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NASCAR Goes Crypto
Last Thursday, NASCAR driver Brandon Brown made headlines after announcing a sponsorship deal with a meme coin:
Let’s Go Brandon (CCC:LGB-USD).
Unsurprisingly, NASCAR immediately sent the sponsorship to review. The racing organization is now faced with a no-win situation of whether to approve the deal.
Yet, one winner has emerged: LGBCoin. Prices are up 240% in the past two months thanks to the free NASCAR press.
As the meme coin shakeout continues through 2022, Moonshot investors will find these… creative… coins increasingly attractive. With thousands of meme coins vying for investor attention, only the truly outrageous seem to get anywhere.
I wouldn’t bet the farm on these contentious coins. But with a bit of analysis, there’s some hope in separating the offensive from the purely bad.
Cryptos Go… On the Offensive
“Let’s Go Brandon” isn’t the first cryptocurrency to market itself via controversy. Pepe Cash (CCC:PEPECASH-USD) and Stadium Pepe (CCC:SPEP-USD) would be the tenth-largest meme coin on CoinMarketCap if they were a single coin. And Radioshack has raised “awareness” of its upcoming token launch by claiming to market itself to “authoritarian” CEOs with “an even lower estimation of the younger age bracket.”
But some cryptos have seen better luck than others at whipping up investor frenzy. SafeMoon (CCC:SAFEMOON-USD) and Wolf Safe Poor People (CCC:WSPP-USD) both air grievances about world inequality. But the former became a billion-dollar token while the latter has only receded into obscurity.
The defining difference, of course, is how long a coin continues engaging people. It’s one thing to call your coin something offensive, but another entirely to keep that indignation going. And that’s why these coins have the chance to make some surprising medium-term gains.
Binance Coin (BNB)
Binance’s (CCC:BNB-USD) native token has a surprisingly long history of angering customers and regulators alike. In 2020, leaked “Tai Chi” documents revealed an elaborate corporate structure designed to “intentionally deceive regulators and surreptitiously profit from crypto investors in the United States.”
“Binance doesn’t have a headquarters,” Wall Street Journal reporter Caitlin Ostroff pointed out in a recent podcast. “One of the issues this creates is that if you want to sue Binance, there’s really no headquarters to actually sue.”
That’s created a legal quagmire for investors. In May, investors lost millions after the platform locked users out of their accounts while liquidating holdings to meet margin requirements. Some traders would lose hundreds of thousands of dollars in the blink of an eye. Six months later, hundreds more lost a combined $3 million to a highly-publicized “Squid Game” token scam.
Binance users don’t seem to care.
Since November, BNB has outperformed Bitcoin (CCC:BTC-USD) by 11%, escaping some of the worst crypto drawdowns that besieged its larger cousin. In fact, BNB is up 50% since I first recommended it in September.
While I’m far more bullish on Ethereum (CCC:ETH-USD) and Terra Luna (CCC:LUNA-USD) as long-term DeFi plays, Binance Coin could still deliver an upside surprise in the medium term.
The mobile stock trading app is, of course, no stranger to controversy. In July, the company settled a record $70 million fine with FINRA for myriad reasons: GME trading blackouts; misleading customers about fees; and the suicide of a 20-year-old trader (The company also settled a wrongful death lawsuit with his family).
“In determining the appropriate sanctions, FINRA considered the widespread and significant harm suffered by customers, including millions of customers who received false or misleading information from the firm… outages in March 2020, and [those] approved to trade options even when it was not appropriate for the customers to do so.”
And Robinhood’s (NASDAQ:HOOD) stock has taken a rightful beating, dropping from an $85 high to below $18 today.
But those same cheap prices now make this controversial company a crypto play to watch.
On Sunday, Robinhood announced the beta launch of its crypto wallet. More than 1.6 million users have already signed up, allowing them to trade, send and receive crypto directly from the Robinhood app.
