Crypto Platforms Can Improve Their Traffic with $105,000 Tweets from Major Industry Influencers
“Bounty campaigns” seem to be the latest method of boosting traffic on cryptocurrency platforms. This type of campaign basically involves someone on social media highlighting the benefits of a particular company, for which they receive a substantial payout.
Many influencers in the crypto world have used this opportunity to add to their wealth, like Paul Angus and John McAfee. Paul Angus goes by “Cryptonomatron” on YouTube, where he reviews the latest ICOs in the industry with his 8,000 subscribers. John McAfee has a long-standing reputation for being a promoter, with his recommendations earning $105,000 for every tweet. These kinds of endorsements can easily be credited for the success of ICO marketing, since many social media websites have decided to ban advertisements for the digital assets.
ICOs seem to be gaining funds at a much faster pace than before, even without regular advertisements, which is probably why companies are willing to pay top-dollar for the most influential reviewers. Even though some campaign holders say they aren’t costly, there are many critics that believe that this is just an opportunity to mislead consumers. Since ICOs are presently considered securities under the SEC regulations, “bounty hunters” (promoters) may be at risk for punishment if they are considered “unregistered broker-dealers.”
In reference to this concern, Lex Sokolin of Autonomous Research in London said, “Once it becomes clear that financial outcomes can be manipulated not just by trading but creating perceptions through social media, regulators will take a very hard stance.”
There are some hunters that already have felt the pressure to get out of these ICO promotions while they’re still ahead. Despite McAfee’s recent success, he has decided to protect the company by withdrawing from the promotion of ICOs and won’t even recommend them at all. On June 19th, he cited that “threat” from the SEC played a role in the decision. Other celebrities have already been warned about endorsing ICOs since November, since most promoters don’t have the technical and financial knowledge to properly judge the investments for others.
A statement from the SEC Chairman Jay Clayton claimed that ICOs are already on thin ice, trying to get around certain registration requirements that can be considered fraud. Keeping in mind that each ICO is considered a security, any violation by the exchange could result in the promoter receiving legal action as well. This “guilty by association” approach is an obvious way to keep consumers from investing in potentially fraudulent exchanges.
The SEC isn’t the only entity that wants to shut down these influencers. The Commodity Futures Trading Commission, a United Stated regulator for financial institutions, has encouraged customers to stay away from tokens that they’ve only heard about from social media. These investment opportunities require a lot of research to make the best decision, and social media doesn’t have the best financial compass to determine the least risky direction.
Despite legal action and warnings from the SEC, bounty campaigns are still widespread, and ICOs haven’t taken much of a hit. In fact, in the first half of 2018, these sales have raised over $11.6 billion towards blockchain-based startups, which is three times the funding accumulated last year.
Even though the tokens awarded to influencers have little worth at the beginning, the goal is to use the promoter’s celebrity status to gain more popularity and value as more consumers make purchases. The fact that McAfee can easily charge over $100,000 per tweet is a testament to how much value the promotions hold. Anyone that promotes the ICOs either get stock options or a general payout, but the cost efficiency of either still benefits ICOs.
The only continued concern, other than the legal aspect, is the quality of the information. Though there are some bloggers and vloggers that give a lot of information and advice about cryptocurrency, they are not financial experts, and few have any background in crypto. Cryptonomatron even comments that any user should spend the time to perform their own research. He continued on, saying, ““There might be people that go in solely based on watching my video — I hope that’s not the case. You shouldn’t listen to YouTubers.”