Social media personalities, researchers, and rating experts are receiving thousands of dollars to post positive coverage of crypto startups, according to a Reuters investigation Tuesday.
The report sheds light on how the crypto hype machine is being bloated by influencers or publications who fail to disclose sponsorship deals. The report highlights Ukrainian start-up Hacken as one of dozens of firms who have bought positive reviews ahead of their ICO. In 2017, the firm paid $7,500 to Christopher Greene, who posted an enthusiastic video review of the coin to his 500,000 YouTube subscribers. Greene did not discuss his payment directly in the video. The coin's value has since crashed.
Paying for coin promotion remains a "regulatory gray area," Reuters' Anna Irrera and Elizabeth Dilts reported.
In addition to promotion, there were concerns about review sites. Seven experts at ICObench, a website which rates ICOs, told Reuters they had been offered -- but rejected -- money in exchange for a positive rating. However, ICObench chief executive Maxim Sharatsky admitted that while it was unusual, they had had "accidents with sales (of) ratings ... It's a problem."
Tim Glaus, co-founder of Swiss-based Alethena, also said he had witnessed "de facto investor fraud" ahead of the company's coin offering after being promised ICObench experts could give them a paid-for rating.
Paying for articles or commissioning research is also common practice, with some sites charging between $100 and $ 10,000 for business coverage.
“The main reason why so many inexperienced individuals invest in bad crypto projects is because they listen to advice from a so-called expert,” The Block's head of analysis Larry Cermak told Reuters. Cermak said he does not own any cryptocurrencies and has never promoted any. “They believe they can take this advice at face value even though it is often fraudulent, intentionally misleading or conflicted," Cermak added.
Reporting by Isabel Woodford