• Post author:
  • Post category:Other
  • Reading time:6 mins read

Esports and entertainment collective FaZe Clan has booted one member and suspended three others for their participation in an alleged “pump-and-dump” cryptocurrency scheme.

Longtime member FaZe Kay has been permanently cut from the organization, while his younger brother FaZe Jarvis and fellow members FaZe Nikan and FaZe Teeqo are suspended “until further notice,” FaZe Clan said in a statement tweeted July 1.

“FaZe Clan had absolutely no involvement with our members’ activity in the cryptocurrency space, and we strongly condemn their recent behavior,” the collective added. “The trust and respect of our fans has been, and will always be, our number one priority.”

The “recent behavior” FaZe Clan refers to is the four members’ investment in–and promotion of–the Save the Kids token, an altcoin that vaguely promised to “[build] a better world for kids” by donating 1% of transaction fees to charity. Which charity or charities would receive the money was not apparent.

Altcoin, for those not familiar, is a broad, catch-all term that applies to any cryptocurrency that is not Bitcoin. There are thousands of altcoins out there, from the (in?)famous Dogecoin to the well-known Ethereum, with more being created each day by founders whose identities are often anonymous.

Save the Kids popped up on FaZe Kay, Jarvis, Nikan, and Teeqo’s social media feeds earlier this summer. According to an extensive report by self-dubbed “internet sleuth” Coffeezilla (450K subscribers on YouTube), FaZe Kay was a prominent voice in the token’s marketing campaign.

“I’m really excited to be apart [sic] of this project!” he tweeted June 3. “This #altcoin is really going to change a lot of lives, and do a lot of good.” (The post, along with all Kay’s other tweets referencing Save the Kids, has since been deleted.)

In the same tweet, FaZe Kay boasted that the coin’s discussion group on Telegram already had 4,000 members prelaunch.

FaZe Jarvis, Nikan, and Teeqo also posted about the coin, and so did non-FaZe influencers like RiceGum (10.4 million subscribers on YouTube) and Instagrammer Sommer Ray (26.6 million followers). In most posts, they referred to themselves as “ambassadors” for Save the Kids, and did not include the “#ad” hashtag or any other indication that they may have been compensated for promoting the token.

In his video (embedded below), Coffeezilla alleges the influencers were given Save the Kids coins prelaunch in exchange for telling their audiences–which collectively amount to more than 100 million people–about the token. If that’s true, it’s certainly the kind of “material connection” creators must disclose, according to the Federal Trade Commission’s stringent guidelines for sponsored content.

Not marking the posts as ads isn’t the only (potential) problem with Save the Kids ambassadors, though. The token’s prelaunch campaign was meant to get people to buy in to the coin ahead of its June 5 launch, when it would become available for sale on the blockchain.

And, judging by responses from fans of the involved creators, the campaign worked. Folks who saw the promotions invested in the coin, hoping that its value would increase and they would later be able to sell it at a profit.

Then launch day came, and Save the Kids’ value, pumped up by the prelaunch sale, swiftly deteriorated. One commenter claimed they lost 50% of their investment just two minutes after launch.

Within a day, the coin had “dumped”: it was down to negative 90% of its prelaunch value, per Coffeezilla.

Why is that drop important, considering the value of cryptocurrency is notoriously mercurial? It’s important because the purchase and sale of Save the Kids, like all other cryptocurrencies, is tracked publicly on the blockchain–and as you can see from Coffeezilla’s chart embedded below, all the major owners of Save the Kids sold off their coins on or shortly after launch day.

from Coffeezilla

That leads us to the “pump-and-dump” allegations. It’s possible, but not verifiable (as blockchain wallet addresses are anonymous) that the influencers ambassadoring for Save the Kids, whether purposefully or without realizing, “pumped” the coin’s value by promoting its presale to their followers. This caused the value of the coins they held to skyrocket.

Then, on launch day, they sold—dumped–their stakes at peak price, before the coin’s value plummeted. Those who sold at this all-time high possibly made a profit, while investors who HODLed saw their investments disappear and are now left with coins that are essentially worthless.

Pump-and-dump schemes are illegal, but laws and prosecution around them primarily target their use in the stock market, not the cryptocurrency sector. At least, not yet.

Save the Kids could change how the creator economy treats cryptocurrency

So what now? Save the Kids is gone. Folks who bought it are out their money, and probably no one will ever know whether the coin actually donated any funds to charity. Its website has been taken down and its anonymous founders are gone.

Whether this incident leaves a lasting impression on the creator ecosphere remains to be seen. FaZe Clan’s condemnation of its members’ involvement is novel, but its commitment to protecting fans from crypto schemes is less impressive when you consider one of its top members, FaZe Banks, was also recently caught up in shady cryptocurrency dealings with a project called BankSocial, which he allegedly was compensated to promote and yet did not disclose that his posts were ads. (FaZe Kay tweeted in support of that coin, too.)

One thing is clear: Even as more and more creators sign on to promote altcoins, more and more creators are self-checking the community, calling people out when the cryptocurrencies they talk up might be less than trustworthy. YouTubers like Coffeezilla, Spencer Cornelia (175K subscribers), and SomeOrdinaryGamers (2.74 million) have each made videos about the potential dangers of creators endorsing suspicious crypto endeavors.

“My message to these people is, if you’re thinking that this project has a reasonable chance of failing, don’t show it to your audience,” Coffeezilla said in his coverage of Save the Kids. He encouraged creators to investigate projects thoroughly, and to question the legitimacy of claims about charitable intentions and going to the moneymaking moon.

“If you want to get in, that’s fine,” he said. “But don’t go and push that on your audience.”

Visit Tubefilter for more great stories.

Source: TubeFilter.com

Leave a Reply