A piece of wisdom that I always hear about eSports is that it’s an “emerging industry,” some 20+ years into its inception, and that means there will be crooks and thieves skulking in the shadows trying to bilk people. It’s also said that everything must be done to shoo these people away, as it reflects poorly on anyone trying to make money when investors look and see that there’s a chance to be ripped off. That makes sense to me, I wouldn’t really question that.
But here’s a question: what happens when the only moneymen left are crooks and thieves?
On Jan. 6th, Matcherino, an Esports platform that lets organizers host and crowdfund tournaments as well as pay them out, posted an announcement about a new sponsor available for their partners:
Tezotopia is a game from Gif.games, who specialize in blockchain-based gaming. What’s that, you ask? It’s when every aspect of a videogame, from its economy to its resources to its gameplay, is done on a blockchain, or digital ledger. Using cryptocurrency, a player would pay small fees for all these actions, and in return their gameplay resources and stats are forever marked with a hash on a blockchain, proof that they own these digital assets. Tezotopia goes one step beyond and adds a building/farming sim aspect to it: users can build blocks of digital “land” that produce in-game resources and then mint them as NFTs, which are then put into a marketplace where you can buy and sell land and earn real money from holding the NFTs.
So it’s a little goofy. The problem? NFTs in particular are a red cape to a rampaging FGC bull. I assume it has to do with a lot of artists being into fighting games and that the unregulated, bullshit NFT market is based a lot on minting other’s work on the blockchain. Either way, Ramesses II didn’t have it as bad during the Plagues as someone who tries to operate in fighting game circles and tries to sponsor or mint NFTs. They will be seen as a scam, as theft, and you’re going to be dragged mercilessly for it. No one likes a thief, after all, especially one that would steal from a creative underclass already plagued with its own maladies.
As expected, Matcherino was torn apart for this decision, to the point that the original tweet was deleted after a few hours and an apology made from the co-founder and again the Discord channel.
I think it’s an unequivocal good that the huge reaction of a certain subset of the community can make Matcherino lose faith; it shows that the fighting game communities, usually small potatoes in most Esports discussions, have a market power that needs to be listened to. Tezotopia is also a terrible scam, as most NFT-based blockchain games are, and the more they are seen as the hyper gambling simulators they are designed to rake money in from addicts, the better.
But I do think it’s funny that Matcherino stated “We will not be allowing NFT/Crypto sponsors going forward.” I was also somewhat surprised by how many in the FGC were willing to not just drag, but stake their use of Matcherino on whether or not they continued going forward with an NFT-based sponsorship, as merely association seemed indicative of endorsement.
After all, they already take money from those industries!
Since this controversy, I’ve been looking into Matcherino, since I knew of the service but not much of the company providing it. I found it very interesting to see who their most recent investors, to the tune of $1.5 million, in 2019 were:
Wells Fargo and Galaxy Interactive contributed a substantial amount to Matcherino, with Wells Fargo being a lead investor. You’ve probably heard of Wells Fargo, a multinational bank, but Galaxy Interactive may not ring any bells. Galaxy Interactive is an offering of Galaxy Digital, which is also a financial management firm, but with a more specific focus. Can you guess what it is? If you said digital assets, crypto trading and crypto mining, collect your prize.
Galaxy is headed by professional bad–opinion–haver Michael Novogratz, a Wall Street fixture who has bet it all on crypto. Here he is pictured with a fresh tattoo of luna, a cryptocurrency on the Terra blockchain that he was very enthusiastic about in January of 2022
Roughly 4 months after he got this tattoo, luna would go from a $116 high price to a fraction of a penny in just a month as Terra collapsed, losing $40 billion in market value and causing significant financial distress to investors, who lost everything.
Suffice it to say, Galaxy could use a W right now, especially since they were recently implicated in a $77 million exposure from the collapse of crypto lending firm FTX. Led by manchild Sam Bankman-Fried, FTX engaged in an inconceivable level of fraud for years yet somehow managed to fool everyone, including Esports team Team SoloMid who took $210 million from them and agreed to change their name to TSM FTX (they’ve since reverted after FTX’s liquidation). Novokratz himself is down $6 billion in personal wealth stemming from the luna collapse, and Galaxy posted losses of over $300 million for FY2022 second quarter, and will be down in Q4 after pulling what cash they could from FTX. Yikes.
Clearly NFTs were just scratching the surface of what Matcherino already had under the hood. If you thought that was the extent of it, I could imagine being pretty sorely disappointed. I imagine, however, that some would say that while the crypto funds are disappointing, at least they weren’t taking money from people who were just out-and-out crooks that would rob the homeless if it meant turning a profit.
So the other major investor, Wells Fargo, committed one of the more brazen acts of theft and fraud by any financial institution, first revealed in 2013. The higher-ups were setting impossible quotas for cross selling various banking services such as online banking, credit cards, and taking out a mortgage, which lead to bank employees making fake credit and checking accounts using customer data and money in order to fill quotas. How down bad were they for sales?
They’ve paid out billions in reparations, fines, and so on, have been under investigation from the US government thanks to Senator Elizabeth Warren and Consumer Financial Protections Bureau director Rohit Chopra, and its executives are still paying for it as recently as last year. In the meantime, they’ve worked feverishly to rehab their image, including using their investing arm, Wells Fargo Strategic Capital, to invest in developing industries. Like Esports.
