On 28 November, Napoli hosted Lazio at home. The evening marked the one-year anniversary of the death of local idol Diego Armando Maradona. Ahead of kick-off, a life-size bronze statue of the Pibe de Oro paraded in front of more than 40,000 fans. The bust of Maradona also adorned the special shirt that the Neapolitan side was wearing for the occasion. That, however, was not the only new feature appearing on the game kit. On the back, under the players’ numbers, the word “Floki.com” was emblazoned for the first time, next to the image of a small dog wearing a Viking helmet.

The jersey back sponsor made its debut a few days after the announcement of Napoli’s agreement with Floki Inu, a so-called “meme coin”, a cryptocurrency started as a joke. Products that derive their value not from the real utility, but from the hope that going viral will inflate the currency’s value. Trading in meme coins resembles a sort of collective high-stakes gambling. Crypto is an extremely volatile market that is fraught with fraud attempts. For every winner, there are several losers. The value of Floki Inu is down by over 60% (as of January 13th) since the announcement of the Napoli sponsorship.

Since the start of the football season, clubs across Europe have been raking up sponsorship deals with crypto outfits. It is a fresh attempt to cope with financial woes exacerbated by the consequences of the pandemic. According to research by IrpiMedia, at least 15 Serie A clubs have commercial relationships with entities in the cryptocurrency world. In the English Premier League, 17 out of 20 clubs have clinched sponsorship deals in the sector.

The Grand Bouffe

Sponsorships between Serie A clubs and cryptocurrency companies during the 2021/2022 season

The Italian financial conduct authority, Consob, has raised alarm over “the high risks associated with operations in crypto-assets”. A spokesperson for the supervisory body told IrpiMedia that “the issue is being looked at by our offices and we can only recommend investors the utmost caution, given the extremely high risks in which they may incur.”

Last July Consob issued a warning against Binance, a crypto exchange, specifying that the companies of the group “are not authorised to provide investment services and activities in Italy”. Binance has been the main sponsor of Lazio since October.

Authorities have stepped in elsewhere in Europe: on 21st December 2021, the UK’s Advertising Standards Authority (Asa) banned two advertisements for the purchase of Arsenal fan tokens offered by Socios. Similarly to Floki, fan tokens are risky financial assets based on blockchain technology and tradable using other cryptocurrencies. The ASA ruling warned future ads “must not trivialise investment in crypto assets” or “irresponsibly take advantage of consumers’ lack of experience or credulity by not making clear that capital gains tax could be due on cryptoasset profits”.

Over the last few months, Floki Inu has launched an unprecedented marketing campaign in the crypto world. In addition to Napoli, other historic European clubs such as Bayer Leverkusen, Spartak Moscow, Fenerbahce and Twente have signed commercial agreements with the cryptocurrency. British boxer Tyson Fury posted a promotional video on his Instagram page in which he described himself as “proud to be a Viking Floki.”

The high-level endorsements have contributed, at least on paper, to create an aura of legitimacy around Floki Inu. The cryptocurrency boasts over 370,000 holders and a market cap of roughly $900 million (as of January 4th). But what is Floki really offering? One of the projects they promise to develop will be called “Valhalla”, a metaverse game built around the Viking traditions where it will be possible to buy and exchange Non Fungible Tokens (NFTs).

“We understand how big of an issue unemployment is all over the world”, Floki says on its website, “and the FLOKI P2E NFT game will solve this problem by helping many people to make a living through P2E gaming”. The cryptocurrency also touted the creation of Floki Inuversity, which its creators promise will be “the premier cryptocurrency education platform”.

Finally, the company is active in charitable activities by supporting the creation of primary schools in Ghana, Guatemala and Laos, as confirmed to IrpiMedia by the NGO Pencils of Promise.

Celebrations by Napoly players after the away game with Milan on December 19, 2021 – Photo: MB Media/Getty

A little digging, however, brings up information that raises concerns. The project is almost entirely managed by anonymous people, hiding behind faceless Twitter accounts. The technical features of the currency – and the lack of transparency over the developer’s holdings – have set off alarm bells with crypto experts. Finally, the legal entity behind Floki Inu is a shell company based in a remote village in Georgia, the Eastern European country, and controlled by a nominee shareholder, as confirmed by one Floki’s core team members.

According to Patrick Boyle, former hedge fund manager and now professor of derivative finance at King’s College London, meme coins like Floki Inu are similar to pump and dump schemes: an ancient mechanism of financial manipulation to artificially raise the value of an asset before offloading it. Those who sell at the right time make a profit, all the others are left empty-handed.

