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This is a disgrace. For so many reasons. I totally agree with the FYP position on this.

Did you know? 98.0000001% of people are morons.

They take all the Palace fan slogans.....

Be Loud, Be Proud, Be Palace

You are the boys from SE25

and then put a bl**dy $ sign at the front of the new scheme....

A stairway to Heaven and a Highway to Hell give some indication of expected traffic numbers

Excellent article from The Athletic earlier this year.

Avoid like the plague

Last week, major global news outlets reported that Lionel Messi’s deal with Paris Saint-German would include something unusual: a signing-on fee partly paid in “cryptocurrency fan tokens”.

These tokens, issued by a company called Socios, allow their holders to vote on club issues but they also rise and fall in value when traded online.

The “$PSG” tokens surged in value in the days before Messi’s free-agent move following the expiry of his Barcelona contract was confirmed, making real cash for savvy traders. Posts in social media channels speculated that the price would “explode” after the announcement.

Less widely reported was what happened once the deal was done: the tokens plunged in value.

So traders who got in early made money but those who got in late lost out.

Messi
Messi’s unveiling at PSG saw the value of the club’s fan tokens fall dramatically (Photo: Aurelien Meunier – PSG/PSG via Getty Images)
“We see the price of tokens being driven up in anticipation of football events like signings or titles,” said Martin Calladine, author of The Ugly Game. “Traders cash them out, prices crash, and fans are left sitting on losses — victims of their enthusiasm for their clubs.”

Adverts for Socios fan tokens appear in prime position on the chests of Inter Milan and Valencia shirts this season, while sponsorship deals have been struck with the likes of Barcelona, Juventus and Atletico Madrid, as well as Manchester City, Arsenal and three other Premier League clubs. And yet very few people appear to understand very much about Socios, or how the tokens actually work.

They are marketed as offering “fan engagement” by facilitating votes on club matters via the Socios app but the scheme has attracted strong criticism from supporters’ groups at the likes of Arsenal, Leeds United and Aston Villa, as well as from the UK’s Football Supporters’ Association.

There is also another level to the entire Socios ecosystem — promoted and inflated by its association with some of the biggest football clubs in the world — owing to its links to cryptocurrency, which is hugely risky and volatile and comes with virtually nothing in the way of disclaimers or regulation.

After months of investigating, The Athletic can reveal:

Socios has liquidated million (£58 million) since March and claims to have made more than 0 million (£73 million) for its partners in 2021
How the value of its tokens are “pumped” by football-related hype
The limited extent to which many believe Socios actually improves “fan engagement”
Why Socios advertising its volatile product as “like buying foreign currency” is misleading
How the company once said the cryptocurrency needed to buy tokens is “only suitable for financially sophisticated persons”
The product is virtually unregulated
Socios said in a statement: “Creating opportunities for the fans is our mission. We are still educating both clubs and fans to understand the countless opportunities we can create for them.”

Fan engagement or ‘monetising loyalty’?

Socios has catapulted from obscurity to the European footballing mainstream very quickly after signing massive sponsorship deals with dozens of top clubs. The Inter deal, which replaced tyre manufacturer Pirelli after 23 years as their main shirt sponsor, earned the club around €20 million (£17 million) at a time when they could certainly do with the cash.

Socios is marketed as a “fan engagement platform”, selling virtual fan tokens that give a “digital pass to the teams you love”. These tokens are held in the Socios app and allow fans to vote on club matters.

Socios, Barcelona
Fan polls do not always tap into subjects supporters really care about
However, a look at the app reveals these votes do not appear to be about issues that fans are generally passionate about, such as transfer deals or match tactics. Rather, many of the votes seen by The Athletic focus on seemingly trivial matters such as in-stadium music choices or social media designs.

When Juventus took on Barcelona in a pre-season friendly this month, the two Socios-sponsored clubs allowed token holders to vote on which pre-approved corporate slogan would appear on a trophy held by the team captains before the match.

A Barcelona source said: “Questions about which fans are asked are focused on the digital side, the creation of content and different PR (public relations) activations. In no case (will) token holders will be consulted about the running of the sporting side of the club or business decisions.”

In 2019, West Ham United ditched a deal with Socios after some fans argued the club were trying to monetise their support. But the company now has a foothold in London football: Arsenal recently announced a lucrative contract.

The club’s first poll involved fans voting on the Socios app to pick the song to be played at the Emirates Stadium following an Arsenal win after supporters’ groups and players had produced a shortlist of candidates.

“Socios.com have described their service as one where you buy ‘influence or a say in Arsenal’s decision-making’,” said the Arsenal Supporters’ Trust. “This isn’t really correct and is based on the types of polls Arsenal have discussed with us. The engagement polls will be on minor issues like which player runs the Instagram account that week, or a picture to go on the team bus.”

