Everyone knows Kim Kardashian, the influencer and reality TV show star, but do you know Kim Kardashian, the cryptocurrency advocate?
Earlier this month, the billionaire mega star posted something a bit out of the ordinary to her Instagram Stories. Kardashian was promoting a new alternative cryptocurrency, or altcoin, called Ethereum Max.
And she’s not the only one.
YouTubers, streamers, and all kinds of social media influencers are jumping aboard the altcoin train. They’re urging their followers to look into new altcoins on a regular basis, if not flat out encouraging them to invest.
What’s going on here? Why are so many of them promoting it, and how invested are they personally?
A flood of altcoins
New cryptocurrencies have been popping up everyday in order to take advantage of the hype around well-known crypto, such as Bitcoin and the meme-inspired Dogecoin, as the more established cryptocurrencies’ value spiked to new heights.
If you look at forums on Discord, Reddit, and Telegram, you find dozens of new cryptocurrencies launching every week. But even if you mostly hang out on more mainstream social media channels like Twitter and YouTube, you very likely have seen some of your favorite internet celebrities promoting one of these newly launched altcoins over the past few months.
Altcoins — which are also often referred to as “memecoins” or even “shitcoins” – are cryptocurrencies based on some sort of online joke or tied to some sort of money-making scheme.
While Bitcoin and other established cryptocurrencies are already considered highly volatile investments, altcoins are even more risky. These coins are usually built on existing blockchains and buying them often requires a number of steps and hoops to jump through, and there are usually various transaction fees.
“Let’s be clear, these things are absolutely worthless bullshit,” David Gerard, author of Libra Shrugged: How Facebook Tried to Take Over the Money and Attack of the 50 Foot Blockchain, explained to me in a phone conversation.
“You only ever hear from the people who won and never from the people who lost.” he continued. “If you buy the coin, your money is gone, and maybe you can get it back if you sell the magic beans to someone else, which is basically the story of crypto in general.”
Taking advantage of their fans
Adin Ross is a popular Twitch streamer with millions of followers. On May 26, Ross went live on his Twitch stream and promoted an altcoin called MILF Token. In his stream, he basically confirms the business model that was outed by Cody Ko and the Nelk Boys.
“I did get sponsored by a fucking crypto today,” Ross says during this stream. “They’re paying me a lot of fucking money to do this shit. It’s, like, three shout outs in one hour so I’m going to fucking do it.”
“Not just that,” he continued. “I get to give out $20,000 of the coin to you guys. It’s a lot of fucking money.”
“By the way, that MILF Token shit I did a while back? I already told you guys don’t buy that shit,” Ross said to his fans between laughter. “I got paid a bag to do that shit. Like, I don’t give a fuck. I hope none of you guys actually bought it.”
Some of his fans tweeted at Ross, outraged that they put money into the altcoin, saying how the Twitch streamer was still promoting MILF Token just in the last week.
“It’s unbelievable! He’s literally admitting that he promoted something shady to his audience,” Feitosa said to me about Ross. “This guy gets 100,000 concurrent viewers, he’s the fastest growing Twitch streamer right now, he gets million dollar deals with gambling sites, and this is what he’s doing?”
The rug pull
Beyond being paid to simply market altcoins, some influencers have more vested interest in promoting certain cryptocurrency.
Sam Pepper was a popular YouTuber who was accused of rape and sexual assault in 2014. Since then, he has re-emerged as a TikTok star and taken up promoting altcoins. In April, Pepper was accused by his followers of being part of an altcoin scam.
As Feitosa explained to me, Pepper allegedly had invested in an altcoin called MoonPug Token during a presale, which is a window for investors to buy in before the coin officially launches. Altcoin developers often gift coins to influencers in exchange for promotion or allow their friends to invest during this time while prices are at their lowest.
Pepper then promoted the coin to his followers on launch day. MoonPug quickly rose before a big sell-off caused the altcoin to completely crash. However, Pepper’s followers noticed that just four wallets held the vast majority of MoonPug, leading them to accuse Pepper of allegedly taking part in a pump-and-dump rug pull scam.
Mongeau also posted videos promoting the altcoin to her TikTok account. Between Instagram and TikTok, Mongeau’s promotion of Titscoin, which marketed itself as a cryptocurrency that donates to cancer research, reached more than 11 million of her followers.