Mishandling funds to the tune of $1k here, some hundreds there is pretty bad. How about mishandling the funds of millions of clients, knowingly and willingly, just in order to sustain a quota?
I applaud a principled opposition to NFTs and scammers and thieves in general, but I hope people understand that it’s small potatoes to hinge a decision to support on whether or not a company mints NFTs – by the time they’ve gotten to that step, there’s a good chance they have already taken money from a crypto company. Isn’t that worse than just minting an NFT?
Now it’s possible that the above info might make someone want to consider putting their money where their mouth is and use another platform for tournaments instead of Matcherino. And while no one quite offers the ease of use to get crowdfunding or the same pot-matching idea, there are some alternatives.
I’ll just pick one at random: ESL.
ESL is a major tournament platform that has been around for decades, holding tournaments across multiple different genres and setting up various leagues and circuits. They’ve partnered directly with Sony, a co-owner of Evolution, to host tournaments for games that can be joined directly from your Playstation 4, and its ads are featured on the Playstation dashboard. They also use Matcherino in their online tournaments to help raise funds directly from players for players (Don’t count on being paid within this year, however).
The company, based in Germany, was recently purchased by the Savvy Games Group in order to combine it with FACEIT, another Esports tournament platform, for $1.5 billion. If you look at their website, it’s pretty impressive: sleek design, clearly stated mission and goals, and some impressively tenured talent running its operations. Where’d they get the kind of jack necessary to hire these credentialed execs and buy ESL outright? Wait, what’s that in the corner of the site?
That is the seal of the Public Investment Fund of the Kingdom of Saudi Arabia. While Savvy is run by execs removed from the House of Saud proper, the Chairman of the Board behind Savvy Gaming, and thus ESL, is His Royal Highness Prince Mohammed bin Salman bin Abdulaziz, Crown Prince and head of the Saudi Arabian state.
The Kingdom has made some pretty bold moves on the Esports front, and according to MBS, they have intentions to be “the ultimate global hub for [the] games and esports sector by 2030”. Just on the fighting game front, the PIF has a 96% ownership stake in developer SNK, of King of Fighters and Samurai Shodown fame, and a 5% stake in Capcom and Nintendo. Obviously they’ve got the ESL connection as well.
While it should be clear that the investments are mostly purely monetary, you’ve probably heard the term “Saudi Blood Money” thrown around a lot. The Kingdom, one of the last Absolute Monarchies in the world, is quite well known for its atrocious record on human rights, such as jailing women’s rights activists, using capital punishment to curb homosexuality, murdering journalists, committing (US-supported and funded) war crimes in Yemen, and so on and so forth.
As a means of improving their public relations with the world, the Kingdom has made significant overtures into sports and entertainment as a means of driving tourism in the country. Esports is yet another one of these distractions, an industry that is predominantly young and in need of cash, thus more likely to take an offer they can’t refuse.
But to say it comes with baggage is an understatement, and crypto backlash pales in comparison to the backlash one can get when they kiss the ring of MBS. As an example, Riot Games, a company besieged by its own reports of both sexual harassment and labor abuse, backed out of a partnership with the Kingdom in2020 over immediate and intense fan and staff backlash. If Riot, one of the biggest names in Esports and also one of its most controversial, won’t do business with you, then that speaks very much to the Kingdom’s toxicity.
Suddenly crypto doesn’t look so bad!
You’ve got to pick your poison. Esports is not a cheap hobby, and the money has to come from somewhere. If not the players, it’s going to come from crypto firms looking to burn cash that could be gone tomorrow, or it’s going to come from His Royal Highness and his Kingdom of goons. I’m not saying it’s an easy decision to make or that it’s fair, or even that you have to think of it at all – it’s just a reality that can’t be avoided so easily.
I understand this is a very tricky issue to navigate – as I talked about when I went into the crypto platform that was a big sponsor at Evo, the money funding these endeavors doesn’t speak for the characters of the entities themselves. Near as I can tell, Matcherino is full of jam-up employees who have been open in their communication and take no input from their investors. Still, it goes back to what I said earlier – no one likes a thief, and crypto and the House of Saud represent some of the biggest sets of thieves and crooks one could probably find in the world.
I suppose I wish there was a curiosity to understand that decisions like Matcherino’s don’t really come from nowhere. Following the money would lead to the obvious conclusion that crypto cash isn’t really something they have a problem with, as a good chunk of their fundraising is from one of the bigger digital asset firms. It stands to reason that a fledgling NFT-based blockchain game is right up the alley of someone they would do business with, and not some late-night betrayal of a community that had been loyal to them.
But so often, that curiosity doesn’t extend past a seething white hot rage towards an initial outrage, and it burns out extraordinarily quickly. Again, this is understandable – Matcherino might be able to be bullied into dropping a goofball blockchain developer from hosting sponsorships, but they are not going to return Galaxy or Wells Fargo’s investments. Even so, one would think that if hosting a blockchain dev was enough to want to burn the bridge, the reality of their funding would turn an anti-NFT zealot into Major Kong overnight.
Ultimately, I think Matcherino is a very useful service that will continue to help organizers raise money directly from communities in order to get decent money that doesn’t have to come from Saudi Arabia or Nestle or some giant awful entity. I also think that in order to use that service, one has to put up with the fact that crypto cash and blood money from Wells Fargo is largely responsible for the platform’s continued existence.
Is the convenience worth the compromise? We’ll see; I would certainly hope folks would be consistent, but reality has a funny way of making that extremely difficult.
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