108. The CRAZY Unethical Business Model Behind Crypto Influencers

Welcome back to another episode of the Ben and Bergs Podcast. I'm Ben, your favorite high school dropout and founder of Collective Shift alongside Ms. Bergs, your favorite MBA and COO of Collective Shift, Australia's leading crypto portfolio insights company, providing professional analysis and portfolio strategies for crypto investors. Like you. We are a unique blend of the established and the self made. And we're here to break down crypto business and personal growth. But we're not here just to talk crap. We're giving you the insights you need to make better investments and build successful businesses and level up your life. And today we are talking about some of the worst culprits in crypto who are crypto influencers. And more importantly, we're going to be going deeper into the business model behind crypto influencers. How do they make money? Why are they telling you the things they're telling you? Some of the things that we have seen and been approached to do is honestly sickening to know that people are doing this undisclosing things. There's no doubt in my mind that unfortunately for many crypto influencers they are a huge reason as to why so many people lose money in crypto. And the real why behind Collective Shift is to separate quality from noise, separate genuine crypto research, genuine crypto information to genuinely help you. Because we have fallen down this trap before. I have fallen down the trap of crypto influencers in the past. I've lost a lot of money to a crypto influencer before. And it's a real mission now for us at Collective Shift and the business model supports that. And we'll go into that as to how we maintain alignment with you, the investor. We win with you, you know, we lose, you lose, you lose, we lose, you win, we win, we win, you win. Does that make sense versus a lot of the crypto influencer business models is they win, you lose, you lose, they win, you know, they don't lose, basically is the way they set it up. Now caveat, there is some good crypto influencers. Not, not like, not to say they're, they're all bad. That's not like I'm not out here just like we're not just shooting them all down. That's, that's not what we're here. There is some actually genuinely good crypto information out there, but most of it's crap.

Yeah. So I would put them not in the influencer or finfluencer category. It's more education or analysis and they've been doing it for a While. And have a loyal following because of that.

Yeah.

And not a cult like following. There is a, there is a huge, huge difference. And Ben, maybe we go into some of the influencer manipulation and we can talk about the business model around why they actually do this and how they get paid.

Yeah. So let's start with the influence manipulation. So how does this even work? Well, the biggest manipulation we see is just influencers simply telling you the wrong information. Now the wrong information usually is around price action or investments, specifically altcoins. You know, they may have some sort of vested interest and they will continue harping on about a particular altcoin because it is something that they really like. Whether right or wrong, it generates a lot of interest around that particular investment that they have a large holding of and invested interest. And they may not tell you the whole story. And regardless of what happens, they going to win because they're on the, they're on the other side of the trade.

That's exactly right.

Yeah, yeah, yeah.

And you got to, you got to think as well. The whole thing with anything in life, investing, your job, the spouse issues, whatever it may be, you need to have independent, critical thought. You don't need all contrarian thought or mainstream thought or someone else's thought or telling you what to think. Take what someone has said or what you have thought yourself. Go away, do your research and come up with your own independent thought and direction. Don't blindly follow anyone else.

Yes, yes, 100%. Now the other part of the manipulation pieces, they actually might be being, they might be paid by the cryptocurrency project they're speaking about to share and actually do an undisclosed advertisement. Now this is very common. We're going to go back a few years where we got approached by a very, very, very reputable.

Crypto exchange. This has a token. And they wanted us to be a advisor, not an advisor, a. What do they call it? Basically a ambassador. Hate influencer Ambassador. Yeah, they come up with these fancy names, right. They, you know, and an organic distributor of good information like just like mumbo marketer, advisor, marketing.

And it's very. Yeah. And you have to be very wary, like if you say you're advising a project immediately, in my mind it's like, oh, they've got a skill set that they need, that they're talking to them about. The majority of times, advisory is you're marketing their project for them and being paid. Just keep that in mind.

And, and the, the amount of money they were offering was considerable. We're talking like you were Talking like five figures a month, right? To, to basically just talk about them every now and again. And then the contract came through and on this contract they had a clear line, right? It was a non disclosure agreement that we couldn't disclose that we're being paid to promote this certain project anywhere. So they were paying us, that were proposing to pay us to promote their token with a lot of money, but we were not allowed to disclose it, which is.

In my opinion should be illegal. And if not illegal, highly, highly unethical. And you know, obviously we declined it. But it went to show how many of these agreements are out there and how these projects go around gathering interest from, from public figures.

It's downright deceitful. So Collective Shift doesn't accept money from anyone. When we get some spicy ones that come in or someone that's really reputable or whatever it may be, we'll go, okay, yeah, you know, we'll have a look at this, you know, send it through just to see how the deal is structured, what they're offering and how they actually run their business. It gives us an inside view of what's actually happening and it also allows us to provide a better view on certain projects or exchanges or whatever it may be once you start to see the inner workings provided, you know, if we're bound and we can't, you know, talk about it, we won't. But it really helps us to stay on top of things, keep our finger on the pulse and see how people are being roped in to promote something.

