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, they have become opinion leaders. However, many crypto influencers have been caught with their pants down, raising concerns about whether they are part of an elaborate pump-and-dump scheme.
There are headlines to celebrate every time a new public figure joins one cryptocurrency platform or the other. From Cristiano Ronaldo to Snoop Dogg, big-name individuals are becoming active participants in the crypto boom.
But social media crypto influencers are accused of complicity with fly-by-night projects. He allegedly promoted the token to people with little understanding of the risks involved in crypto assets, resulting in huge losses for buyers.
Crypto influencers: Big dump, profit on followers
According to observers, this is a typical pump-and-dump scam, where only the influencer and the project team benefit from the misery of others. One of the most popular cases involves YouTuber and influencer Ben Armstrong, aka Bitboy.
Onchain spy ZachXBT made sensational claims against BitBoy in January. By posing as a project looking for publicity, ZachXBT alleged that “I exposed 7 scams Bitboy actively perpetrated and promoted to its audience.”
Projects include MYX Network (MYX), DistX, Zao Finance, Ethereum Yield (ETHY), Meridian Network (LOCK), Cypherium Blockchain (CPH), and PAMP Network (PAMP). ZachXBT alleges that all the projects have collapsed, leaving ordinary investors impoverished.
In crypto lexicon, it was a “rag-pull”. a pump and dump. But the online spy claimed that Bitboy profited from his demise. BitBoy deleted a video posted on Twitter promoting the scam’s projects, apparently to hide his involvement.
“It’s clear that due diligence hasn’t been done and it’s a profit on followers with followers. Just because you delete a video doesn’t mean it didn’t happen,” ZachXBT alleged,
BeInCrypto has contacted Ben Armstrong for comment. He had a few choice words for this publication. In a way, BitBoy’s unflattering comments speak more about his character – a grumpy and bitter influencer who frowns upon transparency.
“We’ve already addressed every single allegation. It’s not my fault if you don’t know how to use Google,” Bitboy alleged in a chat on Twitter. “It’s really cool that you ride Zach’s dick because you can’t do your own research.”
But Zach isn’t the only one to expose Bitboy’s alleged fraud. Cryptocurrency researcher FatManTerra recently warned that people should make their own judgments rather than being led by popular accounts and statistics.
“That’s perfect.” Tweeted, “By following these people, or reading their tweets, or watching their videos, you are asking for burnout.”
Two years ago, Reddit user Kawalele complained at length about how he had been misled by BitBoy.
“He has several videos with something similar titled: ‘Best Low Cap Crypto Gems of 2021’, and guess what!! He doesn’t have the 2/10 coins that he puts in those videos. But they have 300k USD…hmm, where did that come from?” the user said.
Kwalele accused BitBoy of talking about SOUL, a crypto asset he coined as the “Best Low Cap Gem” and that he does not own. This is more than proof that he leaves soon after his video airs.
Misleading Hype: Investors Beware
Many social media influencers are regularly paid by scam projects to help pump and dump new coins 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. He asked his fans: “Are you guys into crypto????”.
While the post was marked as an advertisement, Kardashian did not reveal that the token was created only a month ago by pseudonymous developers. He was later fined over $1 million by the US Securities and Exchange Commission.
Observers say investors should look beyond so-called investment opportunities. Daniel Dychopan, founder and CEO of crypto rewards platform Plutus, said that easy investments or quick wins usually end in tears.
“Crypto influencers make money by selling you an ‘investment opportunity’ instead of 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 ,” Dechopan told BeInCrypto.
According to DeChopan, some of the names involved in the scheme are Kevin O’Leary, Raoul Paul and Mike Novogratz. He called for stricter laws to deal with the flood of online promotion of crypto assets, saying:
“Measures such as harsher penalties for undeclared positions and paid influencers, and tighter regulations on advertising unregulated products such as stablecoins, and high-yield leveraged trading will all contribute to a safer industry.”
DeChopan said that sometimes influencers inadvertently become facilitators of scams by failing to exercise due diligence. In addition to blindly endorsing defunct platforms, sometimes influencers feign background knowledge of impending changes in the cryptocurrency world.
Influencers usually use their large social media following to promote projects. Andre Lagasse, co-founder of DeFi platform Limpid, told BeInCrypto that some influencers deliberately mislead their followers for profit.
He castigated “so-called crypto influencers who repeatedly claim to know not only future market performance…but also claim to have insider knowledge of developments and other topics that may or may not determine the success or otherwise of a project.” Will determine.”
Lagasse pointed to Supmon, which garnered a huge following during the ICO craze of 2017 to 2018. By some sheer luck, Supmon made the right call on the token prices, “even though his efforts were due in nothing but the general behavior of the market.” [which was rising],
Supmon became so popular that it began demanding payment for “saying nice things about” several projects. But Lagasse alleges that Supmon eventually became Schiller-in-Chief. He continued “Dumping tokens on [his] audience.”
“Crypto investors and novices should always avoid following people who make price predictions in general. And in a completely abstract manner, without any real data support from market level as well as specific sector, Lagasse warned.
“On the other hand, you can see people like Vitalik Buterin behaving in a completely different way, I remember Vitalik in 2018 saying that the ETG price had reached a bubble because there was no There was no real fundamental value.”
abuse of power
Influencers help promote projects through regular ads and posts on their social media handles. This sends a signal to investors who may think the product is legitimate.
In April 2022, US authorities charged 22 people for dump and pump scams involving up to $194 million. James Wu, founder of Web3 investment firm DFG, said public figures are abusing their power.
“With the explosion of the FTX derivatives exchange, the biggest culprits among influencers would be Tom Brady and Larry David. And other media personalities who worked with the platform,” Wo told BeInCrypto.
Experts say that inexperienced or retail crypto investors should refrain from following the hype. Hype in the crypto industry is mostly generated by influential people and does not last long. Especially for projects that have yet to prove their worth in the grand scheme of things.
“To avoid getting scammed, investors need to adopt healthy investment ethics, which includes proper research into project fundamentals and business prospects,” Claudia Minia, co-founder and CEO of crowdfunding platform SeedOne, told BeInCrypto.
‘As a rule of thumb, companies that are licensed in their jurisdiction should be the starting point for this research as unregistered companies cannot guarantee safety in the event of an accident.’
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