While the main cryptoactives in the market are losing value and popularity, new tokens and digital coins are constantly being created for the most varied purposes. The so-called “altcoins” are investment alternatives to the biggest names among cryptocurrencies, such as bitcoin (BTC), and are being promoted mainly by influencers, streamers and YouTubers. However, some of them can be scams.
One of the main examples of this phenomenon is Kim Kardashian, the billionaire socialite and influencer who most recently appeared in her Instagram stories promoting a new cryptocurrency called Ethereum Max. a new altcoin that skyrocketed after your Twitter post only to lose 90% of its value shortly thereafter.
Adin Ross, a popular streamer on Twitch with millions of followers, promoted the newly created and (suspicious) MILF token in his live in May, confirming that he did so only for the money a company offered it. However, a few weeks later, it was confirmed that the cryptocurrency was used for a “pump and dump” scam. This scheme consists of quickly raising the price of young altcoins with a surge in demand for new investors so that few holders of numerous units of the currency make a lot of money by selling them, causing the asset’s value to plummet later.
Young altcoins are used for pump and dump scam
In this case, many of these situations are in undefined regulatory terrain. While some call it a scam, others just see a young, risky digital asset behaving in a common way, as these price changes are to be expected. Dogecoin (DOGE), a cryptocurrency based on a meme that took off in 2021 after falling in with the famous, is one of the main motivators for the emergence of these new altcoins.
With the DOGE example, many saw the opportunity to create cryptocurrencies in order to make extraordinary profits in the short term. Generally, the creators of the new digital asset own almost all of their units. Influencers are then called upon to release the new cryptocurrency upon receiving a reasonable amount. After all, for them, it’s not much different than promoting a product. However, once demand for altcoin soars, its price rises at the same speed. So, those people who already owned a huge amount of the token profit, leaving investors swayed with losses that can exceed 90%.
In the case of FaZe Clan, two important members of the organization publicized the altcoin BankSocial on Twitter. Users FaZe Bank and FaZe Kay held a $10,000 giveaway for the new cryptocurrency, implying that it would go up a lot in a short time, which in fact it did.
While FaZe Bank released the award saying they believed in altcoin’s potential, FaZe Kay responded by saying that they had doubled their investment in BankSocial on the same day. However, in a short period the cryptocurrency had already plummeted about 90%.
2ND HAND EMBARRASSMENT: Adin Ross admits live to getting paid to promote pump-and-dump crypto scam. Adin tells his fans “I already told you guys, don’t buy that sh*t. I got paid a bag to do that sh*t. Like, I don’t give af*ck. Hope none of you guys actually bought it.” pic.twitter.com/U4Eymycb3N
— Def Noodles (@defnoodles) June 18, 2021
With Adian Ross, the situation was even clearer. Asked later about his dubious disclosure of the MILF token, which only caused damage to its investors, Streamer admitted on video that he only did it for the money they paid him and didn’t expect anyone to “buy this shit.” However, he came out in profit.
With information: Mashable