Crypto influencers are becoming increasingly cautious about endorsement deals in the wake of the collapse of crypto exchange FTX and the subsequent lawsuit filed against several celebrities for their alleged role in its promotion. In March of this year, eight influencers were accused of promoting “FTX crypto fraud without disclosing compensation” in a $1 billion class-action lawsuit. This has served as a wake-up call for influencers to understand the risks involved in endorsing crypto firms and the possibility of future legal action against them by their followers.
One such influencer is crypto vlogger Tiffany Fong, who gained fame by interviewing former FTX CEO Sam Bankman-Fried after the collapse. Fong has no interest in endorsing crypto firms on her social media at the moment: “Since so many once reputable companies have collapsed, I don’t want to promote anything that could potentially rug customers,” she told Cointelegraph. Although Fong has received many offers, she believes that the risks outweigh the rewards.
DeFi Dad, who has 152,300 followers on Twitter, said he was once offered an opportunity to have his content sponsored by FTX, but he turned it down. “I have no idea how much money I probably turned down by opting to not work with FTX, but it was the best decision in retrospect,” he said.
Marketing agencies that bring together influencers and brand deals have noticed a growing sense of caution on both sides of the business. Nikita Sachdev, CEO and founder of Luna PR, said that there “has been an overall decline in influencer deals” due to increased scrutiny and legal concerns.
Rasmus Rasmussen, chief marketing officer of Polygon NFT game Planet IX, said that securing A-list influencers to promote crypto has become increasingly challenging after the collapse of FTX. He noted that “a lot of more well-established influencers seem to have taken a step back and considered the way they offer services.”
Despite the growing caution, influencers are still charging high fees for sponsorship deals. Sachdev said, “We have seen crypto influencers charge as high as 6 figures for sponsorship deals, which is often a reflection of their following and reach. We have also come across celebrities endorsing web3 projects, who charge in the millions.”
Mason Versluis, who posts as Crypto Mason to over a million followers on TikTok, has seen an increase in crypto brand deals “for the wrong reasons.” The FTX saga, he said, surprisingly expanded the crypto space, leading to new crypto businesses emerging and actively seeking influencers for brand deals.
Crypto vlogger MegBzk suggested that influencers need to conduct their own research before endorsing a firm. “You need to know inside and out who you are working with, to the best of your ability [and] have multiple people look at them,” she said.
The collapse of FTX and the subsequent lawsuit have highlighted the need for influencers to be extra cautious about the brands they endorse. With the possibility of legal action from their followers, influencers need to conduct thorough research before endorsing any crypto firm. The caution on both sides of the business has led to an overall decline in influencer deals, but those that still take place can come with hefty fees. Influencers are still an essential part of the crypto industry, but the expectations for transparency and accountability will only continue to increase.