After a dire 2022, crypto wants its shine back

Industry looking to scrub digital currencies’ stigma and regain public’s trust

By David Yaffe-Bellany and Erin Griffith

  • Follow us on
  • google-news
  • whatsapp
  • telegram

 

After a miserable year, cryptocurrency companies are looking for ways to rebrand products that many consumers no longer trust. (Chris Gash/The New York Times)
After a miserable year, cryptocurrency companies are looking for ways to rebrand products that many consumers no longer trust. (Chris Gash/The New York Times)

Published: Wed 22 Mar 2023, 4:24 PM

At a cryptocurrency conference in Denver this month, a group of singers clad in bright orange onesies took the stage to perform what one industry website later described as an anthem for the crypto faithful, a “blockchain ‘Blowin’ in the Wind.’”

The chorus was a list of crypto’s most notorious villains, from trash-talking entrepreneur Do Kwon to disgraced FTX founder Sam Bankman-Fried, punctuated by four-letter expletives.


“In the next bull market, we promise not to use,” the song continued, “centralised exchanges run by these toxic dudes.”

After a disastrous 2022, when a procession of prominent crypto firms imploded, the industry is angling for an audacious rebrand. Executives like Kwon and Bankman-Fried — once beloved crypto celebrities, with hundreds of thousands of devotees hanging on their every tweet — are now personae non gratae. Their former admirers argue that these crypto villains never truly embodied the industry’s core values, even before their companies collapsed.


At surviving firms, top executives are looking for new ways to market products that many consumers now distrust — and to distance themselves from former colleagues and mentors who could face years in prison. Some companies are trying to capitalise on the growing interest around artificial intelligence, with crypto schemes that feature convoluted AI tie-ins. Others are looking to replace the word “crypto,” arguing that the industry’s original nomenclature has become irredeemably tainted.

Crypto companies were “moving gradually towards changing the narrative” even before Bankman-Fried’s exchange failed in November, said Todd Irwin, the chief strategy officer at Fazer, a branding agency that has clients in the industry. “After the FTX incident, the move has been turbocharged.”

The cleansing effort is a familiar routine in an industry that has experienced repeated booms and busts over its short history. Early advocates of bitcoin had to convince the public and regulators that cryptocurrency was more than just a convenient tool for drug dealers. A major crypto boom in 2017 was followed by a long period of law enforcement scrutiny, as exciting-sounding startups were exposed as scams.

So far, the latest round of soul-searching has done little to turn the industry’s fortunes around. Since FTX’s demise, US regulators have announced fines and other enforcement actions against several major crypto companies. The abrupt failures of two reliable banking partners, Silvergate Capital and Signature Bank, have dealt a fresh blow to crypto startups, making it harder to conduct basic business operations in the United States.

And the industry is still struggling to demonstrate the practical value of its technology to an increasingly skeptical public.

“Rebranding doesn’t solve the fundamental problem,” said Lee Reiners, a onetime supervisor at the Federal Reserve Bank of New York who now teaches at Duke Law School. “What is this good for? What problem does it solve? This is just PR.”

A year ago, the crypto industry was flush with cash. At his compound in the Bahamas in April, Bankman-Fried hosted a weeklong conference where attendees downed Champagne and partied on the beaches. Among the guests: Su Zhu, a founder of the crypto hedge fund Three Arrows Capital, which failed a few weeks later when a market crash sent all the major cryptocurrencies into free fall.

Now Bankman-Fried faces charges over his management of FTX that could mean decades in prison if he is convicted, and industry executives are still navigating the fallout.

Steven Saxton got on a call with a bank this year to discuss his crypto startup, Gorilla Labs, which plans to offer a stablecoin, a type of cryptocurrency designed to maintain a value of $1.

“My CTO said crypto about five times during the conversation. I was like, ‘Just say ‘blockchain,’” Saxton said. “These guys could be very sensitive to that, and it could make them very nervous.”

But even “blockchain” — the term for the publicly viewable ledger where crypto transactions are recorded — has potentially negative connotations. In January, the crypto mining company Riot Blockchain changed its name to Riot Platforms. Other companies have removed the term “crypto” from their marketing materials, turning to vaguer words like “decentralisation.”

“They’re just wearing a different outfit to the same party,” said Irwin, the branding expert.

The marketing push extends to the world of artificial intelligence, which has replaced crypto as the hot trend in Silicon Valley after the release of ChatGPT, the viral chatbot. A series of AI-themed cryptocurrencies have surged in value, and crypto firms with names like DogAI and CryptoGPT are trying to incorporate the buzzy technology into their offerings.

No crypto company is under more pressure than the giant exchange Binance, which is facing government investigations on several fronts, as well as rising concerns about its financial stability and lack of cooperation with regulators. This month, the exchange’s chief executive, Changpeng Zhao, moved to associate Binance with a more attractive trend. He unveiled Bicasso, a product that uses AI technology to make artwork in the form of non-fungible tokens, the digital collectibles known as NFTs. “You can turn your creative visions into NFTs with AI,” Zhao wrote on Twitter. “Give it a try and show me what you make with it.”

In recent months, he and other industry figures have also posted videos on social media seemingly designed to separate themselves from erstwhile crypto heroes like Bankman-Fried.

“Honour isn’t given,” Zhao somberly declared in one post. “It’s earned.” In another widely shared video, Jesse Powell, the founder of the Kraken crypto exchange, threw a few awkward jabs at a punching bag labelled “corruption” and “shady players.”

A similar distancing effort was underway in March at ETH Denver, a conference for advocates of ethereum, the popular crypto platform. In the bathrooms, guests had the option to use toilet paper featuring a Che Guevara-style image of Bankman-Fried. At the opening event, Jonathan Mann, a songwriter who specialises in crypto-themed lyrics, performed an expletive-heavy anthem denouncing 2022’s crypto villains.

“It was supposed to be a final letting go of all this toxicity and bad vibes and feelings of 2022,” Mann said in an interview. “I had everyone do breathing exercises before: ‘Close your eyes. Deep breath in, deep breath out. We’re going to cleanse ourselves.’”

Even in 2023, a crypto conference can still attract high-powered guests. While Mann and four other singers performed, the governor of Colorado, Jared Polis, watched from the sidelines. “He had a grin on his face,” Mann said. (A spokesperson for the governor, Melissa Dworkin, said she “wouldn’t misinterpret his curious demeanour as an endorsement of the words used.”)

For some crypto executives, ritualised cleansing is not enough. A few startups have abandoned crypto altogether in favour of different types of technology.

In late 2021, Troy Osinoff co-founded Zurp, hoping to simplify complex crypto investments for mainstream consumers. Zurp raised $5 million, built a waitlist of 120,000 people and was preparing to launch last summer when the collapse of Luna, a popular cryptocurrency, triggered a broader market meltdown.

The fallout damaged many of Zurp’s competitors, and Osinoff decided to pause the rollout because he was worried the crypto markets were not a safe place to park customer funds.

Soon Zurp shifted to a more conventional form of financial technology. The company began developing a credit card that features perks tailored to Generation Z and plans to offer it in the coming months. Osinoff said he still hoped to incorporate crypto features into Zurp’s offerings, but only once sentiment improved.

“It’s already a hurdle to get people interested in crypto,” he said. “We’re just waiting for it to normalise.”

This article originally appeared in The New York Times.


More news from Business