“The investment strategy of Floki Inu is not clear, nor what should drive the growth of the money people put in”, Silvia Bossio, operational manager of Chainblock explains to IrpiMedia: “As if part of a collective hysteria dictated by speculation, people are flocking to any new supposed crypto miracle. As a result, they decided to put their savings into this venture, convincing themselves this would be a huge success. Those funds have been largely reinvested in advertising campaigns and sponsorships that serve to increase the audience of those who believe they are about to become millionaires”. The reference is to the so-called “fomo”, fear of missing out.

“My new Shiba Inu will be called Floki”

Floki Inu landed on the crowded cryptocurrency market last June. Its birth is not the realisation of a sophisticated business plan, but, in stark contrast, just a spur-of-the-moment reaction to a simple tweet from Elon Musk. “My new Shiba Inu will be called Floki,” wrote the Tesla founder – the reference is to the dog breed of Japanese origin – triggering a small earthquake in the crypto world.

My Shiba Inu will be named Floki

— Elon Musk (@elonmusk) June 25, 2021

Musk is a cult figure in the crypto community after he propelled with his tweets the dizzying growth of Dogecoin, the progenitor of meme coins. Created in 2013 as a joke by two American computer engineers, Dogecoin had thrived for several years only within a niche community of followers. Then, on the back of broader speculations in the financial markets and the support of celebrities such as Musk, the value of the satirical cryptocurrency skyrocketed: from $0.005 recorded on January 1, 2021 to an all-time high of $0.72 on the 8th May following, with a growth of 12,000%. Later in the year the value of Dogecoin collapsed, but in the meantime, a legend was born. Reddit forums and Youtube channels dedicated to the crypto world are flooded with stories of dozens of people who claim to have become millionaires thanks to the meme coin. The tales have set off a frenzied hunt for the next satirical currency destined for success.

Among the dozens of coins popping up immediately after Musk’s tweet on June 25th was Floki Inu. The project details publicly available are limited. Developers and promoters are protected by anonymous profiles, with the sole exception of one of the developers, Jackie Xu. The first white paper – a document that outlines the purpose of the coin – said that “Floki’s mission is to become part of the dog token family” and that developers “hope to create a positive community”.

Despite the initial enthusiasm, the cryptocurrency went off to a rocky start filled with thefts, internal quarrels and several revival attempts. In the first ten days of its existence, Floki Inu suffered at least two rug pulls: scams, common in the crypto space, in which developers drain the liquidity and move it to their personal wallets.

The remaining core team members blamed the project’s first developer and turned a page. They created a second version of Floki Inu with a new blockchain contract and injected fresh capital, saving the community that had rallied around them in support of the project. The new technical specifications ensured – according to Floki Inu – that the project has become more solid and secure.

One of Floki Inu’s fathers, the user “B (Da Viking)”, told IrpiMedia that he had implemented indispensable measures to protect Floki’s Vikings. These include liquidity locked for 265 years – which prevents developers from emptying the pool in which investors put their money. He also said they strengthened the shared responsibility of all the administrators of the team who must all sign-off major changes. Contacted by IrpiMedia, “B” confirmed that Floki Inu now enjoys security features in the utmost interest of investors.

However, “B” did not want to say how many wallets and what percentage of the tokens are controlled by Floki developers. Simply put, it is not possible to know whether a single person or a small group of core holders has the power to drive up or down the currency’s price. If all the major holders decided to sell their tokens at the same time, Floki Inu would be largely driven out of existence.

“B” claims that the developers of Floki Inu have no intention of selling their tokens to cash in and that they are making numerous sacrifices for the sake of the project.

Nigerian bloggers and empty companies

“Anyone could create a meme token at any time and pitch it as an investment”, observed Stefano Capaccioli, chartered accountant and founder of Coinlex, a consulting firm on cryptocurrencies and blockchain solutions. “But the meme coin market is rife with complex instruments, wallets and wild volatility: pieces of an extremely complex jigsaw that is not always in the hands of competent or bona fide people”.

To get a better idea of ​​the reliability of Floki Inu, IrpiMedia tried to dig a little deeper into who is really behind this project. The only real name Floki Inu has published is that of lead developer Jackie Xu, a computer engineer based in the Netherlands. At the head of the technological aspects, Xu shows little involvement in strategic decisions or in the promotion of Floki to the public.

Driving these efforts are a string of Twitter profiles in which real identities are hidden behind aliases. A member of the Floki team explains that this is a choice dictated by the fact that in the world of cryptocurrencies “the focus should not be on individuals, but on the entire community and on technological processes”.

A user named “Sabre” purports to be Floki Inu’s “marketing director”. An entrepreneur based in London, he had reportedly negotiated the sponsorship deals with the football clubs. “Sabre” claims he prefers to remain anonymous because he is not looking for notoriety.

