You’ve probably come across influencers on Instagram, YouTube, and TikTok promoting cryptocurrency projects. Some claim they made a fortune overnight or urge you to invest right away before you “miss out.” Even though the cryptocurrencies themselves are not scams, some of the promoters have been caught either defrauding people directly or failing to disclose paid promotions.
It’s no secret that social media influencers can make a lot of money from sponsorship deals. Nevertheless, when it comes to speculative investments such as cryptocurrency, the lines between right and wrong become blurred. Some social media personalities are making a killing by promoting shady crypto ventures to their impressionable followers.
This is because while influencing pays well, introducing crypto promotions can be quite risky and misleading for fans. There are instances where certain influential people have pocketed thousands of dollars after endorsing different digital cash initiatives without necessarily disclosing that they were paid.
Regulators have begun clamping down on influencer-promoted bogus cryptos recently. They identified numerous situations where famous people exaggerated fraudulent business or forgot to indicate that the content was sponsored by someone else.
Ben Armstrong, a prominent figure in the crypto space and widely recognized as one of the most influential crypto influencers on YouTube, recently confronted a moral dilemma that prompted him to reassess his business practices. At the start of this year, he decided to put a stop to this.
As the BitBoy Crypto channel’s owner, with over 1.5 million subscribers, Armstrong took payments from crypto companies to promote their products to his large audience. However, he now regrets participating in this practice, as it ultimately resulted in significant losses for some of his viewers.
An incident that particularly contributed to Armstrong’s change of heart occurred in the fall of 2020 when he announced his partnership with a cryptocurrency called DistX, proclaiming it as his most trusted coin. The purpose behind DistX was to combat scams within the crypto community.
The truth is, this undertaking turned out to be another scam. The creators of DistX engaged in a “rug pull” by artificially inflating its market cap before abruptly withdrawing, leaving investors with tokens that have no value. Today, the value of DistX has plummeted by 99%, leaving the coin valueless.
These occurrences were a sudden realization for Armstrong and made him reconsider the moral ramifications brought by his deeds and how they negatively affected those who were watching him. This made him more responsible and cautious when it came to promoting projects within the crypto industry.
Even though Armstrong stopped accepting paid promotions in January, there are still many other influencers who seem to be heavily involved in this highly rewarding business. According to CNBC’s findings, a multitude of online personalities receive huge sums just to hype up shady projects.
A while back, an X post from an anonymous blockchain investigator surfaced listing 44 YouTube crypto influencers with their respective prices for paid promotions. The list shows that some social media stars received up to $65,000 for one video advertisement.
To ascertain the truthfulness of these fee disclosures, CNBC contacted the listed influencers named above. Some claimed that the amounts had been inflated, but those who revealed theirs affirmed making no less than $1,000 per promotion video.
In contrast to Armstrong, who openly declares his paid promotion videos, some influencers do not tell their audience about the huge sums they are paid for endorsing products.
As a matter of fact, the Federal Trade Commission (FTC) and the UK Trade Commission require clear disclosure of paid sponsorship’s and endorsements across social media platforms. This allows audiences to recognize possible bias.
Despite FTC endorsement guidelines, state regulators have discovered influencers promoting fraudulent crypto enterprises without disclosing compensation. Others do not reveal the risky nature of the asset. This violates consumer protection laws. Some influencers carefully follow endorsement rules, but the lack of transparency by others erodes consumer trust.
Most influencers mean well, but when you can earn four, five, or even six figures from such projects, it’s difficult to resist the temptation. Fraudsters know this very well. They will willingly pay an influencer thousands of dollars just to get the attention of their followers.
The next time an influencer raves about some hot new crypto asset, approach with healthy scepticism. Do your research before investing, as the crypto space still lacks adequate consumer protection. Don’t let yourself get drawn in without doing due diligence first.
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Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