The crypto saw a brief spike that day, however, Titscoin was already on a downward spiral, tanking from its peak less than a week earlier.
If you invested $100 on the day Mongeau claimed her Titscoin investment resulted in the purchase of a Rolls Royce, you would have approximately $2.50 today.
At least one of the members of FaZe Clan, FaZe Kay, also happened to promote Titscoin on the same day as Mongeau. Unlike Mongeau, who didher videos as an “#ad,” FaZe Kay did not disclose whether this was a paid promotion.
The most recent example is the Save the Kids token.
This altcoin launched earlier this month and had major influencers behind it. FaZe Clan members Kay, Teeqo, Jarvis, and Nikan, along with YouTuber RiceGum, not only promoted this altcoin on social media, they appeared on its website and in marketing videos as “ambassadors.”
A screenshot of the Save the Kids token website.
Credit: screenshot: mashable
The Save the Kids website prominently features promotional tweets from influencers.
Credit: screenshot: mashable
Save the Kids promised investors that their money would benefit kids, as each transaction would be taxed and one to three percent of it would be donated to a children’s charity. The charity angle is a typical marketing scheme with a lot of these new altcoins.
Launching on June 5, Save the Kids hit as high as $0.02. Just hours after that high, it tanked. If you invested $100 in Save the Kids on launch day, it would be worth around $6.50 today.
It gets worse, however. On June 17, just 12 days after the coin launched, Save the Kids asked its holders to meet in the project’s Telegram channel for an announcement.
The Telegram administrator claimed that Save the Kids had been abandoned by its founder, taking all the project’s funds with them. While the developer who was contracted to work on the altcoin claims he’s trying to figure out what to do next, Save the Kids token is basically dead.
A screenshot of the Save the Kids Telegram announcement
Credit: screenshot: mashable
FaZe Kay, FaZe Teeqo, FaZe Jarvis, FaZe Nikan, and RiceGum have not commented publicly about Save the Kids since its launch. Their images and promotional tweets still appear on the altcoin’s website. Fans who’ve tweeted at them with concerns about their investment seem to have been ignored.
What can be done?
Right now, cryptocurrency as a whole is pretty much the wild west — with few rules and almost no regulation or oversight. But there are very real consequences for the people who invest, and especially those who sink money into scammy altcoins.
Feitosa told me about the posts he’s seen from people who’ve lost money by investing in altcoins promoted by their favorite influencers.
“I’ve seen threads with hundreds of people saying I lost five grand, I lost my life savings,” he explained.
To be fair, the problem isn’t just with social media influencers. Boxer Floyd Mayweather has promoted altcoins, and so has billionaire Elon Musk.
Mark Cuban, the billionaire tech investor and owner of the Dallas Mavericks, wrote a blog post on June 13 that hyped up two specific alternative cryptocurrencies, including TITAN. At the time, TITAN token was trading as high as $65.
Just four days later, major investors bailed, and the coin’s value plummeted. It’s currently worth $0.0000000851. In an interview with Bloomberg, Cuban says he lost money from investing in the coin. He chalked up the bad investment to being “too lazy to do the math.”
“If you’re promoting things that turn out to be unregistered securities and you don’t state what your compensation is, you can be busted,” Gerard explained, referencing charges celebrities like Floyd Mayweather and DJ Khaled received in 2018 for promoting cryptocurrencies. “If people know it’s a promotional deal, fine, but you have to say so.”
The U.S. Securities and Exchange Commission (SEC) has recently stepped up, especially over the past year, and have brought cases against some of the worst bad actors in the space. However, even the SEC has said their hands are tied in some respects because the industry is so new. SEC chairman Gary Gensler recently “urged” Congress to act and pass laws regarding cryptocurrency.
“I had a meeting with the SEC after my book came out and I was a bit shocked that someone there asked me if I had heard of any Ethereum-based pyramid schemes,” Springer explained to me. “I said to her that they’re around all the time. I said all you have to do is follow the cryptocurrency exchanges and you’ll see that they are starting and ending all the time.”
With bigger and more mainstream names now promoting these risky investments, it’s clear that the problem will only continue to get worse.
“I think an important factor that isn’t talked about is that everything went nuts in 2020,” Gerard told me. “We had the pandemic, all the markets crashed, even Bitcoin. Everyone’s desperate right now.”
So, many of those people invested in now-worthless altcoins because their favorite influencers told them to.