The wallet couldn’t come at a better time. Two-thirds of Robinhood customers have no dedicated crypto wallet, according to the company. And even crypto-savvy investors will benefit: a MetaMask wallet is only useful for transactions if other people have wallets too.
That gives Robinhood another chance to succeed. I was bearish on Robinhood when prices hovered around $70 in August. Now that its stock is down 75%, HOOD deserves a second chance to make things right.
Special Mention: LGBCoin
I loathe recommending this coin because of its political significance (not to mention it would give my in-laws a good reason to egg my house). But if you’re looking for controversy, Brandon Brown has driven this hot potato right to our doorstep.
According to Brown’s Fredericksburg-based Brandonbilt Motorsports, the team received written approval from NASCAR to market LGBCoin on December 26. There was “no intent to circumvent the process in publicizing the 33-race deal with the cryptocurrency meme coin.”
“We will continue to work with NASCAR and look forward to resolving this matter and clearing the air as soon as possible,” said Max Marcucci, a representative of the racing team.
Meanwhile, officials from NASCAR have flatly denied those reports. They claim that the governing body has not decided on the sponsorship deal yet.
This sets LGBCoin up for a massive showdown. If the sponsorship deal goes ahead, millions of viewers will see the LGB logo circling the track for the ~6,600 rounds a NASCAR racer makes over the course of a season. And if the deal falls through, you can bet that right-leaning fans will cry foul (i.e., “don’t you dare cancel us”).
Either way, infamy has worked its magic before for meme cryptocurrencies. And LGBCoin will have plenty of that in the weeks ahead.
Ubisoft Goes Too Far
There is a limit however, to how much abuse crypto investors will take.
In early November, Ubisoft (OTCMKTS:UBSFY) launched a misguided attempt at selling NFTs. Its Quartz NFT platform garnered a 96% dislike ratio on YouTube before Google could remove the downvote button.
“Ubisoft are [sic] always discovering new and innovative ways to be the most hateable company in gaming,” one commentator wrote. “600 hours to earn an NFT! Now crypto bros will just afk bot to farm hours so they can collect their sh*tty helmet,” another disgruntled reviewer tweeted.
In short, Ubisoft’s NFT launch looked like a cash grab — a way to bilk players of Ghost Recon and other games out of even more money.
Gamers were having none of it. Six weeks after launch, Quartz had reportedly sold just $1,755 worth of NFTs, according to an analysis by Eurogamer.
Ubisoft shares have also struggled. Since November its stock has fallen 11%, compared to a 4% gain in the S&P 500.
These troubles draw a clear line between offending the masses and offending your buyers when it comes to crypto investors. When you give users the option of calling themselves “apes” (FEG Token) or “losers” (LoserCoin), people are more than happy to self-deprecate. But when you treat them like apes or losers, not even taking away the downvote button can deter the wrath of the internet.
Why Don’t I Like Offensive Coins?
Binance Coin… LGBCoin… you’ll notice that these are relatively “tame” picks when compared to the wide world of offensive cryptocurrencies. After all, I could have easily picked out C**Rockets or Pepemon Pepeballs (CCC:PPBLZ-USD) instead.
The problem however, is that these coins often fail to inspire once the initial shock value wears off. Tron (CCC:TRON-USD) — a cryptocurrency that founder Justin Sun once called a Sh*tcoin — stagnated after the headlines went away. And even Garlicoin (GRLC) has failed to maintain its momentum.
That’s why when it comes to meme coins, investors should look for self-perpetuating assets where either 1) users continuously create more content, or 2) organizations are forced to keep a meme coin in the headlines.
I don’t envy NASCAR’s governing body or Robinhood’s management team. But when it comes to getting press, they’ve certainly drummed up a storm worthy of an Elon Musk tweet.
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On the date of publication, Tom Yeung did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Tom Yeung, CFA, is a registered investment advisor on a mission to bring simplicity to the world of investing.