“We have been clear in all communications regarding Socios that fan tokens are a means to engage with the club, vote in polls and access a wide range of benefits,” said an Arsenal spokesperson. “One fan token is enough to access these benefits and we advise fans not to spend more on fan tokens than they can afford.”

Other supporters’ groups have criticised the tokens too, with the Aston Villa Supporters’ Trust expressing disappointment that “the club are out to monetise fan loyalty and enthusiasm”.

“Some may find our polls gimmicky,” said a Socios spokesperson, “but those millions of remote fans who until now had no way whatsoever to actually feel part of the clubs surely appreciate the new opportunity that we are creating for them.

“Are ‘normal fans’ those who buy season tickets to attend the stadium every week or those that live thousands of miles away? We have nearly 1.5 million users from 150 different countries around the world.

“Several polls have generated over 60 per cent of engagement, including the one that allowed PSG fans to choose the design of the captain’s armband, and most of the polls launched over the past few months show engagement rates above 40 per cent.”

Socios does give free tokens to some hardcore fans — Arsenal season ticket holders were all offered one last week and other Premier League clubs have done the same.

But in Arsenal’s initial sale, the company said 30,167 users bought 2,000,000 Arsenal tokens, meaning the average holder has 66. So a season ticket holder’s single token will not count for very much.

Socios said: “Sixty-five per cent of fan token holders own less than 25 tokens each, which represents far less than the cost of annual membership, a season ticket or official merchandise.”

But, despite pushback from multiple supporters’ groups, Socios tokens are now part of the English football landscape. Fans of Arsenal, Manchester City, Everton, Leeds and Villa have all recently been emailed about their club embracing Socios.

“Fan tokens are an extremely innovative product that obviously require an education process which will take time,” said Socios. “We always encourage our partner clubs to give away free fan tokens to their members and season-ticket holders.

“However, and with all due respect, there is a slight contradiction in the claims made by these groups: on the one hand they say that the polls are meaningless, but on the other hand they complain because they would like to vote for free.”

The company added that “voting rights” are always protected and clubs can opt to cap the number of tokens a fan can purchase.

Chiliz and Socios — for the ‘financially sophisticated’ or ordinary football fans?

Socios fan tokens are not purchased using dollars or pounds. It requires the intermediary step of buying Socios’ own cryptocurrency, called Chiliz, to pay for a token — unless you are given a free one by your club.

So not only are tokens bought using cryptocurrency but the tokens themselves are also liable to volatile price movements, doubling the financial risk. No wonder so few people can clearly explain what Socios are all about.

As companies, they are intertwined — Socios was developed by Chiliz. However, Chiliz is also bought and sold on exchanges without any link to football. Its price is at the whims of anonymous traders around the world.

Cryptocurrencies have surged in popularity in recent years, the most popular being Bitcoin. To their advocates, these virtual currencies are the future of finance, a way to move money around without antiquated banking structures. To their critics, they are a volatile asset and their anonymous nature can be used to facilitate criminality.

The UK’s Financial Conduct Authority (FCA) refers to “cryptoassets” rather than cryptocurrency to reflect the way they are increasingly used as assets bought and sold by traders trying to turn a quick profit, rather than currencies with which people buy goods and services.

“Investing in cryptoassets, or investments and lending linked to them, generally involves taking very high risks with investors’ money,” the FCA said in January. “If consumers invest in these types of products, they should be prepared to lose all their money.”

The “Chiliz white paper” released by the company itself in January 2018 said acquiring Chiliz “is only suitable for financially sophisticated persons… or other persons who have been professionally advised”.

It added that those who buy Chiliz should “have sufficient financial resources to be able to bear any losses that may arise therefrom (which may be equal to the whole amount spent in connection with the token acquisition)”, concluding: “Such an acquisition should not be seen as an investment or a financial asset.”

There is nothing wrong with owning and trading cryptocurrencies, as long as everyone involved is made fully clear of the risks it entails. But although this document clearly suggests that Chiliz does not consider its tokens suitable for casual traders, the product is being promoted to certain ordinary football fans.

Socios said the white paper is “not an accurate representation of our product and how the company has successfully evolved since (201”.

The white paper also reveals a connection the company has since expunged from its website.

One of only four shareholders named in the 66-page document is Stanley Choi, chairman of the Hong Kong-based investment group that bought Wigan Athletic from the English club’s long-standing owner Dave Whelan in 2018.

Choi is no longer listed on the Socios website
In July last year, a dramatic and unexpected announcement revealed that Wigan were entering administration, carrying a punishment of a 12 point-deduction that was imposed after their final match of the pandemic-extended season, plunging them from the mid-table Championship safety they had earned on the pitch to relegation into the third division overnight.

