FTX lawsuit sees crypto firms, influencers withdraw endorsement deals

Crypto influencers have been taking an extra-cautious approach to endorsement deals since the collapse of crypto exchange FTX last year, which has seen several celebrities face lawsuits for their alleged roles in its promotion.

In March, a $1 billion class-action lawsuit was filed alleging that eight influencers “promoted the FTX crypto fraud without disclosing compensation.”

Influencers told Cointelegraph that this served as a wake-up call – that those who support crypto firms need to understand that their followers may take legal action against them in the future if the company turns hostile. She goes.

For crypto vlogger Tiffany Fong, who gained fame by interviewing former FTX CEO Sam Bankman-Fried after the collapse, supporting crypto firms on her social media is not what interests her at the moment.

“Since so many once iconic companies have collapsed, I don’t want to promote anything that could potentially impact clients,” Fong told Cointelegraph.

Fong admitted that he had received a lot of offers, but “didn’t respond to most of them”, as he believed the risk outweighed the reward.

“I don’t know how much money I turned down; I am not entertaining it at this time.

The DeFi dad, who has 152,300 followers on Twitter, said he was offered the opportunity to have his content sponsored by FTX.

“I don’t know how much money I probably turned down by choosing not to work with FTX, but looking back it was the best decision,” he said.

Marketing agencies that bring together influencers and brand deals have seen fear from both sides of the business.

It’s funny to see some of these influencers risk their entire reputation making these for a quick $$$

— zachxbt (@zachxbt) May 6, 2023

Nikita Sachdev, CEO and founder of Luna PR, explained to Cointelegraph that it is not only influencers who are becoming more cautious about endorsement deals, but also crypto firms themselves, noting:

“Increased scrutiny and legal concerns have made 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 “there has been an overall decline in impactful deals.”

Rasmus Rasmussen, chief marketing officer at Polygon NFT game Planet IX, told Cointelegraph that it has become increasingly challenging to secure A-lister influencers to promote crypto following the collapse of FTX:

“A lot of the more well established influencers have taken a step back and considered the way they provide services.”

However, when these deals are executed the fees charged are staggering.

“We’ve seen crypto influencers charge as high as 6 figures for sponsorship deals, which is often a reflection of their following and reach. We’ve also seen celebrities endorsing Web3 projects that run into the millions. charges,” Sachdev said.

Connected: Former SEC chief warns influencers about prosecution for crypto price manipulation

Meanwhile, Mason Versaluis, 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 dramatically expanded the crypto space, with new crypto businesses emerging and actively seeking influencers to brand deals.

“A lot of people were reminded about crypto and building crypto businesses when the SBF made headlines globally.”

Crypto vlogger MegBzk suggests that influencers need to do their research before endorsing a firm.

“You need to know inside and out who you’re dealing with, to the best of your ability (and) have as many people look at them,” she said.

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