Crypto influencers are taking an extra cautious approach to endorsement deals since the collapse of crypto exchange FTX last year, which has seen several celebrities hit with a lawsuit for their alleged role in its promotion.
In March, a $1 billion class-action lawsuit was filed alleging that eight influencers promoted “FTX crypto fraud without disclosing compensation.”
Influencers told Cointelegraph that it has served as a wake-up call — those that endorse crypto firms need to understand their followers can take legal action against them in the future should that company turn unfavorable.
For crypto vlogger Tiffany Fong, who gained fame by interviewing former FTX CEO Sam Bankman-Fried after the collapse, endorsing crypto firms on her social media isn’t of interest to her at the moment.
“Since so many once reputable companies have collapsed, I don’t want to promote anything that could potentially rug customers,” Fong told Cointelegraph.
Fong admitted she has received a lot of offers but hasn’t “responded to most of them,” as she believes the risks outweigh the reward.
“I don’t know how much money I’ve turned down; I’m just not entertaining it at the moment.”
DeFi Dad, who has 152,300 followers on Twitter, said that he had been proposed an opportunity to have his content sponsored by FTX.
“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 fears from both sides of the business.
funny to see some of these influencers risking their entire reputation creating these for quick $$$— ZachXBT (@zachxbt) May 6, 2023
Nikita Sachdev, CEO and founder of Luna PR, explained to Cointelegraph that it’s not only influencers who are becoming more cautious about endorsement deals, but also crypto firms themselves, noting:
“The increased scrutiny and legal concerns have made both influencers and crypto firms more careful in their collaborations.”
Sachdev pointed out that the extended crypto winter has forced crypto firms to tighten budgets and that there “has been an overall decline in influencer deals.”
Rasmus Rasmussen, chief marketing officer of Polygon NFT game Planet IX, told Cointelegraph that securing A-lister influencers to promote crypto has become increasingly challenging after the collapse of FTX, noting:
“A lot of more well-established influencers seem to have taken a step back and considered the way they offer services.”
However, the fees being charged when these deals are executed is staggering.
“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,” Sachdev added.
Meanwhile, 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.”
Versluis explained to Cointelegraph that the FTX saga, surprisingly, expanded the crypto space, leading to new crypto businesses emerging and actively seeking influencers for brand deals.
“A lot of people were reminded about crypto and building crypto businesses when SBF made headlines globally.”
Crypto vlogger MegBzk suggests 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.