June 2, 2023

A group of singers in bright orange jumpsuits at a cryptocurrency conference in Denver this month on stage Make an industry website in the future describe An anthem for cryptocurrency believers, “Blockchain ‘in the wind.'”

The chorus lists the most notorious villains in the cryptocurrency space, from trash-talking entrepreneur Do Kwon to disgraced FTX founder Sam Bankman-Fried, with four-letter expletives in between.

“During the next bull run, we promise not to use,” the song continues, “centralized exchanges run by these toxic dudes.”

After a disastrous 2022 that saw a slew of prominent cryptocurrency companies go under, the industry is looking for a bold rebrand. Executives like Mr. Kwon and Mr. Bankman-Fried — once beloved crypto celebrities with thousands of followers for every tweet — are now persona non grata. According to their former admirers, these crypto villains never really embody the core values ​​of the industry, not even before their companies collapsed.

In the surviving companies, top executives are finding new ways to market products that many consumers now distrust—and distance From former colleagues and mentors who could face years in prison. Some companies are trying to capitalize on the growing interest in artificial intelligence, adopting encryption schemes that feature complex AI pairings.others are looking for Replace the word “encrypted”, It is believed that the industry’s original nomenclature has been irreparably tainted.

Even before Mr. Bankman-Fried’s deal fell through in November, cryptocurrency firms “gradually changed the narrative,” said Todd Irwin, chief strategy officer at Fazer, a branding agency with clients in the industry. “The move was intensified after the FTX incident.”

In an industry that has seen repeated booms and busts in its short history, cleanups are household routine. Bitcoin’s early advocates had to convince the public and regulators that the cryptocurrency was more than just a convenient tool for drug dealers. A major crypto boom in 2017 was followed by lengthy law enforcement scrutiny as exciting-sounding startups were exposed as scams.

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

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 Lynas, a former head of the Federal Reserve Bank of New York who is now a professor at Duke University Law School. “What does this do? What problem does it solve? It’s just PR”

A year ago, the crypto industry was flush with cash. In April, Bankman-Fried hosted a week-long conference at his compound in the Bahamas, where attendees drank champagne and reveled on the beach. Among the guests: Su Zhu, founder of crypto hedge fund Three Arrows Capital, which collapsed weeks after the market crash sent all major cryptocurrencies plummeting.

Now Mr. Bankman-Fried faces charges of managing FTX, which could mean decades in prison if he is convicted, while industry executives are still grappling with the fallout.

Steven Saxton got a call from a bank this year about his crypto startup, gorilla labwhich plans to offer a stablecoin, a cryptocurrency designed to maintain a value of $1.

“My CTO mentioned encryption about five times in the conversation. I was like, ‘Just say ‘blockchain,'” Mr. Saxton said. “These people can be very sensitive about it, and it makes them very nervous.”

But even “blockchain” — the term for a publicly visible ledger that records encrypted transactions — has potentially negative connotations. In January, crypto mining company Riot Blockchain changed Riot Platforms name. Other companies have removed the word “cryptocurrency” from their marketing materials in favor of more vague terms like “decentralized.”

“They just wore different clothes to the same party,” said branding expert Mr Owen.

The marketing push extends to artificial intelligence, which has overtaken encryption as the hottest trend in Silicon Valley following the release of the viral chatbot ChatGPT.A series of artificial intelligence-themed cryptocurrencies have already soaring valueand cryptocurrency companies with names like Dog AI and encrypted GPT are trying to incorporate popular technologies into their products.

No cryptocurrency company is under more pressure than giant exchange Binance, which is facing government investigations on several fronts, as well as growing concern about its financial stability and lack of cooperation with regulators. This month, Changpeng Zhao, CEO of the exchange, move Link Binance to more attractive trends. He launched Bicasso, a product that uses AI technology to create artwork in the form of non-fungible tokens, digital collectibles known as NFTs.

“You can use artificial intelligence to turn your creative vision into an NFT,” Zhao wrote on Twitter. “Try it and let me see what you do with it.”

In recent months, he and others in the industry have also posted videos on social media that appear aimed at differentiating himself from erstwhile crypto heroes like Mr. Bankman-Fried.

“Honor is not given,” said Mr. Zhao with a sullen face Announce in an article. “Earned.” In another widely shared videoJesse Powell, founder of the Kraken cryptocurrency exchange, took several awkward jabs at punching bags labeled “corrupt” and “shady players.”

A similar distancing effort took place in March at ETH Denver, a conference for advocates of the popular crypto platform ethereum.In the bathroom, guests can choose to use toilet paper Che Guevara style image of Mr. Bankman-Fried. At the opening, songwriter Jonathan Mann, who specializes in crypto-themed lyrics, sang a swearing song denouncing the crypto villains of 2022.

“This should be the last release for 2022 of all these toxicities and bad emotions and feelings,” Mr. Mann said in an interview. “I had everyone do a breathing exercise before: ‘Close your eyes. Take a deep breath, a deep breath. We’re going to cleanse ourselves.'”

Even in 2023, crypto conferences can still attract high-profile guests. Colorado Gov. Jared Polis watched from the sidelines as Mr. Mann and four other singers performed. “He had a smile on his face,” Mr Mann said. (The governor’s spokeswoman, Melissa Dworkin, said she “would not misinterpret his curious demeanor as an endorsement of the words used.”)

For some cryptocurrency executives, a ritualized purge is not enough. Some startups are ditching encryption altogether in favor of a different type of technology.

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

The aftermath hurt many of Zurp’s competitors, and Mr. Osinoff decided to put the launch on hold because he was concerned that the crypto market was not a safe place to park client funds.

Soon, Zurp turned to a more traditional form of financial technology. The company began developing a credit card with benefits tailored to Gen Z, which it plans to launch in the coming months. Mr. Osinoff said he still hopes to incorporate encryption into Zurp’s products, but only if market sentiment improves.

“Getting people interested in crypto is already a hurdle,” he said. “We’re just waiting for it to get back to normal.”

susan beach contributed research.

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