Some influencers paid thousands to endorse cryptocurrency projects

Ben Armstrong says his crisis of conscience came in January of this year, when he realized he had to stop a business that he – and so many others in his industry – – participated for many years.

Armstrong is one of the most viewed crypto influencers on YouTube. His channel, BitBoy Crypto, has amassed over 1.5 million subscribers. For years, Armstrong said he accepted payments from crypto companies to introduce their new products to his large subscriber base. It’s a practice he says he now regrets as it led to some painful loss for his own viewers.

In the fall of 2020, Armstrong announced his partnership with a cryptocurrency called DistX, calling it his most trusted coin. He said the whole idea of ​​DistX was to prevent scams in crypto — but in the end, Armstrong said, the project itself turned out to be a scam. The project team’s tapestry pulled, meaning they worked to increase market capitalization then disappeared – leaving investors with pockets. The coin is now 99% off, worth less than a cent.

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


While accepting paid ads, Armstrong said he has previously earned more than $30,000 per endorsement, including his promotional video for DistX, and can easily earn more than $100,000 per endorsement. Monthly promotions only.

Armstrong now says he feels responsible for the losses his followers have suffered. “I mean, of course, I have,” he said. “I hate it when we talk about things that don’t work well.”

While Armstrong says he stopped accepting paid promotions in January, other influencers still dominate this lucrative market. CNBC found that some of these online personalities are paid thousands of dollars to endorse dubious projects. This spring, an anonymous blockchain executive posted a list on Twitter naming 44 crypto YouTube personalities and their prices for paid promotions. According to that list, some of these influencers were paid as much as $65,000 for a promotional video.

Armstrong said he used the money he earned from promoting DistX to refund followers after the coin crashed, adding that he felt especially guilty that it was lost. How heavily advertised on your channel. However, he said it was the only project he intervened in that way after investors lost money on his advice.

While Armstrong revealed that he is not a trained financial professional, many of the business ventures he promotes have plummeted. After other crypto ventures like Ethereum Yield, Cypherium, and MYX Network dropped in 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 prices were inflated, and those willing to share their rates said they earned the minimum. $1,000 per promotional video.

Unlike Armstrong, who says he’s exposed all of his paid promotional videos, some influencers don’t share that they’re being paid well for plug projects. According to Armstrong, many of the companies that contact him while he’s collecting endorsements don’t want him to let viewers know sponsored content.

Armstrong says that 5 years ago, many influencers wouldn’t disclose that they got paid for plug-in projects, but most influencers today reply in advance about promotions to viewers. their.

But state regulators warn that there are still influencers who lack transparency. Joe Rotunda, director of enforcement for the Texas State Securities Commission, said he has seen paid promotions that are not only undisclosed but also promote fraudulent ventures.

Joe Rotunda, director of enforcement for the Texas State Securities Commission.


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

Neither casino responded to a request for comment.

“We had to identify the cheats that were going on, especially those tied to the metaverse,” says Rotunda.

Rotunda said his team discovered fraudulent activities through ads from crypto influencers on YouTube. He mentioned two famous influencers who promoted Flamingo Casino Club in videos that reached around 80,000 viewers.

The cease-and-desist order for the Flamingo Casino Club says one of the influencers promoting the casino is “recruiting promoters to engage and pay him to promote their products.” through his YouTube channel.” He also found messages on a popular chat platform that said one of these influencers “has brought a lot [of investors] from their videos. “

CNBC reached out to two influencers mentioned in the enforcement action when advertising for metaverse casinos allegedly misled investors about whether they made undisclosed payouts. to advertise or not.

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

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

Disclosure was released after the commission’s announcement revealed Cawthorn had purchased the “Let’s Go Brandon” cryptocurrency worth between $100,000 and $250,000. He was seen in a photo with the coin’s co-founders above Instagram next week, comment”Tomorrow we go to the moon! “The news broke the next day of a funding agreement with a NASCAR driver, causing the price of the coin to increase by 75%.

Cawthorn, who lost the primary election in May, said he sold between $100,000 and $250,000 in coins the day after the rally. Within weeks, NASCAR rejected the deal and the coin’s value collapsed.

Taylor Monahan, head of product at digital wallet MetaMask, said she is “violently opposed” to all partnerships with crypto influencers.

Taylor Monahan, product lead at digital currency wallet MetaMask.


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

Monahan said she is hesitant to support banning online advertising because of the negative effects she sees from restricting and regulating cryptocurrencies. Instead, she said that the crypto community could come together to call for partnerships and make them less popular.

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

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

Rotunda warns that the growing interest in decentralized and metaverse currencies, the more scams will emerge. Regulators need to focus on digital asset transactions, he said, as many crimes remain undetected.

“What we are seeing is the tip of the iceberg,” says Rotunda.

However, the paid advertising business is not the same as it was in 2021, with the crypto market down 49% year-over-year. Armstrong said that in a bear market, less legitimate crypto influencers could face more scrutiny and mislead their subscribers.

– Érica Carnevalli and Margaret Fleming contributed to this article.

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