For $700 Million, Crypto.com Is Putting Its Name on the Staples Center
What’s Crypto.com, which is paying $700 million for the naming rights to the sports venue?,
The Crypto Company Behind the Renaming of the Los Angeles Staples Center
What’s Crypto.com, which is paying $700 million for the naming rights to the sports venue?
Kris Marszalek, chief executive of Crypto.com, in 2018. In an interview, he called Staples Center, the Los Angeles sports venue that his company has secured naming rights to, “culturally relevant.”Credit…Paul Yeung/Bloomberg
LOS ANGELES — Less than four years ago, Crypto.com was the personal blog of a University of Pennsylvania computer science professor.
By the end of this year, the name will be emblazoned on one of the most storied U.S. sports venues, part of an expensive marketing blitz from a little-known company that took over the web address and turned the site into a cryptocurrency playground.
That company, which was founded as a start-up named Monaco in 2016, is a cryptocurrency exchange that also offers digital wallets and crypto-backed debit cards. Its has its headquarters in Singapore but maintains addresses in Malta, the United Kingdom and Ireland. Its chief executive, who is also its majority shareholder, previously ran a failed daily deals site for Southeast Asia. The company is privately held and has raised no institutional funding.
Yet this week, Crypto.com, which billed itself as “the world’s fastest-growing cryptocurrency platform,” said it had secured the naming rights for 20 years to Staples Center in Los Angeles. The venue will be renamed Crypto.com Arena on Dec. 25. The deal cost about $700 million, said two people with knowledge of the details, one of the largest sums ever paid for a sporting venue’s naming rights.
The deal punctuated how the world of cryptocurrencies has been on a tear over the past year, minting millionaires, spawning a slew of new buzzwords (web3, NFTs, DAOs) and attracting investment from more than 20 million people in the United States alone, according to one survey. On Thursday, a group of cryptocurrency fans amassed more than $40 million to bid for a rare original copy of the U.S. Constitution.
And as interest in cryptocurrencies soars — the price of Bitcoin has jumped nearly 230 percent in the last 12 months to around $60,000 a coin — companies like Crypto.com are vying for attention among the general public.
“It’s a symbol of how mainstream crypto has gone,” said Laura Shin, an author whose podcast about cryptocurrencies, “Unchained,” has run Crypto.com ads. “This whole past year, a lot of what the crypto people call ‘normies’ have entered the space.”
Ms. Shin said she was not surprised by Crypto.com’s naming rights deal. “This is the story of every crypto person: They started with a small amount of money, and now they’re gazillionaires,” she said.
In its original incarnation as Monaco, the company offered branded Visa debit cards that could be topped up using cryptocurrencies. It raised funding by minting its own digital token and selling it to the public in 2017 in an initial coin offering, a form of crowdfunding that is similar to an initial public offering. The company’s balance sheet stood at nearly $200 million as of mid-2018, Kris Marszalek, the chief executive, told the blog TechCrunch at the time.
It was then, during a slump in cryptocurrency prices, that Mr. Marszalek decided to rebrand Monaco. He contacted Matt Blaze, a cryptography professor then at the University of Pennsylvania, who had owned the crypto.com domain name for 25 years. During that time, Mr. Blaze had refused to part with the web address and had publicly disdained the new digital gold rush.
But this time, Mr. Blaze couldn’t resist. In a July 2018 blog post, he wrote that he had “gotten a growing barrage of offers, many of which were obviously nonserious, but a few of which were, frankly, attention-getting, for the crypto.com domain.” He said he had “shrugged most of them off, but it became increasingly clear that holding on to the domain was making less and less sense for me.”
Mr. Blaze, now a professor at Georgetown University, declined to comment. In a Zoom interview from a stark white room in Hong Kong, Mr. Marszalek also declined to discuss what he paid for the Crypto.com domain name, but pointed to an article on the tech site The Verge that suggested the address could be worth millions.
In an interview, Mr. Marszalek, 42, a Polish-born entrepreneur, said Crypto.com and its parent company, Foris Technology, had their headquarters in Singapore. Crypto.com’s trading app, which allows people to buy and sell Bitcoin, Ether and 150 other digital currencies, makes money by taking a fee on transactions. Mr. Marszalek said the company was profitable but did not provide exact figures.
“As with all cryptocurrency businesses this year, the market has been phenomenal,” he said. He added that Crypto.com’s revenue between April and June was about a quarter of that of Coinbase, a leading cryptocurrency exchange, which generated $2.2 billion in revenue in that period.
Crypto.com is only the ninth-largest cryptocurrency exchange by daily volume, according to CoinMarketCap, a site that tracks cryptocurrency trading and prices. Yet the bull market has allowed the company to fund an eye-popping marketing push.
It recently signed sports sponsorship deals with the United Fighting Championship, Formula 1 Racing and Italy’s Serie A soccer league, as well as sports teams including the Paris St.-Germain soccer team in France and the Philadelphia 76ers. Crypto.com’s website features a David Fincher-produced, Matt Damon-led advertisement with astronauts, telling customers that “fortune favors the brave.”
The deal, which will rename the venue the Crypto.com Arena on Dec. 25, will cost the five-year-old company about $700 million.Credit…Jenna Schoenefeld for The New York Times
Those moves have given Crypto.com “additional visibility,” Mr. Marszalek said, noting that he’s a basketball fan who loved Michael Jordan and the Chicago Bulls. And even though he had never been to Staples Center, the “deal is even more significant because of the legacy of this place,” he said. “It’s culturally relevant.”
Whether the company will have staying power over the 20 years of its naming rights deal is unclear. Another cryptocurrency exchange, FTX, bought the naming rights to the home arena of the Miami Heat this year, in a bet that crypto is now mainstream.
Yet history is littered with stadium naming deals gone bad. Enron, the energy company, secured the naming rights to the Houston Astros’ stadium in 1999 before it collapsed two years later and removed its name from the venue. In 2000, CMGI, a dot-com incubator, got the naming rights to the New England Patriots’ new football stadium in Foxboro, Mass. — and then fell from grace shortly thereafter in the dot-com crash.
Staples, the office supply store chain whose name Crypto.com is displacing in Los Angeles, hasn’t fared much better. It signed its naming deal for the venue in 1997 with AEG, the sports and live entertainment company controlled by the billionaire Philip F. Anschutz. Its business has since been decimated by the advent of online shopping, and it sold the Staples Center naming rights back to AEG in 2019.
Dan Beckerman, AEG’s chief executive, said he didn’t think Crypto.com would go the way of Staples.
“We believe it’s viable, long term, and they will be around a lot longer than all of us,” he said.