Yes, yes. And on the other side of that, about a year ago we were looking into influencer marketing. We were looking to do actual genuine influencer marketing, paid promotion, transparent, all that sort of thing. And we did a deep dive on a lot of the YouTube channels. And what we found with these YouTube channels that offered paid promotion was again, damn right, just disgusting. So what we found with 90% of YouTube channel crypto YouTube channels that offered paid promotion, which by the way was extraordinarily expensive, that these 90% of these YouTube channels all had fake viewers and fake subscribers and fake people following them. We went deeper on these data and you'd see these massive spikes and subscriber growth. They went from basically no subscribers to like 30,000 subscribers in one day. And then what they do there's bought, they'd buy these bots to basically AI driven bots to comment on the topic they're talking about with fake views. And it's very, very hard to actually differentiate fake from not fake because of how well they can basically mask these fake bots to actually be community followers. And they do it across their Instagram and their Facebook and their YouTube. And then they sell massive, you know, 20, $30,000 packages to advertisers to advertise their fake audiences. It is wild. And the.

I remember those costs, and they were astronomical. And you can literally pay for a service. It'll cost you a couple hundred bucks to get thousand followers. And some of them are bots, some of them are people. Like, it's farming. So they've got, you know, 10,000 accounts per person. They go on there, they comment, and you'll see it. You'll know the comments straight away. They're not related to the video. They sound like AI or someone that's just trying to do 10 billion comments per day. And for us, we found that out because we're like, hey, we've got a crypto product. If you've ever met Ben I or you're in the collective shift group, you know, we're legit. We provide a lot of value. How do we provide that to more people? And there's heaps of different avenues. There's, you know, organic growth ads, influences. So, like, cool. These guys already have crypto audiences. Let's go help those people. And as soon as they send it back. And my God, the way they talk to you, the arrogance, like, the way they try and manipulate you and make you feel like you're missing out and Ben and I aren't to be manipulated. Ain't going to happen, son. We dove a bit deeper into it and we're like, all of this is fake. It's not real. You're not providing anything. Nothing's tied to outcomes. This is not a good relationship. And we're like, no, see you later. And that was incredibly eye opening because it wasn't just one, it was the majority of people.

How much talk is there? It's just from so many people just talk, talk.

And they talk like they're in a position of power. They're the best, whatever it may be. And I'm like.

It'S all a scam. Like, they do that to make you feel small, like you don't know what you're talking about. They know, and you need to pay them in order to find out. We found a lot of this as well when we were doing capital raising. The people that approached us, they're like, oh, oh, pay us 20 grand. We'll get you on this platform, you know, put you in front of this investor. This will happen. I said, okay, no worries. We'll pay the money. Can you just show me, of all the people that have come through, how much capital they've actually raised? Oh, sorry, we can't do that. I'm like, wait, so you don't have any results? You're promising me all this stuff? You can't guarantee anything. And of the people that have come through, you can't say how much money they've raised because of you. That's your main selling point. 99% of the people that did that could not prove it either. And that's the kind of thing you need to look out for if you're selling a service. And you can't prove to me that there are people behind you that you have helped, and you can't quantify that. Help. See you later.

Yeah, show me that. Show me the results. I love those ones. Yeah, if you pay me 20,000 USD, you can come on my podcast and speak to, you know, family offices. Okay, who's on the family offices? Oh, we've got a few of them. Okay. Have you raised money before? Like, who's. Who's raised money? Oh, you know, it's just. It's a new podcast, so what the hell am I paying $20,000 for?

It is so crazy, but people get in all the time, and you will never get your money back from these people. They fulfilled their obligations, have essentially, you know, done what they need to do on the contract, but they prey on a certain type of person that is inexperienced, and if you don't have a big following and you are inexperienced, you'll be the type of person that is reaching out. Yeah.

Yeah. The last one that is the biggest manipulation is, is in the worst case is that these influencers will promote these cryptocurrencies and then dump. So basically sell them immediately to their. To their audiences. Now, this doesn't happen as much in bear markets, but it does in bull markets where they'll basically buy. And this has been backed by this. There's a guy on Twitter called Zach. What's his name? Zach. Bt you'll see him on Twitter. Yeah, I can't. Anyway, he basically goes through and he will track blockchain addresses tied to crypto influencers, and you will see them get a huge chunk of tokens before they announce it on their channels. Their. In their retail investors will go buy the token and they'll basically sell it into them, which is just sickening. It's just screwing your audience. It's screwing so many people. It's just awful. And that's happened a number of times before. And that's, that's the worst case of manipulation.

