Cryptocurrency influencers are taking a more cautious approach to endorsement deals since the collapse of cryptocurrency exchange FTX last year, which has seen several celebrities sued for their alleged role in promoting it.
In March, a billion dollar class action lawsuit was filed alleging that eight promoted influencers "FTX Crypto Fraud Without Disclosing Compensation".
Influencers told Cointelegraph that it has served as a wake-up call: those who support crypto companies need to understand that their followers may take legal action against them in the future if that company turns out of favor.
For cryptocurrency vlogger Tiffany Fong, who gained fame interviewing former FTX CEO Sam Bankman-Fried after the crash, endorsing cryptocurrency firms on her social media isn't in her interest right now.
โSince many once reputable companies have gone under, I don't want to promote anything that might upset customers,โ Fong told Cointelegraph.
Fong admitted that he has received many offers but has not "responded to most" as he believes the risks outweigh the rewards.
โI don't know how much money I have turned down; I'm just not entertaining him right now."
DeFi Dad, who has 152,300 followers on Twitter, said he had been approached with the opportunity to have FTX sponsor his content.
โI have no idea how much money I probably gave up by choosing not to work with FTX, but in retrospect it was the best decision,โ he said.
Marketing agencies that bring together influencers and brand deals have noted fears on both sides of the business.
fun to see some of these influencers risking their entire reputation creating these for a quick $$$
โ ZachXBT (@zachxbt) May 6, 2023
Nikita Sachdev, CEO and founder of Luna PR, explained to Cointelegraph that it's not just influencers who are becoming more cautious about sponsorship offersbut also the crypto companies themselves, noting:
โIncreased scrutiny and legal concerns have made both influencers and crypto companies more careful in their collaborations.โ
Sachdev noted that the prolonged crypto winter has forced crypto companies to tighten budgets and that โthere has been a general decline in deals with influencers.โ
Rasmus Rasmussen, director of marketing for Polygon NFT game Planet IX, told Cointelegraph that securing top-tier influencers to promote cryptocurrency has become increasingly challenging after the FTX crash, noting:
โMany more established influencers seem to have taken a step back and considered the way they offer services.โ
However, the fees charged when executing these deals are staggering.
โWe have seen crypto influencers charge up to 6 figures for endorsement deals, which is often a reflection of their following and reach. We have also come across celebrities endorsing web3 projects, charging millions,โ added Sachdev.
Related: Former SEC Chief Warns Influencers About Prosecution For Crypto Price Gouging
Meanwhile, Mason Versluis, who posts as Crypto Mason to more than a million followers on TikTok, has seen a surge in offers from crypto brands โfor all the wrong reasons.โ
Versluis explained to Cointelegraph that the FTX saga surprisingly expanded the crypto space, leading to the emergence of new crypto businesses and the active search for influencers for brand deals.
โA lot of people were reminded about cryptocurrency and building cryptocurrency businesses when SBF hit the headlines globally.โ
Crypto vlogger MegBzk suggests that influencers should conduct your own research before endorsing a business.
โYou need to know inside and out who you are working with, to the best of your ability. [and] let several people look at them,โ he said.
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