Another particularly active profile is that of the user “B Da Viking”, who describes himself as Floki Inu’s “strategist”. IrpiMedia has discovered that behind this alias is a 27-year-old Nigerian freelance blogger and writer. Before dedicating himself full time to the world of cryptocurrencies, until last February “B” (as he is known online) ran a website in which he dispensed tips on how to make money through blogging and ghostwriting. “There is no doubt countless ways to make money online but writing for others is one of the most lucrative ways to make cool money online,” read the page, now removed. “B” claimed to earn a six-figure salary through his own business. On his site, it was also possible to purchase an e-book, priced at $ 29.99, featuring a step-by-step guide on how to become a successful freelance writer.

Alongside his career as a blogger, Floki’s head of operations had also ventured into catfish farming in Nigeria, with which he planned to “solve the problem of hunger in Nigeria and in various African countries, and finally in the world”. “B” said he does not want to reveal his identity because he fears for his own physical safety. “The risk of kidnapping is very high in Nigeria,” he explained.

The Floki team goes to great pains to highlight that the project is based on decentralisation and that operations are carried out almost exclusively on the blockchain. That’s the future, they argue. But, in today’s world, the presence of a legal entity was required to secure advertising deals.

The video promoting Floki Inu and Napoli partnership | Source: Twitter

Floki’s developers opted for Georgia. The Eastern European country has become a favourite destination for crypto-entrepreneurs attracted by low taxation and a permissive regulatory regime. Floki Ltd was founded on October 1st in Marneuli, a town of around 20,000 inhabitants located on the border with Armenia and Azerbaijan. Floki’s management does not appear to hold any position within the company. The sole director and shareholder is a 52-year-old Georgian woman with no apparent experience in the financial world.

“B” initially explained that the owner of Floki Ltd is a person “related to the management of Floki”. When IrpiMedia asked if the woman was a nominee director and shareholder who looks after the interests of the real beneficial owners of the company, “B” replied: “Exactly, that would be the best way to put it”.

Floki Inu’s massive advertising campaign

Since then Floki has embarked on a massive advertising campaign. It is funded by a tax levied on every purchase of the currency, the core team member said. Increased media exposure leads to more transactions which in turn drives up the budget for marketing activities up in a continuous cycle.

Towards the end of October on public transport in various European cities billboards appeared with the message “Missed Doge? Get Floki ”. A clear reference to the original meme coin, Dogecoin, and, again, to the fear of missing out. Having quickly gone viral, the campaign stirred up controversy. In London, following a complaint from a city councillor, the Advertising Standards Authority launched an investigation into the ads, which is still ongoing. Floki Inu told the BBC that it had complied with all legal requirements while shifting its attention to a new front of the marketing campaign: agreements with top European football clubs.

On November 23, Napoli announced that Floki Inu had become the new sponsor on the back of its blue shirt. The first press release published by the Neapolitan club quoted a spokesperson for Floki, according to whom the goal was “to become the best known and most used cryptocurrency in the world”. Napoli, on the other hand, explained that “they had discovered that our club and Floki have the same values ​​and the same aspirations for growth in common”. What are the values ​​and aspirations is not clear: the club has declined to answer this question, as well as the others asked by IrpiMedia. In the meantime, the press release has been subsequently replaced on the Napoli website by a more concise one in which the quotes have disappeared.

The agreement with Napoli was followed shortly afterwards by sponsorships with Bayer Leverkusen in Germany, Twente in the Netherlands, Spartak Moscow in Russia and Fenerbahce in Turkey. Floki Inu promoters celebrated each announcement, extolling the resulting media exposure. “The strategic partnership is a great victory for the crypto world,” said Floki Inu on the occasion of the agreement with Bayer Leverkusen, “because it introduces cryptocurrencies to millions of people in the Bundesliga and the Europa League while legitimising the sector to the eyes of hundreds of millions of people “.

For Boyle, a professor of derivative finance at King’s College, through these sponsorships, the clubs expose their fans to major risks. “I think that it is wrong to promote such products to your audience, especially without adequate disclosures,” said Boyle. “Pitching an investment product, particularly one as speculative and unconventional as a “new form of money” could end up bankrupting people, and destroying their retirement prospects.”

IrpiMedia asked Napoli, Bayer Leverkusen and Twente for details regarding the checks carried out on Floki Inu before signing their respective agreements. Nicola Lombardo, Napoli’s press officer, said he had nothing else to add to the press release published on the site. «The press release is fully exhaustive. The doubts are yours (the authors, ed) », added Lombardo. “And I remind you that in this corporate management, Napoli has always done everything they had to do with the utmost correctness”. IrpiMedia did not receive answers to questions sent to Bayer Leverkusen and Twente.