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Could today’s influencers be drawing their fans into risky crypto schemes? A troubling trend is developing as crypto pump-and-dump tactics rise, with popular personalities seemingly roping followers into questionable investments. Influencers are promoting obscure coins and tokens on social media, promising quick gains that often vanish after the value plummets.
The speculation surrounding cryptocurrencies has created fertile ground for manipulation. Influencers generate buzz around lesser-known coins or "altcoins" that supposedly hold "potential." Fans view these endorsements as credible, believing the influencer’s involvement adds legitimacy. However, the reality is often far less promising.
For instance, members of the esports collective FaZe Clan promoted the infamous “Save the Kids” token as a charitable venture. Just days later, the token’s value crashed as insiders sold their shares, leaving investors to suffer heavy losses. In truth, the project wasn’t linked to a legitimate charity at all—although the charity angle was compelling, it was simply a façade. "Save the Kids" is just one of many examples where influencers leveraged their platforms to raise funds for projects that later vanished without a trace.
This scheme isn’t new; it’s a classic pump-and-dump tactic, originally from the stock market, that has found a home in the mostly unregulated crypto world. The process is simple: influencers use their reach to push a new token’s price up, fans buy in with hopes of profit, and then influencers sell their holdings at a high, causing the price to crash. This not only ruins investors but also erodes trust in cryptocurrency.
For example, in the 2016 CSGOLotto scandal, influencers Trevor Martin and Thomas Cassell faced backlash for promoting an online gambling site they owned without disclosing their involvement. Although not directly related to crypto, this case was an early example of influencers profiting from fans by hiding their true interests, setting a foundation for similar misconduct in gaming and digital currencies.
Last year, Initial Coin Offerings (ICOs) became another target for crypto scams. By allowing new projects to bypass traditional funding, ICOs invited irresponsible and fraudulent ventures. One infamous case involved Centra Tech, which paid celebrities like Floyd Mayweather and DJ Khaled to promote its ICO. Both later settled with the SEC for not disclosing their paid involvement. As more ICO scams were exposed, the public saw a clear pattern: influencers were capitalizing on the unregulated space, often at their followers' expense.
As regulatory scrutiny increased, scammers turned to new digital assets like NFTs (non-fungible tokens). While some NFTs hold real value, many have been exploited for quick profits. Influencers market these NFTs as "unique" or "exclusive" to capitalize on scarcity, but most experience rapid value loss, leaving buyers with digital items that are nearly worthless. Scammers often justify these losses by claiming buyers are still receiving "digital art," even as market prices crash.
This pump-and-dump model has evolved with NFTs, allowing influencers to promote intangible "digital art" that’s difficult to objectively measure.
As blockchain technology matures, so do scammers' tactics. Influencers are increasingly taking advantage of the popularity of altcoins and NFTs. Although public awareness is rising, regulatory measures remain in their early stages. Platforms like YouTube and Twitter are starting to enforce stricter guidelines for promotional content, but vigilance remains the best defence for investors.
Until robust regulations are established, investors should stay cautious. The accountability of influencers promoting crypto projects will be critical as the market matures.
