Pump, and dump. With the explosive rise of popularity in dogecoin, many social media influencers have taken to investing in and promoting various alternative cryptocurrencies. These “altcoins”, or more often disdainfully known as ‘s—coins”, have a reputation for being involved in quick online scams akin to pyramid schemes.
One of the first cases of an altcoin being promoted by an online celebrity. FaZe Banks, a member of the gaming organization FaZe Clan, was paid cash upfront to promote Banksocial to his online audience. The deal was initially supposed to span several weeks, involving multiple promotions through Twitter, until he suddenly backed out and deleted his original tweet. Ultimately, Banksocial’s value in USD fell by 90% within one day of the promotion.
That same month, Adin Ross, one of the largest online streamers on Twitch, promoted a similar scam that ended, again, in a 90% drop in value. In contrast to FaZe Banks, it was revealed three weeks after the promotion that Ross had no confidence in the cryptocurrency he was pumping to begin with. “By the way, that [crypto] s— I did a while back? I got paid a bag to do that… I hope none of you guys actually bought it.”
Similarly, another FaZe Clan member, FaZe Kay, promoted several altcoins using his Twitter platform, all of which met the same fate. One, by the name of “Titscoin”, fell by over 97% in the few hours following his promotion.
One of the most widely backed crypto launches, known as the “Save the Kids token”, had the defining feature of enforcing a tax on investors, with the money being used to donate to charities. Despite the charitable nature, the “Save the Kids token” has been criticized for taking its name and company logo directly from the top rated charity Save the Children. As with most of the other social media promoted altcoins, within hours, the coin plummeted down to less than 7% of its peak value.
With the world of cryptocurrencies in the state it is in, it is unlikely that any of these influencers face legal consequences. As time moves on, new pump and dump schemes are being clearly stated as ads by the influencers, further covering their liability legally.
Aside from these promotions, content creators continue to influence the audience’s investment decisions through YouTube videos and livestreams, heavily focused on entertainment while still attempting to give legitimate investment advice. Unlike previously established video producers like FaZe Kay, these YouTubers’ claim to fame is through providing commentary on crypto in their videos, attempting to capitalize on the buzz to make a career.