With the rise in popularity surrounding the purchase of altcoins (alternate to bitcoin and government issued coins), and tons of new cryptocurrencies launching each week, altcoin buzz has crossed platforms from forums like Reddit onto more widely-used forums like Instagram, Twitter and YouTube. Along with many others around the world, social media influencers have tried to cash in on the recent spike in cryptocurrency trading activity. Unfortunately, these lifestyle and gaming influencers are often uneducated on the coin that they promote, and their devoted followers lose money. 

Bitcoin is already considered a risky investment, and due to its complex nature, experts do not recommend people who are uneducated on the coin to purchase it. But new altcoins have proven to be even more fiscally dangerous.  

In a 2021 interview with time.com, Kiana Danial, a successful investor and author of “Cryptocurrency Investing for Dummies” as well as three other finance books, discussed the reality of investing in trendy altcoins and the importance of investing responsibly. 

“Some people have gotten lucky, but a majority of people have gotten burned,” Danial said. “You need to have your emergency fund, clearly.” 

Followers have started receiving financial advice regarding investing in trendy altcoins from their favorite social media influencers. Often, these lifestyle, beauty and gaming influencers are not reliable financial advisors. Multiple influencers have posted videos, Instagram posts and stories telling their followers to invest in a new altcoin, promising their fanbase that this investment will make them rich. Celebrity influencers have dedicated followings that become connected and trust their favorite social media stars’ intentions. Because part of influencers’ job is getting paid to show off material items, their followers come to believe that they too can reach that level of wealth if they follow their favorite influencers’ financial advice. Unfortunately, these social media stars’ intentions are not to help their fans or educate their followers on finance, but rather to accept an advertisement deal with scam coin developers and make a profit off each follower that they influence to purchase the coin.  

In June of 2021, Kim Kardashian, one of the most followed celebrities, posted a sponsored post to her Instagram story, urging her 252 million followers to purchase the coin Ethereum Max. This post was met with speculation throughout the media because Kardashian usually posts beauty and lifestyle related content and has no qualifications to advise her devoted fans on finances. 

“This is not financial advice, but sharing what my friends just told me about the Ethereum Max token,” Kardashian said on her Instagram. “A few minutes ago, Ethereum Max burned 400 trillion tokens- literally 50% of their admin wallet giving back to the entire E-Max community.” 

The altcoins that influencers promote are known as “pump and dump” scams, in which the coin company inflates the price of their stock by paying an influencer to promote false or misleading positive statements in order to sell the stock at a higher price. The promoted altcoin’s worth usually has a brief skyrocket right after being promoted as followers start to invest in the coin. In less than a week, the coin’s worth spirals down, leaving the hopeful investors with far less money than they invested. The influencers rarely take responsibility, claiming that their sponsored post was well-intentioned guidance rather than financial advice. 

Scam coin promotions are only found on large influencer’s pages with enough reach to cause the spike needed to fuel the “pump and dump.” Most influencers with followings of under one million simply promote products that line up with the content that their followers enjoy, allowing both the follower and influencer to benefit. 

For example, travel blogger and social media star, McCall Mitchell, promotes products such as clothing, travel gear and photography presets to her fans. Merrin Cetto (9) is one of Mitchell’s almost 145,000 Instagram followers and enjoys the travel and fashion related products that Mitchell promotes. 

“This summer I bought a pair of shoes from McCall Mitchell. The ad was on Instagram,” Cetto said. “I do not think I would have bought them if they hadn’t of been promoted by her because I don’t know if I would have known about them.”