As we witness the collateral damage caused by FTX unfold and the federal criminal charges against the crypto exchange's founder Sam Bankman-Fried stack up, many are asking how so many people fell for this Ponzi-like scam. As with any "successful" financial scheme, FTX was a confidence game – and the game only works if the "players" are duped into thinking things are safe. Enter FTX's promoters and pumpers.
Celebrities including centi-millionaire financier Kevin O'Leary, football star Tom Brady and basketball stars Steph Curry and Shaquille O'Neal all attached their images to FTX. Larry David played a crypto-skeptical curmudgeon in a much applauded FTX Super Bowl ad last year. Many of these well-known names are now facing a class-action lawsuit.
However, there is another group of people who need pointing out: social media influencers. In an age of bifurcated attention, where people are more likely to be watching YouTube than network television, micro-celebrities can have an outsized influence on their audience. That's part of the reason FTX sponsored so many so-called creators, especially on YouTube.
Sam Bankman-Fried is known now for making deals seemingly on whim, based on the shaky math of "expected value." The one-time billionaire was seen as a shrewd businessman with a heart of gold, who valued inflating that public persona. Last year, FTX signed a $130 million deal to put its name and logo on the Miami-Dade County sports arena. What's a couple million to pay dozens of YouTube creators, if they might also bring in millions of viewers to be converted into potential customers?
Financial schemes only work if people are confident in the hustle, and dozens of social media stars helped create an illusion of safety and spread FOMO. The psychological phenomenon of the "mere exposure effect," where people are more likely to believe things are true if repeated, might be heightened by the para-social relationships that form on social media.
Over the past year I made several videos calling out FTX promoters, and warning people that assets on these exchanges were unsafe. Contracts for YouTubers to push FTX ranged from $50K per month upwards to hundreds of thousand per month and/or around $2.500 a video. These prices were quite high for a 30-second mid-roll ad read. Several creators even made videos saying FTX and its stateside subsidiary FTX US were fine – as they were going up in flames.
Three creators – Minority Mindset, Graham Stephan and Tom Nash – even made apology videos within hours of FTX's bankruptcy announcement and seemed to be reading from the same script. Not a good look. Saying "everyone else was doing it" or "I'm bad at business" is hardly a defense. Many of these people pose as financial gurus, yet they promoted what could be the largest Ponzi in history. Either they're not the geniuses with money they claim to be or they were just plain greedy.
Obviously, no one should look to YouTube as a bastion of morality. Tom Nash has admitted to using fake names and lying about his credentials, while Meet Kevin drinks on camera when talking about investing. Andrei Jikh sells his "Zero to a Million" course. These creators, just a fraction of the total, took money that was likely stolen from FTX customers to promote a Ponzi scheme to their audience. Many of their viewers will lose everything, or have to wait years to get pennies back on the dollar.
A lot of good could be done if FTX's advertisers apologize in a way that recognizes the harm they may have caused others. Forget clearly scripted and grossly insincere apology videos. If these people truly care they should take all the money they received from FTX and either return it to the bankruptcy estate or donate it all to charity.
– Chris Norlund is the creator of a daily news YouTube channel and host on Busan BeFM Radio.
