Producers can market their products in so many ways: Ads, word of mouth, flyers, etc. In crypto, there are many currencies and NFTs that should have the proper marketing tool to go viral and thrive. Giving the new players, such as social media and the internet, in the game, it's a golden opportunity for crypto companies to seize. Nowadays, you can reach out to millions of people directly by just choosing the right person to go to.
Celebrities and influencers are very important tools for the marketing industry. In the past year, many celebrities and influencers have joined the crypto market. It's not exclusive toinfluencers in the crypto market, it has rather gone viral for famous persons in any other field. Now, you can open Instagram and find your favorite athlete, actor, or Youtuber telling you about his new NFT or predicting a bright future for a certain cryptocurrency. That will make you at least eager enough to look it up, and maybe invest in it. This was agreed on by the marketing professor at New York University, Marc Beckman, who made the point of celebrities' impact on the market very clear in an interview with The Washington Post in early February this year. “Typically, when you see celebrities start to adopt and use something new, … you reach the tipping point where it’s going to spill over to the masses,” he said.
Because who these persons are not always from the crypto environment, various things can go south. There are many different famous cases when celebrities and influencers entered the world of blockchain. But how they affected the market and most importantly, how did their followers fare in those endeavors?
Celebrities in the crypto promotion
Matt Damon, Snoop Dogg, Elon Musk, Mike Tyson, Tom Brady, Paul Pierce, and many others are among the resonant names who are involved with crypto. All of them either promote or make acquisitions in a certain currency/NFT. Take Matt Damon for example, who shows up in every commercial on TV touting Crypto.com since October 2021. The thing that got him in the situation of sarcasm and mockery sometimes from people who see that he is promoting fraud. By numbers, Bitcoin has dipped more than 60% since the ad first aired.
The great Elon Musk, who is known for his Tesla and SpaceX, is one of the game changers in this arena. He is so influential on Twitter, and he used that to push a certain currency last year through his tweets. Dogecoin which was starting as a meme and a joke a decade ago. After his tweets, there was a rush for Dogecoin that lifted the currency by 20% in just 24 hours in April 2021, and all that cost Elon was a tweet. It made huge revenue for Musk and those who listened to him and invested in it in the first 2 to 3 days, after which it surged up more and more to double its former value.
Jimmy Fallon, the host of The Tonight Show, recently invited over Paris Hilton, who is an NFT aficionado, and started talking about Jimmy's NFTs and discussing their new NFT purchases. It had the loud studio go silent for a considerable portion of the show.
If you are a music fan, you must know Snoopy. Snoop Dogg, who's not only a brilliant hip-hop star but also a businessman who truly believes in Bitcoin,and according to him he "Knows it's here to stay". He possesses his NFT collection named Snoop Dogg coins. Not too far from Snoopy, French Montana is also playing this game. The rapper has an NFT sneaker collection which was introduced in September 2021. But Mr. Montana didn't do so well with his collection which collapsed right after 3 months.
On Twitter, you can find many people talking and advising others in the crypto area, but at the top, you can find Gwyneth Paltrow. Paltrow was a huge promoter of Bitcoin in 2017, and she became the face of the royal currency that year. She is known for her tips and lessons on Twitter about Bitcoin basics and how to invest in it.
All these names have already made their fortunes through their original jobs whether it's acting or singing or some other field. They did invest in what they're promoting. But the major difference here is what Matt Damon threw in Bitcoin is just a fraction of his wealth while he is asking small investors and ordinary people to invest in Bitcoin with a considerable amount of their living money. That could break people in some cases or if they're lucky enough, the celebrity they're following will lead them to a massive win, a good example of that success story is Elon Musk with Dogecoin. Now let's look at influencers who made the bulk of the money from crypto and promoting it.
Influencers as an integral part of the crypto business
A lot of influencers are now playing the crypto game, whether investing in it or just promoting it. Several names are specialized in this area, and people are trusting them. Let's take Mark Cuban as an example. Mark is a billionaire investor with 1.8M followers on Instagram. He has a token called "Titan", issued on June 13, 2021, in which he made it clear that he's not asking people to invest in it. Subsequently, the token lost 99% of its value.
