Non-fungible tokens (NFTs) and cryptocurrency are still making waves for all the wrong reasons – scams, cons, and phishes are giving these digitally-driven technologies a bad reputation.
Anna Collard, senior vice-president: content strategy and evangelist at KnowBe4 Africa, explains that this is largely due to the fact that the line between legit and scam is becoming very blurred and hard for most people to see.
“Digital assets like NFTs are being used to drive engagement in the virtual space,” says Collard. “They are also used to handle brand collaboration, to reward consumers, and to build brand loyalty and customer connections. However, they’re not necessarily working as well as they should, and already there are court cases with celebrities and influencers being sued.”
NFTs are unique digital tokens built on blockchain that can have value attached to them. Currently, NFTs span anything from drawings to music to artworks. As an example, the founder of Twitter recently sold one of his tweets for $3-million.
NFTs can be used to assign ownership of a digital item, allows tracking of previous owners using blockchain and can be used to attach – often speculative – value to the asset. The most famous example of this is Bored Ape, a NFT series that has sold to celebrities for upwards of $450 000.
However, celebrities (and influencers) are getting into hot digital water because they are either promoting NFTs or cryptocurrencies that are not necessarily legit, or do not deliver what they promise.
Perhaps one of the most well-known cases is that of Save the Kids, an initiative promoted by influencers as being the ultimate vehicle for saving children in need while still making its investors money. A digital win-win, if you will.
It failed, and today it is a worthless crypto that lost people money.
A number of the influencers involved in the initiative were from the very popular FaZe esports clan and subsequently some have been removed or suspended, but the damage has been done, adding these funds to the growing tally of crypto scams taking money from people.
According to research, scammers wandered off with around $14-billion in cryptocurrency in 2021, and this is very likely to continue considering how profitable this market is.
A recent article in Time Magazine highlighted three of the biggest scams: GSGOLotto, a scam that saw two influencers charged; Centra Tech, a false project that used influencers to trick people out of millions and put another two celebrities – DJ Khaled and Floyd Mayweather – under the microscope; and pump-and-dump schemes using NFTs.
Even more recently, Kim Kardashian and Jake Paul have joined the ranks of celebrities and influencers who have been accused of playing the pump-and-dump game and are currently being investigated for promoting EthereumMax. The case is still ongoing so the outcome remains uncertain, but one thing is certain – this is not a safe space for people’s money to play and we cannot trust influencer’s marketing.
“There’s also been a rise in virtual influencers, robots that are replacing human beings as the trend setters on social media,” says Collard. “There’s Shudu, a virtual supermodel, and lilmiquela, a virtual 19-year-old with digital mood swings. These are just two of a growing list of virtual characters that have massive followings and earn agencies a ton of money for endorsing brands like Vogue, Chanel and Fendi.
“This is a remarkable testament to the marvels of digital, but should also come with more transparency. People need to know who owns and controls them and influencers need to publicly announce that they are getting paid to endorse NFTs or crypto projects – especially if it’s being advertised as a potential investment opportunity or financial product to minimise the risk of abuse or scams.”