Big names are entering crypto and crypto is making some names big. There are some who have shaped their views to a point of dominance, becoming opinion leaders. However, many crypto influencers have been caught pants down, raising concerns about whether they are part of an elaborate pump-and-dump scheme.
Every so often there is a headline celebrating a new public figure joining one cryptocurrency platform or the other. From Christiano Ronaldo to Snoop Dogg, big-name individuals are becoming active participants in the crypto boom.
But social media crypto influencers are accused of colluding with fly-by-night projects. They allegedly promoted tokens to people with little understanding of the risks involved in crypto assets, resulting in massive losses for the buyers.
Crypto influencers: The big dump, profits over followers
It is a typical pump-and-dump scam where only the influencer and project team profit from the misery of others, according to observers. One of the most popular cases involves that of YouTuber and influencer Ben Armstrong, a.k.a BitBoy.
Onchain sleuth ZachXBT made sensational claims against BitBoy in January. By posing as a project looking for promotion, ZachXBT alleged that “I uncovered 7 scams Bitboy actively worked with and promoted to his audience.”
The projects include MYX Network (MYX), DistX, Zao Finance, Ethereum Yield (ETHY), Meridian Network (LOCK), Cypherium Blockchain (CPH), and PAMP Network (PAMP). ZachXBT alleged all of the projects collapsed, leaving ordinary investors poorer.
In the crypto lexicon, it was a “rug-pull.” A pump and dump. But BitBoy profited from their demise, the online detective claimed. BitBoy then deleted the videos he posted on Twitter promoting the scam projects, ostensibly to hide his involvement.
“It’s clear simple due diligence is not done and it’s profits over followers with shills. Just because you delete a video doesn’t mean it didn’t happen,” ZachXBT alleged.
BeInCrypto reached out to Ben Armstrong for comment. He had a few choice words for this publication. In a way, BitBoy’s unpalatable comments speak more to his character – an angry and bitter influencer who frowns at transparency.
“We’ve already addressed every single allegation. It’s not my fault if you don’t know how to use Google,” BitBoy charged in a chat on Twitter. “It’s really cool you ride Zach’s dick because you can’t do research yourself.”
But Zach is not the only individual to highlight BitBoy’s alleged shenanigans. Cryptocurrency researcher FatManTerra recently cautioned that people should make their own assessments instead of being led by popular accounts and figures.
“This is exactly right ‘Influencers’ like BitBoy and Ran Neuner have a storied history of shilling absolute scams and dumping on their own followers,” he tweeted. “By following these people, or reading their tweets, or watching their videos, you are asking to be burned.”
Two years ago, Reddit user Kawalele went on a long rant complaining about how they had been misled by BitBoy.
“He has several videos titled something similar to: ‘BEST Low Cap Crypto Gem of 2021’, and GUESS WHAT!! He doesn’t hold 2/10 coins that he pumps in those videos. But he does hold 300k USD…hmmm, where has that come from (sic)?” the user said.
Kwalele accused BitBoy of talking about SOUL, a crypto asset which he framed as the “Best Low Cap Gem and he does not own it. This is more than proof that he dumps soon after his video airs.”
Misleading promotions: Investors beware
Many social media influencers are routinely paid by scam projects to help them pump and dump new tokens for speculative purposes.
Earlier this year, US TV star Kardashian West was criticized for posting a paid promotion of a crypto token called Ethereum Max to her 250 million followers on Instagram. She asked her fans: “Are you guys into crypto????”.
While the post was marked as an advertisement, Kardashian did not disclose that the token was created only a month earlier by pseudonymous developers. She was later fined more than $1 million by the US Securities and Exchange Commission.
Observers say investors should look beyond the so-called investment opportunities. Danial Daychopan, founder and CEO of crypto rewards platform Plutus, said that seemingly easy investments or quick wins usually end in tears.
“Crypto influencers make money by selling you an ‘investment opportunity’ rather than by providing valuable advice. This is a huge conflict of interest that people should be wary of and avoid at all costs, even if they promote Bitcoin,” Daychopan tells BeInCrypto.
According to Daychopan, some of the names implicated in this scheme are Kevin O’Leary, Raoul Paul and Mike Novogratz. He called for tougher laws to combat the flood of online promotion of crypto assets, saying:
“Measures such as harsher fines for undisclosed positions and paid influencer posts, and stricter regulations on the advertising of unregulated products such as stablecoins, and high-yield leverage trading would all contribute to a safer industry.”
Daychopan added that sometimes influencers unwittingly become accessories to scams by failing to apply due diligence. Besides blindly endorsing faulty platforms, sometimes the influencers pretend to have background knowledge of impending changes in the cryptocurrency world.
Influencers typically make use of their large social media following to promote the projects. Andre Lages, the co-founder of DeFi platform Lympid, told BeInCrypto that some influencers deliberately misled their followers for profit.
He berated “so-called crypto influencers which repeatedly claim to know not only future market performance…but also claim to have inside information of developments and other topics that will determine the success or not of a project.”
Lages pointed to Suppoman, who enjoyed a huge following during the ICO mania of 2017 to 2018. By some sheer luck, Suppoman made the right calls on token prices, “even though nothing was due to his efforts but to the general behavior of the market [which was rising].”
Suppoman became so popular he started demanding payment from several “projects to say good things about them.” But Lages alleged Suppoman eventually became the shiller-in-chief. He continued “dumping tokens on [his] audience.”
“Crypto investors and newbies should always avoid following people who make price predictions in general. And also in a completely abstract way, without any real data support at market level as well as in the specific sector,” Lages warned.
“On the other hand, you can see people like Vitalik Buterin behaving in a completely different manner, I recall Vitalik in 2018 stating that ETG price had reached a bubble status since there was no real fundamental value for it.”
Abuse of Power
Influencers help projects generate publicity through regular adverts and posts on their social media handles. This tends to send signals to investors who may think the products are legitimate.
In April 2022, US authorities charged 22 people for dump and pump scams running up to $194 million. James Wo, the founder of web3 investment firm DFG, said public figures have been abusing their clout.
“With the implosion of the FTX Derivatives Exchange, the biggest culprit among influencers will be Tom Brady and Larry David. And other media personalities that worked with the platform,” Wo tells BeInCrypto.
Experts say inexperienced or retail crypto investors should refuse to follow the hype. Hype in the crypto industry is mostly generated by influencers and that does not last. Especially for projects that have not yet proven their worth in the grander scheme of things.
“To properly guard against scams, investors need to adopt healthy investment ethics including proper research into the project’s fundamentals and business prospects,” Claudia Minea, co-founder and CEO of crowdfunding platform SeedOn, told BeInCrypto.
‘As a rule of thumb, companies that are licensed in their jurisdictions should be the starting points for this research as unregistered companies can guarantee no safety in case of a crash.”
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