And you even got approached to buy to support a layer one technology recently, Ben. And you're like, okay, send it through, knowing full well you're not going to sign up. Right? Like, because it's just like. But we like to, we like to see what's on offer. And you're like, they're like, oh, it's going to be like a Bitcoin killer, eighth killer. And you can spot these people because they will never ever tell you to buy Bitcoin or Ethereum. These are the two major platforms. That's where all the innovation is happening. And they will never tell you to buy that because they don't make any money. They will only tell you to buy things to get money. And this is how the scam works. Okay? What will happen is it's one of two ways. One is they will go to something like CoinMarketCap. They will look for projects that are under $5 million. They'll click through and see if they've got a nice little team, a little maybe MVP and whatever it may be, and they'll start. They'll go, great, this is my project. They'll then go promote that to the people that follow them. They'll buy in that day. It won't be listed on exchange. It'll be like on a decentralized exchange, it'll be difficult to buy. It's hard to get liquidity. They will buy it. Once they bought it, they start promoting it and saying, this is the project. This is why I think it's awesome. On and on it goes. Or they get approached by a project or partner with them. They will be an advisor or marketer or influencer or ambassador for that project because they believe in it and they're working and they're doing all this stuff together and it's going to be amazing. And then they will then promote that to you. They're being paid. In both of these instances, they, these people win by you losing. So you have to buy that token. The price has to go up and you are the exit liquidity, nothing more. They will then sell. They'll keep promoting the project going, oh, but since you bought it, it went up like 20%. But for them it's gone up like 3000% and that is how they make their money.

Doesn't it make you sick?

It's literally, yeah.

Like, our business is based on trust and customer success. The second that we lose that trust, our business is gone. The Second, we don't provide value to our members, our business is gone.

Yeah. Where these models are, the more you lose, the more they win.

Yeah. And you look at the big ones like oh.

So look for any project that has the big project that has failed, where they've got a team, they've got this big list of advisors that are advising them and look, I'll tell you how to spot the scam, right? If someone is trying to sell you something and get into a project scan, right, if it's on YouTube, what they need to provide is they need to provide basic things like what does the project do? What, what will it need to actually succeed? What will they have to do? What are the resources they will need, what is their token allocation, how much is allocated to the team, to VCs, to marketers, to influencers, to investors. And then go through who are the competitors? Do an analysis there. What innovation have they done? Who are the key people that are creating the things? Then look in the totality of reality, of on chain analysis, where are those tokens going? Are people using them? Are they in the desired way? And when you project to the future as this being an opportunity, what will have to occur? As well as tell the people to go and do their own research, read the white paper, get in the discord, talk to the people, see the activity. These are all the proof of work things that need to happen in order for that alignment to be there. And the majority of the time people don't want to put in the effort, they don't have the time, which is completely understandable and they'll just take a punt. And that punt you are taking is aligning with someone else's incentives. You're being the exit liquidity and you are making them rich. You are the product. If you're not paying for something, you are the product.

Yeah, yeah, great points Bugs. And just, just to reiterate some red flags of a crypto scam or a Ponzi scheme, which are usually the ones that most people get into because they sound the most lucrative. If your crypto investment has any of these, be warned, if you have any of these, if you have any like any of these that are more than just one, I'd probably get the hell out one. Multi level affiliate programs or if you have, or if you lose points or credits, if you withdraw funds from the platform, if there's massive lockup periods, promised returns, a cult like Community with a big personality founder, anything like send me money and I'll send you more is just like a Just straight up scam. And if they have their own token, plus have crazy lockup periods. Never trust anyone, verify.

You just described hex mate.

And you gotta, you gotta wonder like I'm giving you my money, you're telling me all this stuff. There's gonna be a lockup period and you need to even look at when are these disbursements happening? When are unlocks happening? When can I get my money back? Do you control the keys? What do I actually own and control is this hopes and dreams is being pumped up by some guy. And then also in the worst case, the money that you're putting into an ecosystem is used to recycle and buy more. So you buy the token, that person then takes that eth and keeps buying more of the token. They're on both sides of the market. So that's how you get price appreciation. That is a flat out scam. Is this so rife? At one of Australia's biggest crypto conferences last year, Nick, who is the scam master, like he will sniff this out from 10 miles away. He works at Collective Shift. He actually went up and told the creators of the conference. He's like these guys are a scam. First of all, they can't do what they say they're going to do. And he listed out all those things. And also I want to let people know there's also a difference between a scam where someone comes out and they literally want to scam your money and it's fraudulent versus incompetence. Because there are a lot of projects that will come out that want to do a blockchain with AI with a token and it will sound fantastic but they are either have a rational exuberance or they're inexperienced and they cannot deliver on that because it is so fucking hard. And that's just incompetence. They both look the same, they result in the same. It's kind of a scam but they don't have that malicious actor mentality. It's more that they can't deliver what they want to deliver.

