Home Markets Some influencers have paid thousands to endorse cryptocurrency projects

Some influencers have paid thousands to endorse cryptocurrency projects

Some influencers have paid thousands to endorse cryptocurrency projects

Ben Armstrong says his crisis of conscience came in January this year, when he realized he had to end a business practice in which he – and many others in his line of work – had been involved for years.

Armstrong is one of the most watched crypto influencers on YouTube. His channel, BitBoy Crypto, has over 1.5 million subscribers. For years, Armstrong said he accepted payments from crypto companies to tout their new products to his vast subscriber audience. It’s a practice he says he now regrets as it resulted in painful losses for his own viewers.

In the fall of 2020, Armstrong announced its partnership with a cryptocurrency called DistX, calling it its most trusted coin. He said the whole idea of ​​DistX was to stop crypto scams – but Armstrong ultimately said the project itself ended up being a scam. The project team’s rug pulled, meaning they worked to increase market capitalization and then disappeared, leaving investors to hold the bag. The coin is now down 99%, valued at less than a penny.

Crypto influencer Ben Armstrong in his studio records a live episode of BitBoy Crypto.


While accepting paid endorsements, Armstrong said he previously made over $30,000 for a single endorsement, which included his promo video for DistX, and could easily earn over $100,000 a month. just in promotions.

Armstrong now says he feels responsible for the losses suffered by his followers. “I mean, of course I do,” he said. “I hate it when we talk about stuff that didn’t go well.”

While Armstrong says he stopped accepting paid promotions in January, other influencers still swarm in this lucrative market. CNBC has discovered that some of these online personalities are paid thousands to endorse questionable projects. This spring, an anonymous blockchain sleuth posted a list on Twitter naming 44 YouTube crypto personalities and their prices for paid promotions. Some of these influencers have been paid up to $65,000 for a single promotional video, according to this list.

Armstrong says he used the money he earned from promoting DistX to pay back his subscribers after the coin crashed, adding that he felt particularly guilty about the heavy publicity on his channel. However, he says it is the only project in which he has intervened in this way after investors lost money following his advice.

Although Armstrong reveals that he is not a qualified financial professional, many of the companies he has promoted have collapsed. After other cryptocurrency companies like Ethereum Yield, Cypherium, and MYX Network lost value, he removed promotional videos for them from his channel.

CNBC reached out to these influencers on the list to verify their fees: some said the prizes were inflated, and those who wanted to share their prizes said they earned at least $1,000 for each promotional video.

Unlike Armstrong, who says he leaked all of his paid promo videos, some influencers don’t share the fact that they get paid handsomely to plug projects. According to Armstrong, many of the companies that contacted him while he was collecting fees for endorsements didn’t want him to tell his viewers that the content was sponsored.

Armstrong said five years ago many influencers wouldn’t disclose they were paid to plug projects, but most influencers today are upfront about promotions with their viewers.

But state regulators warn that there are still influencers who lack transparency. Joe Rotunda, director of the Texas State Securities Board’s enforcement division, said he’s seen paid promotions that not only go undisclosed, but drive fraudulent companies.

Joe Rotunda, director of the law enforcement division of the Texas State Securities Board.


Rotunda and a team of regulators recently filed lawsuits against two casinos in the Metaverse, the new digital frontier where users can attend virtual concerts, purchase digital assets, or even gamble at a casino. The actions cite the Flamingo Casino Club and the Sand Vegas Casino Club, accusing them of trying to defraud retail investors by selling unregistered securities.

Neither casino responded to requests for comment.

“We need to identify the scams that exist, especially metaverse-related scams,” Rotunda said.

Rotunda said his team discovered the metaverse’s fraudulent operations through the promotions of crypto influencers on YouTube. He referenced two popular influencers who promoted Flamingo Casino Club in videos reaching around 80,000 viewers.

The cease and desist order against Flamingo Casino Club said one of the influencers promoting the casino “recruited promoters to hire and pay him to advertise their products through his YouTube channel” . He also found posts on a popular chat platform saying that one of these influencers was “bringing a lot [of investors] of their videos.

CNBC contacted the two influencers mentioned in the enforcement action as promoting metaverse casinos accused of defrauding investors to find out if they accepted undisclosed payments for the promotion.

The influencer known as FLOZIN said he wasn’t paid for his endorsement, but it appears he deleted his promo video after CNBC started asking questions. The Dream Green Show, the second influencer, did not respond to CNBC’s request for comment.

Dodgy promotions don’t just happen through crypto influencers on YouTube. The House Ethics Committee announced in May that it was investigating potentially inappropriate cryptocurrency promotions by Rep. Madison Cawthorn, a Republican from North Carolina.

Disclosures released after the committee’s announcement reveals that Cawthorn purchased between $100,000 and $250,000 worth of “Let’s Go Brandon” cryptocurrency. He was seen in a photo with the coin’s co-founders on instagram next week, commenting “Tomorrow we will go to the moonThe news broke the day after a sponsorship deal with a NASCAR driver jumped the coin’s price by 75%.

Cawthorn, who lost his primary election in May, said he sold between $100,000 and $250,000 of the coin the day after the rally. Over the next few weeks, NASCAR rejected the deal and the coin’s value plummeted.

Taylor Monahan, product manager of the digital currency wallet called MetaMask, said she was “vehemently opposed” to all partnerships with crypto influencers.

Taylor Monahan, Product Manager of MetaMask Digital Currency Wallet.


“I urge anyone, even if they consider themselves legitimate, not to form these kinds of false partnerships,” Monahan said.

Monahan said she was hesitant to support banning online promotions because of the negative effects she has seen in limiting and regulating cryptocurrencies. Instead, she says the crypto community could come together to call partnerships and make them less common.

Armstrong said the decision to stop paid promotions took a burden off him because he can post freely. But he said he understands why others continue to create sponsored videos.

“Obviously we’ve been doing this for a long time because it’s a good way to grow your business,” Armstrong said. “But you just have to do it honestly.”

Rotunda warned that the more interest in decentralized currencies and the metaverse grows, the more scams will appear. Regulators, he said, need to focus on digital asset transactions because there are still more crimes to detect.

“What we see is just the tip of the iceberg,” Rotunda said.

Yet paid promotion activity is not what it was in 2021, with the crypto market down 49% year-to-date. Armstrong said that in a bear market, less legitimate crypto influencers could face more scrutiny and hide their followers.

— Érica Carnevalli and Margaret Fleming contributed to this article.

Email advice to investigations@cnbc.com


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