In blockchain gaming—where crypto tokens and ways to “earn” are at the forefront compared to traditional games—should influencers with insider knowledge be allowed to talk about tokens and their ever-changing prices publicly?
This question has become the center of a conflict between crypto influencer and YouTuber Jesus “Classy” Martinez and blockchain gaming company Gala Games. The firm removed Martinez from its creator program following concerns that Martinez’s videos were too focused on “ROI” (return on investment) and token-centric content.
“Yesterday, I was kicked out of Gala’s creator program,” Martinez wrote in a lengthy post explaining his experience. “I’ve poured thousands of hours into this ecosystem.”
According to the company’s President of Blockchain Jason Brink, Gala Games is ramping up its creator program, which is an initiative to spread awareness about Gala and bring creators together through an exclusive Discord server.
Yesterday, I was kicked out of Gala’s creator program
I had created a video showing my commitment to the Gala community & I’m going to keep that
With or without @GoGalaGames‘s support, I will make sure that my community gets the information they need & continue to come to me…
— JesusMartinez.ron 🔮 (@0xJesusMartinez) January 23, 2024
The program provides each approved creator with a monthly grant of $1,000 worth of GALA to give away during livestreams or IRL events to their supporters. Gala doesn’t “sponsor any content creators directly,” said Brink, but is trying to foster a community through “network initiatives” instead.
In a post responding to Martinez, Brink stated that because creators in the program will receive advance knowledge of Gala’s upcoming news and launches, Gala doesn’t want to allow any creators who focus on its token to be a part of the program.
“If a creator makes a lot of ROI-driven content or talks about tokens (moonboy/roiboi content), we cannot give them access to this information,” Brink said. “The GALA token is the central heartbeat of everything, but we do not want to incentivize anything that creates a liability for the project as a whole.”
“Classy is a fantastic creator whose content doesn’t align with what we want to to [sic] promote for what seems like quite obvious reasons,” Brink added.
Just to be very clear, the $GALA Creators Program is spinning into high gear.
Content Creators that are part of this program (which is not a contracted program) will be given information on games and publications in advance so that they can prepare content for release.… https://t.co/w4fGoC9jJG
— Jason Brink aka BitBender (@BitBenderBrink) January 23, 2024
But it’s certainly possible that any creator, regardless of what they publicly promote, could theoretically “front-run” any of Gala’s many crypto tokens in advance of a game or NFT launch behind the scenes.
“Play-to-earn” or “play and earn”—a subset of games that allow players to earn crypto tokens or NFTs for wins—make up a substantial portion of Gala’s gaming portfolio. The company has also sold pricey NFTs that can cost thousands of dollars for its games, some of which have not yet been released. Gala has also issued numerous tokens: GALA, ETIME, TOWN, MUSIC, MTRM, and SILK.
Blockchain gaming influencers may choose to cover crypto games instead of traditional games because they want to explore the financial elements of the fledgling industry—they like owning game assets and buying and selling NFTs and tokens. Expecting content creators not to focus on blockchain gaming’s blockchain elements is a paradoxical task.
And in an era when free gaming token airdrops suck up vast amounts of community attention and excitement, it’s unlikely that crypto gaming enthusiasts will lose interest in the money of it all any time soon.
Martinez told Decrypt in a message that he has tried to give a voice to the Gala token-trading community and the gamers who have bought and sold different Gala tokens and NFTs. He said that he also created his own community tournament for the Gala game Spider Tanks because of his passion for the game, without help from the company. And while Martinez said he’s previously made “price prediction videos” that he felt were realistic, he said that he has never owned a substantial amount of Gala’s crypto tokens.
As for whether so-called “moonboys” are allowed to be a part of the Gala ecosystem, Brink said they are “more than welcome to come around.”
“I am just not going to feed them information to make legally problematic posts,” Brink said.
But theoretically, does an influencer front-running or making public predictions about token prices pose a real legal risk to Gala, the company?
Reached for an outside opinion, Todd Phillips, assistant professor of law at Georgia State University and former FDIC attorney, who frequently advises Congress members and U.S. regulators on cryptocurrency regulation, doesn’t think what an influencer does would ultimately make Gala liable for that behavior from a legal standpoint.
“It is unlikely that Gala Games itself could be held legally liable, especially if they have policies in place to stop insider trading through their terms of service,” Phillips told Decrypt via email.
“However, the influencers who violate Gala’s TOS certainly could be. Securities laws’ insider trading is based on duties owed. If influencers violate the duties they owe to Gala (by violating TOS), they could be held liable.”
Currently, Gala Games’ TOS asserts that users of its platform shall not engage in “creating, offering, selling, or buying securities,” cannot “violate any law,” and users are “solely responsible for user’s conduct,” among other rules.
Gala Games does not currently have a separate legal agreement or TOS for creator program members, Brink confirmed to Decrypt.
Gala Games’ general TOS argue that the Gala token is “a digital reward and not a security token.”
But any incidents could still be subject to securities law, said Phillips.
“Gala Games’ Terms of Service do not decide whether their Gala token, or any other tokens that their games use, is a security. That’s decided by judges based on the facts of the case,” Phillips told Decrypt.
For instance, last year a U.S. judge found a former OpenSea executive guilty of insider trading NFTs. The exec pleaded innocent by claiming that NFTs aren’t securities and therefore such laws didn’t apply. The judge wasn’t convinced, however, and now the executive is trying to appeal the guilty verdict.
Edited by Andrew Hayward