We all know the trendy Logan Paul. The boxer/social media influencer is one of the many new investors who entered the world of crypto in the past 2 years. He announced that he is invested in crypto recently and wants to be a part of the show. One day, he recommended the new currency "Dink Doink" to his 33.6M followers and many of them had to take the leap and invest in Dink Doink. But that did not end up happily for them. How did that turn at the end of the day to be a potential lawsuit against Mr. Paul?
A closer look at promoters behind the scenes
The Dink Doink currency dipped briefly after people followed Logan Paul and invested in it. That started some speculations about the surprising behavior of the currency. Logan appeared in an interview and admitted that he didn't say it all to the people when he was promoting crypto. He confessed that he's not just friends with the project owner, they came up with the idea of it together. Logan also had a percentage of Dink Doink coins in his account when it launched. "I don't know what went absurdly wrong. That's the project from hell, and I just wiped my hands off that" Logan said.
That all happened this past June and July. He mentioned that all this drama made him rethink some of his promotions. "I don't want anyone to feel like they've been screwed because of any sort of move they've made because of me" he added. Now Mr. Paul could face allegations because of what happened.
If you think that this kind of shady operations only happens with big names, you've got to look Ben Armstrong up. Armstrong is a YouTuber who has 1.5M subscribers on his BitBoy Crypto channel. He was occasionally promoting crypto and was frank about the fact that he received money from crypto companies for his videos. In January, he stopped accepting paid promotions. That came after he partnered with a cryptocurrency called DistX in 2020 and he named it his most trusted coin. He loved it because, according to him, it aims to stop the scams in the crypto world. Well, it turned out to be a scam also. The team behind DistX raised the market cap and disappeared. The currency fell to less than a penny. According to Armstrong, he could make $30000 for a single endorsement. He used the money he received from DistX to compensate his viewers for their losses. In a talk with CNBC, he said that majority of his colleagues in that line also take money for their promotions and endorsements. Other influencers denied that, and others refused to comment when reached out by CNBC.
Being a decent promoter and disclosing all the necessary details to the public including your proceeds is just not enough to be on the safe side. Another big fish who got involved with crypto flops is Kim Kardashian. She made an Instagram post last summer touting EthereumMax, a cryptocurrency, and she added an "ad" at the end of it. Of course, after that, a surge happened and soon enough the currency's price collapsed. There are lawsuits from 9 traders against Ms. Kardashian, the basketball star Paul Pierce, the boxer Mayweather, and certainly the project's founders. The allegations say that Mr. Pierce received 15 trillion EthereumMax tokens to endorse the crypto through his tweets. They accuse him of doing a "pump and dump" move by selling the tokens immediately after he advised traders to invest in them.
Recently, another high-profile case has emerged where celebrities involved in promoting NFTs failed to disclose their financial interest. On 8 December 2022, a class action suit was filed in the U.S. District Court’s Central District of California alleging a conspiracy to boost Yuga Labs’ Bored Ape Yacht Club (BAYC) NFTs and the ApeCoin token through celebrity promotions, without disclosing the payments made to the celebrities. Prices of these assets have fallen sharply. The lawsuit names as co-defendants a number of celebrities including Justin Bieber, Paris Hilton, and Jimmy Fallon, a group of executive defendants related to Yuga Labs and Ape DAO, and another group of defendants accused of setting up a "vast scheme" to defraud investors.
Where are the authorities in all of this?
The Federal rules say that if any marketer had any stake in the project they endorse, they must disclose it. Also, it is required to disclose any payments received for promoting any securities. By that rule, several promoters can get caught. But the crypto promotion is still in a gray zone that doesn’t ensure that there is no manipulation going on. As a good sign, in 2018, there was $600,000 paid by Mr. Mayweather to settle SEC. charges against him for not fully disclosing his compensation for marketing initial coin offerings. The rule Mr. Mayweather broke here only applies to securities, such as stocks, but it's obscure if it applies to crypto or not.
The director of the enforcement division of the Texas State Securities Board, Joe Rotunda, told CNBC that many more paid promotions are many shaders to the point of fraud and made on purpose and the authorities should give this a thought.
Finally, people are different, same as their finances. It doesn't mean anything to you that your favorite actor, player, blogger, or even your friend is investing in something. You should not follow them blindly and just do as they did. Know your financial situation well, then act based on your knowledge.
The good news is that now if you are an Investor or Consumer who was affected by the NFTs dropdown and you suspect that your rights were violated you can seek justice by uniting with Attorneys on Platform 11thestate.com.