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Crypto industry facing ‘bad PR’ as lawsuits mount after crash, expert says

Emily Parker, CoinDesk Executive Director of Global Content, breaks down bitcoin's current price trends, the launch of Luna 2.0 following Terra's crash, the ramifications on cryptocurrency investors around the world, stablecoin regulation, and NBA-crypto partnerships.

Video transcript

[MUSIC PLAYING]

- Much like tech stocks, Bitcoin has been hammered this year. But it, too, is rallying in recent days, ending last week below the 29,000 mark, before spiking up above 31,000. Emily Parker is the managing director of global content at CoinDesk. She joins us now with that and how crypto is actually lifting up the NBA. I want to talk about that in a moment.

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Nice to see you, Emily. But first, what do you make of the volatility of the crypto market? Is it simply here to stay?

EMILY PARKER: Yes, I think so. I mean, crypto has been pretty much volatile from the beginning. It continues to be volatile. It's been particularly volatile lately. I don't know if it's here to stay forever. But it's here to stay for the short term because we're far from reaching the point where crypto prices are anywhere near predictable because we still don't really know what drives crypto prices. There's a lot of mystery behind what brings Bitcoin up or down.

SEANA SMITH: Well, and Emily, speaking of something that's extremely volatile, we got the relaunch, or launch I should say, of Luna 2.0. The revival of it launched over this weekend, off to a very wild start. What's your takeaway just from the action that we've seen over the last couple of days?

EMILY PARKER: Well, there's no surprise that it's off to a volatile start because it's a wildly controversial project. You know, you have UST, which was-- which failed spectacularly, leading a lot of people to lose their life savings. And then shortly thereafter, there's this kind of relaunch.

And so, yeah, it's really, really controversial. I think a lot of people think that this shouldn't even exist. And I think there's people who think that maybe lessons weren't properly learned. Now, this is different because it's not actually attached to any kind of stablecoin. But I think there's just questions about, like, why is there a limit to begin with, and what kind of future does it does it have?

- BitBoy founder, Ben Armstrong, told us yesterday to run, run away, run away fast. Do you agree with that advice?

EMILY PARKER: I mean, I definitely wouldn't invest in it. So I mean, we just saw-- we just saw, basically, the collapse of UST, which was one of the most horrible things to happen in the crypto industry in recent memory. I mean, this is just billions of dollars of losses, so many ordinary people whose lives have basically been destroyed by putting their investment into this project, you know.

And then shortly thereafter, this kind of the same group basically is putting out a new coin. So, yeah, I think there's reasons to be really concerned. I don't think there's been enough reckoning for what just happened to, you know, just move on to the next step.

SEANA SMITH: And Emily, speaking of the fact that so many people lost all of their life savings here, a number of lawsuits, the legal fallout from this, I feel like that is being missed when we're talking about the larger story at play. Where do you see-- I guess, how do you see those type those potential lawsuits here affecting the future of the crypto industry? Do you think it's going to deter some of this type of volatility or maybe some of these new entrants that we've seen over the last several years?

EMILY PARKER: So I don't know what's going to happen on the legal front. But I can tell you that this is really, really bad PR for crypto, right? Because, you know, if we're reading all these stories about ordinary people who lost their life savings and all these people are posting on social media-- and some of these stories are legitimately very tragic, whether or not you think they should have invested or not. Their stories-- and it's not just in the United States. It's all over the world, you know.

It's in countries-- you know, countries in Latin America, for example, where people are battling high inflation. And, you know, they saw a project with the word stablecoin in it and, you know, had some sort of impression that this was a relatively stable investment. And some of those people, you know, really lost everything. And

What's really sad about some of these investors is that, you know, they're not just all chasing greed. Some of them were just, at least according to them, were just trying to buy a home or just trying to, you know, save up for a better future. Now, again, this might not have been the smartest investment. But still what happened to them is very tragic.

So I think regulators are definitely looking at these stories and asking, what can we do to prevent this in the future? And I think there's a lot of questions. I mean, stablecoin regulation is clearly coming. We know that.

But I don't think regulators know how to regulate algorithmic stablecoins specifically, which is what UST was. So I think this will hasten regulation. But I think it will also create a lot of-- cause a lot of people have a very negative impression of the crypto industry.

- Meanwhile, though, Emily, you've got millions of sports fans across the country who have an entirely different image of crypto because it's all they're inundated with in the NBA-- in the NBA Finals which start tomorrow-- and news that it's become the second-most lucrative form of sponsorship in the NBA, lifting the entire sport, frankly. Their ad revenue up 13% because of crypto. What are the implications there? And how widespread is it?

EMILY PARKER: Yeah, I don't what it is about sports and crypto. But there really is a connection there. I think this is a real sign of the mainstreamization of crypto, right? Because when you have crypto companies, their names plastered across an arena-- and and arena is named after a crypto company or across a jersey. Or then you-- not only that, you have all these athletes who are really into the NFT game, and they're promoting NFTs.

And you can actually now buy fractions of sports teams, you know, using NFTs. So this is really, really a big thing. And I think it is a way of getting more attention, for better or worse, to crypto for mainstream audiences, who maybe don't know very much about crypto. But all of a sudden, they just start seeing these names everywhere. And they start looking it up, and they start investigating. I mean, we saw these huge crypto ads during the Super Bowl. So I think it's quite significant in terms of just bringing it to the attention of a much wider group of people.

- Yeah, the Crypto.com Arena is arguably the largest deal in the history of sports, $700 million to name where the Lakers play. You mentioned the Crypto Bowl, what they call the Super Bowl. And a lot of celebrities were taken to task by "The New York Times" for not warning people and not speaking up about the risks. Are we seeing athletes held to that same standard?

EMILY PARKER: It's an interesting question. I don't think they are yet. I think the people that should be actually held to the standard are some of these very prominent investors that were out on Twitter, you know, really shilling UST and talking about how great it was and, you know, people who are actually in the crypto industry and have large followings and were just not really doing due diligence. I think those are the people that should be held more accountable. I mean, athletes, yeah, you would think that fans would take some of their endorsements with a grain of salt, but, yeah.