FTX lawsuits see crypto companies, influencers roll back endorsement deals

Crypto influencers are taking an extra cautious approach to endorsement deals since the collapse of crypto exchange FTX last year, with several celebrities suing over their alleged role in promoting it.

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

Influencers told Cointelegraph it has served as a wake-up call: Those who endorse crypto companies should understand that their followers may take legal action against them in the future if that company becomes unfavorable.

Crypto vlogger Tiffany Fong, who rose to prominence by interviewing former FTX CEO Sam Bankman-Fried after the collapse, is not interested in endorsing crypto companies on her social media at this point.

“Since so many once reputable companies have collapsed, I don’t want to promote anything that could put off customers,” Fong told Cointelegraph.

Fong admits that she has received many offers, but “didn’t respond to most of them,” as she believes the risks outweigh the rewards.

“I don’t know how much money I turned down; I’m just not having fun with it at the moment.”

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

“I have no idea how much money I probably turned down by choosing not to work with FTX, but in hindsight it was the best decision,” he said.

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

funny to see some of these influencers risking their entire reputation by making these for quick $$$

— ZachXBT (@zachxbt) May 6, 2023

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

“Increased scrutiny and legal concerns have made both influencers and crypto companies more cautious in their collaborations.”

Sachdev pointed out that the extended crypto winter has forced crypto companies 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 following the collapse of FTX, noting:

“Many more established influencers seem to have stepped back and rethought the way they offer services.”

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

“We have seen crypto influencers charge as much 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, which cost in the millions,” added Sachdev.

Related: Former SEC Chief Warns Influencers From Prosecution For Crypto Price Manipulation

Meanwhile, Mason Versluis, who posts as Crypto Mason to over a million followers on TikTok, has seen an increase in crypto brand deals “for all the wrong reasons”.

Versluis explained to Cointelegraph that the FTX saga, surprisingly, expanded the crypto space, leading to new crypto companies actively seeking influencers for branded deals.

“Many people were reminded of crypto and building crypto companies when SBF made headlines worldwide.”

Cryptovlogger MegBzk suggests that influencers should do their own research before endorsing a company.

“You have to know inside and out who you are working with as best you can [and] have several people look at it,” she said.

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