CRYPTO SCAMS YOU NEED TO KNOW
“Hey sisters!” we are quite sure the first person you can possibly think of when you hear this phrase is James Charles, an influencer.
An influencer has the ability to influence target buyers of a product or service by simply recommending them on their social media. They are influencers because they show their unfiltered personalities which are relatable to most of us. They build an intimate and strong relationship with their audience which brands crave for. Hence, people tend to associate with influencers on a very personal level. From Charlie D’amelio to Komal Pandey, every single post racks up millions of likes from people across the globe. The power an influencer holds is almost bizarre. Top brands like Gucci, Dior, and others have adopted influencer marketing to keep up with their growing audience. Brands connect with them to boost their reach and convert potential customers. It is all down to one thing – ‘business’. Collaborations are a win-win for both influencers and brands. But hey, can you really trust influencers with your finances? Especially when it is something extremely volatile such as – crypto investments.
It is supposed to be a rhetorical question. The so-called rational people are fogged by the promotions and advertisements by the influencers who end up making irrational decisions.
CRYPTO PROMOTIONS ON SOCIAL MEDIA
Cryptocurrency is a beguiling landscape fascinating millions around the world. The hype wave is rising every day and influencers are cashing on this hype. They have swayed their way into finance and it is pretty scary. Their practice of overselling the potential of almost everything is petrifying in the finance industry. Not every influencer is wrong, but it is always safe to think about the off chance. From Kim Kadarshian to Dave Portnoy, crypto promotions are on the rise. When they promote certain crypto, it blows up in popularity thereby gaining value in the market. However, when the storm effect fades, the value hits the ground too. Influencers tend to promote crypto without understanding its repercussions.
Our favorite example is ‘Dogecoin’, also known as a meme coin today. Dogecoin’s value skyrocketed after Elon Musk mentioned it in an interview. Him advocating for dogecoin as a potential currency broke the internet. People started buying it in hopes of becoming rich of course. Well, we know the fate of the coin now. Dogecoin investors are despondent today. Recently Elon Musk himself rebuffed that he never was a spokesperson for the coin. I mean it all makes sense, doesn’t it? We cannot live in a fool’s paradise forever. Entrusting our finances with influencer ads is a fool’s act.
THE FAZE CLAN SCAM
Talking about fools’ acts, the Faze Clan Scam is well noted in this category. When a few members of the Faze Clan promoted the ‘Save the Kids’ token, their followers rushed to get in on this. To their surprise, the token value crashed right after the launch. The coin that was promoted for the betterment of society had crashed. Their followers accused them of plotting the infamous ‘Pump and Dump’ scheme to boost the value of the currency. They then sold their investment to get higher returns leaving their price in the market low. Following this, the members involved in the act were suspended from the Faze Clan. This episode served as a binocular for the audience to see the approaching danger of crypto ads by influencers.
BUT, WHAT IS A PUMP AND DUMP SCHEME?
Basically in a ‘Pump and Dump’ scheme, scammers spread false information or rumors to create demand around the stock that will typically ‘pump’ up the price of the same in the market thereby creating hype. Then they ‘dump’ the stocks by typically selling off their share of stocks at an inflated price crashing their value in the market. This securities fraud causes a lot of distress to believers who buy the stock as a result of the false hype and futuristic gains. This brings us to our next question
IS TERRA LUNA A PUMP AND DUMP SCHEME TOO?
Let us talk about ‘the crypto scam’ – Terra Luna. We all know Do Kwon, a cryptocurrency developer who cofounded Terraform labs. He is a man known for his absurd messages and comments on social media and his interviews. Post the crash, he seems to be surprisingly quiet. The investigation suggests that the crash of this currency will be the most catastrophic event in the history of crypto with billions of people losing their money. The exit of the founders and the crash of the token raised questions in the market. The fall in the value of the token baffled the investors. However, the close-knit community profited from it. An analyst Anders Helseth of Arcane Research studied the on-chain events and activities to support his claims. He says that the Terra Classic ecosystem benefitted from the “perfect exit liquidity”. They apparently set up unidentified wallets. This crash made investors miserable. On the other side, the founders exited with $6 Billion. Does not sound like a coincidence, does it?
Influencers irrespective of their niche promoting crypto coins is a hazard. Other famous influencers like Kim K, Logan Paul, and Tana Mongeau are advertising altcoins too. We buy their opinions about the same and make irrational investment decisions. Influencers are usually paid by the brands for their ads. It is what they do – ‘promote’. We must be wise and know the core strengths of the influencers we follow. It is easier to trust Charlie D’amelio with new dance trends compared to crypto advice, right? We need to take the promotions as is and not conclude them as advice. Influencers are medium for brands to grow their reach due to the connections they have built with us. Ads are targeted to reach the masses. Ultimately it all comes down to how we are influenced by these ads. We need to stand by our image of a rational consumer and prevent ourselves from getting sucked into the ‘hype game’. Take your time, think through it, and research before you make an investment.
“YOU CAN ONLY TRUST YOURSELF WITH YOUR FINANCES. DO NOT CHASE THE HYPE”.
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August 26 2022