Socios said Choi “was an investor in the original company in 2015, long before the launch of Chiliz and Socios.com. He is not involved in Socios.com or Chiliz at all”.

How tokens can be turned into cash

Chiliz and the Socios fan tokens are underpinned by blockchain technology. This means transactions are recorded on a ledger facilitating the movement of money, without a central authority like a government or bank.

If one person transfers £1,000 to another account, the bank and the recipient can see that, but a third party cannot. With blockchain, however, transactions between anonymous “wallets” can be traced by outsiders.

As the value of a single Chiliz has surged over the past few months, the blockchain transactions show the company has been moving vast amounts of cryptocurrency — via an intermediary account — into Binance, an online platform that enables the conversion of crypto into cash.

As Chiliz (CHZ) has inflated massively since Socios has taken the football world by storm, the company has been liquidating vast amounts of the coins. The Athletic has discovered payments totalling million since March of this year.

Socios said most of these transactions “are the transfers of CHZ revenue collected from fan token offerings”.

“As fan tokens are ‘purchased’ on the app with CHZ,” a spokesperson added, “we need to liquidate those CHZ to provide a flat revenue (euros or dollars) for our partners. We liquidate at the optimum time so the clubs benefit and we provide value as a revenue partner. In 2021, we generated more than 0 million in incremental revenue for our partners.

“Liquidation of CHZ doesn’t necessarily mean profit for the company, but rather revenue for the clubs. Like any company, the figures are declared and tax is paid on any profit.”

Chiliz: a ‘whale’ or a ‘vault’?

Of the 8.9 billion total supply of Chiliz, three billion — almost a third — are held by one holder: Chiliz’s own account.

Concerns have been raised over this because “whales” — accounts that hold large amounts of one coin — can manipulate the price and exploit smaller investors. For comparison, the largest Bitcoin wallet holds 1.5 per cent of those coins, while the largest Ethereum wallet holds 5.7 per cent.

“Concentration of ownership, initial token distribution, and how long tokens are locked for the developers and investors is something that buyers of any cryptoasset should take into consideration when making a purchase,” said Josh Kamps, a PhD student at University College London researching cryptocurrency. “These holders are often able to buy in at a lower price point than the public, and if purchasing for investment reasons, you don’t want to be left holding their bag.”

Socios said this is a misunderstanding of how the product works and only 66 per cent of the Chiliz supply is in circulation, with the remainder released linearly and on a publicised schedule. “Think of it like a vault where unreleased tokens are stored,” a spokesperson added.

Many of the fan tokens also have extremely highly concentrated ownership, with the founding “deployer” address owning the vast majority of many of them.

For the PSG token, for example, the founding account owns 79 per cent of tokens in existence. More than 90 per cent of the tokens are held in just a few accounts, which seem to transfer large sums between each other.

This deployer address recently moved around 800,000 of the PSG tokens into another wallet, just as the coin was peaking at around each, a transaction worth around million (£29 million).

Socios said that, like Chiliz, fan tokens also follow a staggered release schedule so not all of a particular club’s tokens have yet been vested.

‘Pumping’ and ‘dumping’

A simple Twitter search of Chiliz ($CHZ), or club coins like those for Barcelona ($BAR), Manchester City ($CITY) or Arsenal ($ARS), finds frenzied speculation that appears to have little to do with football. Much of the online hype comes from Turkey.

The company has a channel on the encrypted messaging app Telegram, which has more than 9,000 members and claims to be “the official trading community for Chiliz.net”.

It is a hotbed of feverish financial speculation. There is barely any discussion of football itself as users discuss flipping these digital assets to try to bank a quick profit. For example, as the $PSG coin surged and then collapsed in value, token holders took to the channel to speculate about “pumping” and “dumping”.

Messi, messageboard

Speculation was feverish among the Chiliz trading community before Messi arrived at PSG

Just before Messi’s signing was announced by the French club, traders encouraged others to pile into the market, predicting that the coin would surge after the move was confirmed. It did the opposite, suggesting traders were pushing others to buy their coins to bank a quick profit for themselves.

Meanwhile, other traders beg the company to list football club tokens on crypto platform Binance, suggesting a financial rather than sporting motive for holding them.

“The Chiliz Trading Telegram is not targeting sports fans, nor have we ever advertised any Chiliz Telegram to fans (Socios.com followers/users),” said Socios. “The trading Telegram is for the CHZ community (enthusiasts excited by these new digital assets).”

Alexandre Dreyfus, the founder of Socios, has repeatedly drawn attention to the “trading volume” of Chiliz, saying this indicates “fan sentiment”.

But this idea makes little sense. The PSG token surged in value before the Messi deal was confirmed, and slumped afterwards.

