchange that helps celebrities create, list and trade their own crypto tokens.  

GCOX said the tokens can be used to buy merchandise or make donations to charities selected by the athletes, and as a way to enhance interaction between the celebrities and their fans. 

Not every fan is convinced though.

“If he is backing this [token] purely because of his fame or his career, but has absolutely no knowledge whatsoever, why on earth would any investor - football fan or otherwise - invest in this just because it has his name?”said Beijing-based Mark Dreyer, a sports fan who also runs the China Sports Insider website.