Firstly, to clear up any confusion this is going to cause, I am firmly behind the Web3 vision and believe that aspects like blockchain technology and decentralisation can be the future of computing and social communication as a medium, despite all the heinous scams I’m about to list.
That being said, the Web3 space has seen an insane amount of scamming and skullduggery.
Now, people using a new frontier for nefarious means is by no means a new phenomenon (who else remembers turning your family computer’s hard drive into swiss cheese with Limewire). People will always use the confusion around new products or technologies to try and scam people, it’s just a sad fact of life.
But what I find so awful about the examples I’ve listed below is that celebrities and influencers leverage their own audience for their own personal gain and the net detriment of their audience. It’s essentially stealing money from their own fans. Money they often don’t need. This audience consists of people who follow and support these influencers every move, buy their merch and sing their praises. Their views and content consumption is often the reason that influencers have a roof over their head. And when influencers participate in these schemes, it inevitably follows the following set up :
Influencer receives or buys a lot of an unknown token.
Influencer raves about the token on social media and preys on their impressionable fans to buy in with them. They usually say “it’s going to the Moon” and promise it will make their fans rich.
The price of the token goes up due to the increasing trading demand, meaning the influencers initial stash increases in value.
The influencer (usually along with the creators of the project) sell all of their tokens for cold hard cash, and this increased selling demand crashes the coin value.
This means that all of the money that the fans put in is lost, whilst the influencer makes away with more money.
Sound familiar? It should do, because it’s called a “pump and dump scheme” and it’s a crime if you do it with real stocks, which is the reason Jordan Belfort AKA The Wolf Of Wall Street went to jail. But some of the biggest influencers on the planet are doing this repeatedly and unashamedly, including :
People who praise the Paul brothers for becoming global superstars by saying “look how much they accomplished with no talent” are actually not giving them enough credit.
They do have talent, and it’s the talent of possessing absolutely no shame while they use their audience of mostly children to make money whilst providing no real value other than messages of “anxiety is all in your head” and that filming dead people is fine.
Given this innate talent, it’s a natural career curve that the Paul brothers have been using blockchain technology to scam the public for a few years now but Logan’s animal NFT project is possibly the laziest, most hilarious cash grab I’ve ever seen.
CryptoZoo was a project whereby people (i.e children who follow Logan Paul) would buy different “animals”, which were combinations of two animals. The kicker here though is that they weren’t designed or created in any way by Logan or his team. They simply took Adobe stock images, and photoshopped a face on top of them and sold them, again, reiterating this for the fifteenth time, to children. The project obviously imploded soon after launch and all “investors” lost their money, whilst Paul made $1.8 million.
Now, fair play to Logan, he took some time away from the crypto space and readjusted his attitude… no wait he didn’t do that, he did two more stupid rugpull projects, again ripping off his own fans for money. If you want, you can get in on his most recent project! It’s live on OpenSea, it’s called 99 Originals and it’s terrible! Or you could light your money on fire, probably would be more fun.
One particularly disturbing aspect of these schemes is that sometimes the creators use a charity hook to differentiate themselves from the rest of the market, much like an angler fish using a little glowing bulb to catch a fish. Such was the case with the unimaginatively named Save The Kids Coin, peddled by members of the FaZe Clan, RiceGum and Sommer Ray.
Don’t recognise these names? Because you aren’t their target audience, children are, which is why this is so messed up.
The basic premise of the scheme was a rinse and repeat of the usual pump and dump, receive a bunch of token, get fans to buy token, sell token at high prices and crash the market costing fans all the money they put in. Garden variety scumbag behaviour. But the kicker is that the Save The Kids Coin project promised to donate a % of their proceeds to benefit underprivileged children.
Another kicker is that at the project's inception, it actually had a thing called an “anti-whale mechanism” in place, which stops people “dumping” or selling a large amount of their token within a set period. This would effectively make a pump and dump impossible to pull off as the dumpers couldn’t offload their coin quickly enough for it to work. And they marketed the coin as having this in place, so that people would feel safer buying in.
However, the influencers involved in this scam got the developers to change the code at the last minute, purely for the purpose of allowing them to sell all of their coin as quickly as possible. You can already tell where this is going, but the coin's price rose, all the influencers quickly sold all of their coin, and the price plummeted, to the detriment of all that had bought in, and also the children they had promised to save.
