Everybody keeps talking about Crypto, and making millions out of it.
But nobody talks about the crypto scams.
People have lost more than $80 million between October 2020 to March 2021.
And the crazy part is –
Your favorite influencers are the ones promoting these crypto scams.
Not just the ones with 1,000 followers.
Or the ones with 10,000 followers.
It’s the megastars like Kim Kardashian and Soulja Boy!
But why do people believe them? How can you avoid getting scammed? And can you actually make money off of Crypto?
Let’s dive in!
Some Crypto basics to get you started
Before you get into the story of these crypto scams, you need to understand what cryptocurrency is.
It’s digital money, just like the one you got in your bank account. The only difference is that instead of dollars, it’s crypto.
You see, a 100 dollar bill only has value because people are using it and trusting it.
If you trust the money, then that money has value. Otherwise, it’s just a piece of paper.
We trust Dollars because we trust the US.
We trust Euros because we trust Europe.
But the thing is, that cryptocurrencies are still fairly new. So why would anybody trust them?
That’s where your favorite Influencers come in.
They’re paid to tell you all about the millions they made using one Crypto-currency, and how amazing and safe it is.
The more people they get to use it, the more people trust it and the more valuable the currency becomes.
Influencers promote crypto-coins to create a buzz. Their followers start buying it, which increases its price. Then these same influencers sell off all of their crypto at a profit.
The buzz dies, so does the value of the coin. And that’s when people start losing money.
This is a pump and dump scheme, it’s very common in the stock market where investors “pump” up the price of stocks by creating a buzz, only to “dump” or sell their stocks.
Now, this scam is part of the crypto world too, and it’s on the rise.
The shady world of influencer crypto scams
A-list celebrities, YouTubers and Twitch streamers are promoting crypto-currencies like Dogecoin, Shiba Inu, Ethereum Max and many more.
Even though they’re sure to include the tag “not financial advice” or “ad” in their videos, these are just cheat codes for them to avoid blame if the crypto tanks.
Their audience is mainly teenagers, who know nothing about money, they’re easily influenced into buying whatever the influencer tells them to!
In 2017, the Securities Exchange Commission stated, “it is never a good idea to make an investment decision just because someone famous says a product or service is a good investment.”
For example, when Elon Musk said it was good it became super popular on the news and that’s why the value of the coin went up to nearly 75 cents.
Later, he banned Bitcoin, as a purchase option for Tesla, which made that coin tank.
That’s the power of an influencer. And that’s why developers are now on the lookout for social media influencers who can create the same kind of hype for their coin.
Here’s a list of some popular influencers who were involved in major crypto scams:
FaZe Clan is a US-based professional e-sport and entertainment organization. The group began with 3 YouTubers way back in 2010 and now has over 80 members worldwide.
Back in May, FaZe Banks sent out a tweet promoting a cryptocurrency called BankSocial and said that he would give away $10,000 to one lucky winner who retweets and follows Bank Socials’ page.
Because of this tweet, thousands of investors bought the coin. And the price of BankSocial almost doubled.
But soon after, once the hype died down, the price of BankSocial started tanking. It lost more than 90% of its value. And their followers lost thousands of dollars.
But it didn’t end there.
Save the Kids Token Scam
In June 2021, members of the FaZe clan were part of another crypto scam.
This time with a coin called Save the Kids token.
This crypto was launched in June and had major influencers including a few members of the FaZe clan and YouTuber RiceGum promoting it.
These guys promoted the coin on their platforms and were also listed as ‘Ambassadors’ on the website and marketing material.
The creators of the coin told investors that their money would benefit kids, as each transaction would be taxed and 1-3% of it would be donated to a children’s charity.
When the coin launched on June 5th, it hit as high as $0.02. Only to start tanking just a few hours later.
12 days after the coin launched, Save the Kids told its investors that the founders of Save the Kids has abandoned the project and taken all the money with them.
So basically, the coin was dead!
But this time the influencers faced consequences and were suspended from the group for being involved in this crypto scam.
Adin Ross is a popular Twitch streamer with millions of followers.
In May 2021, he promoted a shady coin called the MILF Token.
Ross went live on Twitch and told his fans that he was being paid to promote the coin. But he also added that he’s buying a few himself.
The coin price peaked. But soon after, it tanked!
After his fans had lost all their money, Ross went live again to tell his fans that he hoped no one bought the coin. He said that he only promoted it for the money and that he doesn’t really believe in it.
Tana Mongeau is a reality TV and internet star. In April, she started posting videos on her TikTok and Instagram about the new Rolls Royce she just bought after investing in an coin called -Titscoin!
The coin marketed itself as a cryptocurrency that that donates to cancer research.
She told others to invest in this coin. Between Instagram and TikTok, she reached more than 11 million followers!
The coin saw a brief spike that day but already started tanking a week later.
The Influencer Dilemma
The issue here isn’t just crypto scams. It’s the power we give to influencers.
Because someone makes you laugh or inspires you, that doesn’t you should trust them with your money.
Even though some people make a lot of money from Crypto, remember that many people lose money as well.
Be careful whose advice you take, or you just might lose all your savings.