Crypto’s newest pitchman?
Photo: Screencap/Coin Cloud
In a new ad released this week, Spike Lee makes an impassioned case for cryptocurrency — “new money,” as he dubs it — before specifically promoting a company called Coin Cloud, which operates crypto ATMs.
Whereas old money is “flat out broke” and “systematically oppresses,” says Lee, who both directed and stars in the ad, “New money is positive, inclusive”— the commercial flashes to three smiling people holding a Black Trans Lives sign — “fluid, strong, culturally rich.”
Holding a gold-tipped cane and wearing a red plaid blazer, black bow tie, and panama hat, the famous filmmaker urges, “Do your own research!”
So, I tried. Considering Lee shot the ad in New York — the two-minute spot shows iconic views of Wall Street, as well as NYC’s signature hot dog and pretzel carts with their yellow-and-blue Sabrett umbrellas and Coin Cloud machines placed nearby — I tried to find where exactly these were located. When I went to Coin Cloud’s machine locator map, though, while there were plenty of them around the country, I could not find a single one in New York.
Maybe, I thought, the map was broken or outdated, so I used Coin Cloud’s chat-bot feature on the same webpage to ask about it. A few minutes later, the customer service rep replied: “Yes we have lots of machines in NY. Do you have a zip code you’ll like the machine near by?”
I provided the zip code for New York magazine’s downtown offices. The rep sent back a location in North Bergen, New Jersey.
Again I pushed — I’m looking for a location in New York!
It took a few more minutes before the rep responded. “Unfortunately I have just been informed that at this time we no longer have active machines in New York,” he wrote. “Compliance laws have changed and we are working on obtaining permits again. We will for sure have active machines in New York before the end of the year.”
Spike Lee’s production company, Forty Acres and A Mule Filmworks, did not reply to a question about how they’d worked around this during the filming. But Chris McAlary, Coin Cloud’s founder and CEO, explains how they made it happen: “We used the machine as a prop,” he says. “We brought them into New York. They were in demo mode, there were no actual transactions happening.” While Coin Cloud once had a machine in New York back when the company first launched in 2014, inside a drone store on Fifth Avenue, it was barely there a month before New York launched its crypto-regulatory requirement called a BitLicense, and Coin Cloud pulled out of the state rather than spend the money to obtain one, McAlary adds. (New York has so far awarded a BitLicense to just three other crypto ATM operators.)
McAlary wasn’t deliberately trying to market to New York, either. “Spike’s in New York, so Spike wanted to shoot there, and so Spike had what he wanted to do in his mind, and we were supportive of that,” he says. “Certainly New York City and Brooklyn has people from all walks of life, more so than, I don’t know, Iowa or something. So our products are serving all walks of life.” Coin Cloud recently submitted an application for a BitLicense and hopes to reenter New York once state regulators approve it, he adds.
Bitcoin ATMs have long been a fairly niche part of the cryptocurrency industry: They’ve been a headline-attracting novelty since they began appearing in various parts of the world around 2013 — often tucked into a corner in mom-and-pop bodegas and convenience stores — but have failed to gain the customers and usage that have made online crypto-selling websites and apps, such as Coinbase and Robinhood, mainstream successes.
McAlary launched Coin Cloud in 2014. After college, he’d moved to Vegas in 2008 to play online poker, turning down “real job” opportunities and buying a house out of foreclosure. He played exclusively online for several years until 2011, when U.S. law enforcement suddenly cracked down on internet gambling, forcing online poker sites to shut down on what became known in the card-game industry as Black Friday. “I had my entire bankroll locked up on those sites, and to me it was all the money in the world,” recalls McAlary, sporting a short dark beard and mustache and a satin black button-down for our Zoom call.
He’d first heard about bitcoin around the same time and bought a mining rig which he hooked up in his garage. After running it for a couple of months, he’d generated a bunch of bitcoins, worth about $2 a piece at the time, but his electricity bill soared from about $100 to $600 a month, and he had to shut down the operation. Searching for a new way to get bitcoin, he heard about a new ATM offering it, bought a prototype, and in 2014, installed it on the Las Vegas strip. Since then, he’s used any profits to slowly grow the company without taking outside money. (During our Zoom, he had to take a quick break to approve a bank wire.)
By this summer, Coin Cloud had nearly 3,000 machines across 47 U.S. states and Brazil, but few people — even in the cryptocurrency industry —had heard of them. “Everybody sort of knew Coinbase and some of these other companies,” McAlary acknowledges. “Nobody necessarily knew who Coin Cloud was.”
Seeking a celebrity spokesperson, Coin Cloud approached Lee and found a fit. “He was familiar with crypto,” McAlary says. “He sort of self-identifies as someone who gets the idea of it but doesn’t necessarily get all the technical details with it. He understands what the technology means for everyone in the world.”
“[Lee] also understood the risk. That’s why a key piece of the message was ‘do your own research,’” adds McAlary. “Just as the technology empowers people, he understood that, with that power, you need to take responsibility.” (Neither Coin Cloud nor Lee have disclosed how the company compensated the filmmaker for the commercial.)
Unlike Coinbase and the more well-known crypto exchanges that cater to relatively savvy investors, Coin Cloud is targeting novices; more than half of its customers are trying crypto for the first time. “I want bitcoin in the next hour, how do I go get it?” McAlary says of his customer’s mindset. There is some risk Coin Cloud will let them take, though: People who use its kiosks can buy $500 worth of crypto just by putting in their phone number, no other questions asked. Says McAlary, “We’ve taken a risk-based approach that nobody’s going to run a drug empire with $500.”