Yeah. And anything for me. I don't believe in anything. That's not bitcoin, that's trying to act as a currency. I only believe in. Sorry and Ethereum. I only believe in utility tokens. If there's anything that you are like buying these like coins for a currency that's not in a game, like hands down, like I'd get the hell out and anything, you're exchanging cash for some new world changing coin. It's a lot of Nonsense, in my opinion.

Exactly. It's like, it's like the rappers say, use real money to buy fake watches. That's really what you're doing, right. And you're chasing a hope and dream. And every token will come out. It's going to be 10,000 times faster than bitcoin. It's going to be this, it's going to be that. Great, you can build that technology, but what are you sacrificing? Is it security, is it decentralization? What are those trade offs? Great, you got the trade offs. How are you going to get to a billion users? You won't. Just because you have the tech does not mean you will get there. It is an incredibly long road and you've just started like Bitcoin and ETH have been around for ages and they've proven themselves that it's what people are betting their livelihoods on because they're building on those technologies.

Yeah, spot on. So there you have it. Don't trust, verify. And the reason we are here is really to be aligned with our members, our investors, our community. Like, you know, the incentives are massive in crypto. And understanding the incentives behind why someone will do something is the most important thing to understand.

And also another key thing is look for references. So whenever you see people arguing on Twitter, it's all just thoughts. You see someone like Balaji arguing, he's literally got references of where he's got his data from. You'll see the same thing in Collective Shift. We will talk about a bunch of stuff. We will put in the screenshots. We'll actually have the links at the bottom. You can click on and you can go and verify and form your own opinion. So what we're doing is we're looking at the entire market. We're synthesizing it for a specific project or area or thing that's happening, providing all the research points in a report that you can consume and then go make up your own mind.

Yeah, yeah, exactly right. Research based, factual quality, that's what you're after. And there's a lack of it in this space. So be careful.

And look, folks, incentives drive behavior. If someone is trying to make you do something, make you feel some fomo, you're missing out, or buy something or change your life or whatever it may be, just ask yourself for two seconds, what is the incentive they have to do this? Why would they give up their time, set up their little studio with their lights and their camera and their fancy microphone, write down a script and record it and edit it and upload it to YouTube. Why would they spend all of that time? And I guarantee you it is not out of the goodness of their hearts.

There is a couple. I will say again that they're good, but most are not.

Oh, and let's. Well, let's. Let's look at that. So ones like Andreas Antonopoulos, classic example. And again, he's doing this well when we say the goodness of their hearts. He's doing it for a reason. He's doing it to, well, help people, keep them safe and promote bitcoin. His whole livelihood relies on bitcoin at bitcoin education, doing talks. And that's how he builds his proof of work. That's his incentive structure. That is perfect because his whole thing, you can see that line from, I follow his video. He talks about bitcoin. He's written textbooks. He educates people. He goes to the Senate and educates them about it as well. If at any point he has a scam or something against his name, his whole livelihood goes away. You can see that incentive structure straight down the line. And that is something that gives you a high level of confidence. If you can't see that with someone else, you are the product. And if it doesn't light up, you need to be aware of that and have your independent thought and critical analysis ready.

Yeah, spot on, man. Great little video. Hopefully everyone that's helped. If you have anyone that you know that should listen to this, maybe they need to just get a little bit more information about where they're getting the info from. Maybe know someone that's kind of like listening to an influencer. Maybe they've been scanned. Maybe you just know they're just going down the wrong. The wrong path. Send them. Send them this episode. Benneberg sent them. When?

Absolutely. And if you're in crypto and you've been in there for a while, look back on those altcoins that you're holding. Look back on those projects and be like, okay, when I bought it, I might have been a bit greener. I didn't know too much. And look at where those projects are now. Have they delivered? How's their roadmap going? What's their reputation? Are they active in their discords? Are they engaging their community? Look on chain. Are the coins moving around or is it moving just between a couple of accounts? And now is the perfect time in a bear market to rejig your portfolio. And if those coins didn't work out, that's okay. And if they're not doing what they said they would do. That's okay. Cop the loss. Rotate into something that is better and prepare yourself for the bull market that is coming.

Yeah. Hang on, man. Great episode. Thank you so much. If you love this episode, we'd love for you to share it. As I mentioned, you can follow us on Twitter babybackburg. On Twitter and @benSimpsonau. We've also got a Ben and Berg's Twitter, which you can get around, which is at Ben and Bergs. And as always, we'll keep bringing you two episodes every week, getting you ahead in crypto, business and personal growth. And we'll see you on the next episode.

Thanks, champions.