Financial traders call this pattern “buy the rumour, sell the news” — traders will pile into an asset when they have information that they think means it will appreciate in value. Once that is confirmed, they sell that stock, cashing out their profits, and its value falls again.

This pattern is easy to observe with Socios.

For example, in the days leading up to Atletico Madrid’s stunning La Liga title win last season, the club’s token rose in value dramatically. The moment they were confirmed as champions on May 22, it plunged.

Atletico Madrid’s 2020-21 title win prompted the value of their token to fall
It is hard to understand why “fan sentiment” would decrease dramatically once a club have signed the world’s greatest living footballer, or just won their domestic league.

There is nothing wrong with people trading volatile virtual assets in an attempt to make money, taking on hefty financial risks in the process. But, though there are disclaimers in the Socios app at the point before a token is bought, they are not apparent in lots of the social media posts promoting the tokens, or in a lot of club communication, which makes no mention of cryptocurrency.

“The price of fan tokens is driven by supply and demand, as well as news, including what happens on and off the pitch,” said Socios. “When a user makes a fan token purchase for the first time, all users are reminded that fan tokens are meant to be used for entertainment and fan experience purposes only, and that both CHZ and fan tokens do not represent financial instruments or any form of investment product.”

Why cryptocurrency is not like a foreign exchange

After announcing its Arsenal fan token, Socios said using $CHZ to buy the club’s token is “like a foreign currency for when you go on holiday”.

This is a highly misleading analogy.

First, $CHZ is incredibly volatile. Its value surged in March, then almost halved over a week in April, and was recently bubbling along at a far lower value than its early-April peak. Although conventional currencies do move around too, it is unheard of in the modern era for them to spike and trough as much as this.

Second, if pounds are changed into euros, it is easy to change them back, perhaps via a small conversion fee. This is not always the case with $CHZ.

This reporter spent £100 on 250 Chiliz at close to their peak in April. Within a few weeks, they had halved in value, though have since risen somewhat, to around £67.

It can be, though, extremely hard and complicated to extract them into “fiat currency”, such as pounds or dollars. There is no “cash-out” facility here.

Aston Villa
Aston Villa have promoted the $AVL token on their club media channels
Although “Fan Token Offerings” are initially at fixed prices — Villa’s is around £2 — fans may find themselves holding onto Chiliz they cannot change back while getting sucked into a world where they lose out to smarter traders.

“It’s important to note that fan tokens are not a cryptocurrency,” said Socios. “They have been classified as ‘utility tokens’, because they exclusively convey an entitlement to access a digital usage or service.”

The third reason Chiliz is not like trading foreign currency is that the company encouraging the transactions — and taking a cut on each one — still owns a huge proportion of the coins themselves.

“The foreign currency example is a simple way for users to understand that one currency must be swapped for another to use the app,” said Socios.

A volatile world with little regulation

Five months ago, Football Index collapsed and lots of ordinary football fans in the UK and Ireland lost huge sums of cash.

There is a key difference between Football Index and Socios, though. The former was regulated by the UK Gambling Commission and was required by the UK Financial Conduct Authority to run prominent disclaimers saying that the product carried financial risk.

Reading about the volatile world of Socios, with traders buying low and selling high, and ordinary fans potentially carrying the can, you may be wondering what rules and regulations are in place to protect consumers or how the company advertises.

The answer is: none.

Socios-partnered clubs are based in Spain, Italy, France, the UK, Argentina, Turkey, Belgium, Switzerland, Cyprus, Poland, the Netherlands and Croatia, as well as the Portugal and Argentina national teams. However, Socios and its affiliated companies are based in Malta, Estonia and Switzerland.

“If consumers invest in these types of products, they should be prepared to lose all their money and they are unlikely to have access to any redress or compensation schemes,” an FCA spokesperson told The Athletic.

Socios said: “Fan tokens are ‘utility tokens’ for the purposes of the UK’s financial regulatory regime. Socios nor the issuer will therefore not require authorisation from the Financial Conduct Authority to issue and distribute the fan tokens.

“We don’t promote fan tokens as a way to make money, but as a tool to engage with sport organisations in ways that were simply unimaginable only a few years ago.”

The Athletic approached all the clubs mentioned for comment.

Edited by SW19 CPFC (09 Dec 2021 6.25pm)

Did you know? 98.0000001% of people are morons.

Maybe explains why no loyalty points have been given on food and drinks all season

I was just thinking I can"t be arsed to try and understand all this crypto stuff, i"m stuck in the cash only taxi world of yesteryear, then you come out with a phrase on here I never heard of! What does pinning this thread mean?

Not often CP but I am totally with you on this.
Green backs and debit from your bank account.
See it feel it spend it.