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Saturday, September 24, 2022

Influencers earn big bucks for shilling shady crypto projects, report finds

A CNBC report has outlined the sprawling frontier of shady crypto promotions, where social media influencers (largely focused on YouTubers), have earned up to $100,000 per month for shilling projects that had no legitimacy.

These influencers — as is common with promotional posts on social media — failed to disclose the fact that they were being compensated by the companies behind the advertisements.

Ben Armstrong, the mind behind BitBoy Crypto, a YouTube channel boasting over 1 million followers that focuses on providing news and analysis on the crypto landscape, claimed that when he was still accepting paid promotions, it was common to make “more than $30,000 for a single endorsement.”

Coffeezilla began exposing influencer and celebrity crypto promotions last year, while they were largely being ignored.

Hindsight is 20/20 — Armstrong has stopped accepting promotional payments since the beginning of this year, after some of the projects he vouched for were revealed to be outright scams. One project that was specifically cited involved the endorsement of DistX, a cryptocurrency launched in the fall of 2020 that was eventually rug pulled. As of this writing the digital currency is worth a fraction of a cent, according to CoinMarketCap.

On the bright side, Armstrong did use the money he received from the endorsement to “refund his followers after the coin crashed.” The report highlights lots of scammy promotions taking place over the course of 2020 to 2021.

Still, influencers with platforms should be doing research about the projects they promote to an audience that may take what they say as sound advice. Not to mention, disclosing personal ties to an endorsement is also something that is required by law; Armstrong noted in the piece that many companies requested that he not disclose the fact that a recommendation was sponsored.

While a request like that should immediately sound alarms on the validity of a product, some influencers proceeded to advertise projects without sharing that they were being compensated.

Though most people probably already know to approach crypto advice with a grain of salt, glaring conflicts of interest like these show just how treacherous the space can be. If you didn’t have enough reasons already to pursue crypto investments with caution, YouTubers just gave you a few more.

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