Another charity themed crypto scam, how delightful.
I do want to take a second to explain that there is a good chance that some of the people on this list weren’t fully aware of what they were promoting. I can’t possibly sit here and say I know what the day-to-day of a celebrity is like and I’m sure they are inundated with requests for promotion that their brand manager or team handles. And I’m actually fine with people making mistakes, we can all say we’ve acted a certain way or done something we regret, so I’m not casting any stones there.
It’s the reluctance to apologise, and in some cases the repeated scams over and over again that get me, especially when they use charity as a hook to draw people into their ePonzi scheme. Which is what Lindsay Lohan did.
She promoted the Daughter Doge coin, which promised to help stop domestic violence, and for some reason give out a Tesla once it hit a certain market cap and also had the random added kicker of being created on Elon Musks birthday according to their marketing material, which I mean, how could it go wrong?
In a shock to literally no one, Daughter Doge shot up and then shot immediately back down as all these coins do, and is no longer listed on any exchanges and people lost a tonne of money.
Sidenote, it’s very funny going through the Twitter account for Daughter Doge and seeing that about 10 different influencers tweeted the exact same, obviously paid-for message, and for some reason Daughter Doge retweeted them all in a row, so you can clearly see they’re all the same. These are the idiots getting rich off this stuff.
Another classic example of someone just getting paid to promote something and taking absolutely zero time to investigate the product or its potential negative effects on their own fans.
Famed blockchain techie and overall progressive technology wunderkind Kim Kardashian took a break from all the back-breakingly hard work she does to randomly promote a token called Ethereum Max.
Besides the story she shared being an absolutely awful graphic that looks straight out of the “you wouldn’t steal a car” era of graphic design, it promoted this obvious pump and dump to her nearly 290 million fans.
You already know where this is going.
The token rapidly climbed off the back of this publicity, Kim K and the founders assumedly cashed out off the back of her fans' money pouring in, and then it crashed into the dirt.
She’s now being sued alongside a bunch of other celebrities for promoting this digital Ponzi scheme, including Floyd Mayweather, who hilariously tried to bring it up at a Bitcoin event and was repeatedly booed.
This one technically isn’t a scam but it’s such a delicious example of karma I can’t help but post it.
I’m going to write about exactly what happened to Luna in a future blog post because it’s possibly one of the most insanely bad crashes the world has ever seen. In non technical terms, it was as if the Titanic hit the iceberg, went over it like a ramp and landed in a tire fire, and rolled into an orphanage.
This is a fairly basic rundown of what happened. Basically Terra Labs has an ecosystem with two coins in it.
No matter the price of either, Terra is always equal to $1 of Luna. So if the price of Terra goes down to $0.95, people can buy Terra and exchange it for $1 of Luna, for a $0.05 profit. In doing so, this destroys the Terra coins that were traded, which limits supply and raises its value.
Equally, if Terra goes up to $1.05, people can buy it with $1 of Luna, so people buy Luna and create or “mint” Terra with it, resulting in another $0.05 profit. In this case more Terra has been created, expanding the supply and dragging the price of Terra back up to $1.
This is called “a peg” and is meant to keep Terra stable at a price of $1. However on 7 May 2022, Terra stayed at $0.98 for way longer than expected, causing absolute chaos as people cashed out of the system in droves, and $40 billion of value was wiped off the face of the earth, and buried the Luna project irreparably.
But Luna isn’t the subject of this entry. Its founder Do Kwon is.
He is a typical crypto bro, frequently telling detractors to “have fun staying poor” and that “he doesn’t debate the poor, and he doesn’t have any change on him”. Nice guy. So what happened when his crypto currency lost 96% of it’s value in a day?
He released an unintentionally hilarious series of tail-between-the-leg tweets in which he said “he didn’t really care about money that much” which I’m sure is a huge relief to the people who lost their life savings and were contemplating suicide whilst he allegedly cashed $2.7B out before the crash.
I think the main message of this article is that influencers are not your friends!!! Just because someone used to do sick backflips on Vine does not mean that they understand or care about blockchain technology, so don’t take any financial advice from them! It's much more likely that blockchain isn’t their next meal ticket, you are.