A look into a failed influencer deal to promote a cryptocurrency

Over the past week, influencers who’ve promoted altcoins, highly volatile alternative cryptocurrencies, have sought to distance themselves from the coins they once supported.

“[I] let my followers know and was extremely clear about how you shouldn’t invest a dollar into this… that you can’t afford to lose,” said FaZe Banks, a co-founder of the popular esports team FaZe Clan, in a statement posted on Twitter. “To suggest I would ever knowingly scam my following for a quick buck is unfair and simply not true.”

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Banks’ post was in response to an altcoin called BankSocial, which he promoted through a giveaway in May. BankSocial rose in value right after Banks’ promotion and then promptly plummeted after many big early investors sold off. This is known as a pump and dump and it often leaves those who got in at the time of an influencers’ promotion at a loss of their investment.

A now-deleted tweet from FaZe Banks promoting a BankSocial token giveaway.
Credit: mashable screenshot

However, influencers aren’t the only ones looking to set the record straight. After Mashable’s investigation into influencers promoting altcoins published last week, the team behind BankSocial reached out.

Mashable’s conversation with BankSocial provides an interesting peek behind the scenes of one such deal with an influencer to hawk these cryptocurrencies to their fans.

BankSocial’s Side of the Story

“They pumped it and then they dumped it,” explained BankSocial CEO John Wingate in a phone call with Mashable, referring to FaZe Banks and those who bought into the token on his advice. “Then he backed out of the deal.”

Wingate claims that BankSocial was a victim as well. The company claims it paid FaZe Banks to be an ambassador for the token and had a deal for a certain number of promotional posts. The token tanked shortly after Banks’ promotion. BankSocial feels the dump was spurred by those within Banks’ orbit who allegedly invested due to his promotion with the intent to sell quickly. And then BankSocial got caught up in the controversy of FaZe Banks promoting what turned out to be a pump and dump of their token, while Banks abruptly cut their deal short.

BankSocial is now trying to protect their project and its brand name in the aftermath.

It should be noted that looking through some since-deleted posts from FaZe Banks promoting BankSocial, Banks never discloses his exact relationship with the altcoin.

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Shortly after Banks sent out his promotion of BankSocial via the giveaway, another member of FaZe Clan, FaZe Kay, replied on Twitter about his quick return on investment.

“I’m 2x already,” Kay tweeted.

A since deleted tweet from FaZe Kay about BankSocial.
Credit: Mashable Screenshot

“When it all went down, we got on the phone with Ricky [Banks] and we were like, what the fuck? Like, why are your guys posting I’m making ‘2x’…you pretty much laid out [in the article] exactly how we felt after the whole thing went down,” Wingate said, referring to Kay doubling his investment in BankSocial.

BankSocial provided Mashable with some details of their deal with FaZe Banks. They did not pay him in the token, so his take-home pay was not directly correlated with the altcoins performance. According to BankSocial, the company was looking for more online engagement and brand awareness than actual investment in the project.

BankSocial previously had highs of as many as 8,000 wallet holders, but have lost 400 to 500 wallets since that time. Wingate told Mashable only around 200 wallet holders that bought during the FaZe Banks promotion were still holding onto the token.

While Wingate wouldn’t share exactly how much they paid FaZe Banks, he did provide some details. BankSocial did not pay Banks in the altcoin, so his pay was not directly correlated with how the token performed. “It wasn’t a small amount,” Wingate said in terms of how much Banks was paid for his promotion of BankSocial. “For what I’m concerned, it was a substantial amount.”

Wingate gave me a peek into the pay range we’re usually talking about when it comes to these deals during another part of our conversation where he discussed how easy it would have been for them to hire other influencers in the aftermath to pump the coin again.

“We had the ability…to get another influencer to pump it up,” he explained. “We have the ability to do it. We could go hire some guy for $50,000 or $100,000 or whatever it is.”

This is something Wingate says BankSocial did not want to do, saying they are through with influencers after the failed FaZe Banks deal and are only interested in long-term relationships with ambassadors, such as more well-established professional athletes.

“We really do want to legitimize as much as we can how crypto can be beneficial to decentralization of the traditional economic models,” Wingate said.

If one is wondering why BankSocial went with FaZe Banks to promote the altcoin, look no further than his name. “Everybody was coming to us wanting to be an influencer for BankSocial,” Wingate claimed. “We only made a deal with one influencer because his name was Banks…we thought it was the perfect play.”

Wingate did say the company looked into Banks before signing the deal. According to the BankSocial CEO, they couldn’t find any other cryptocurrency promotions from Banks, which was a positive in their eyes.

“You know, he seemed clean. Right?” Wingate told Mashable. “Like he seemed like we were really getting a long-term ambassador. I’m not going to go out on a limb and say that FaZe Banks did this intentionally. Right? Because I don’t know,” said Wingate.

According to BankSocial CEO Wingate, the deal ended before it was supposed to because Banks wanted out. However, Banks allegedly kept the money BankSocial paid him despite not following through on the promotions.

“It’s very odd that he was supposed to do several more posts [as part of our deal] and then he cited some loophole that he had that says if the token doesn’t perform to a certain point, he’s not going to have to promote any more,” Wingate shared. “Well, it’s like, yeah, you basically did that yourself, you know?”

FaZe Banks has continuously stood by his claim that BankSocial is a “project he genuinely believes in,” claiming this is why he shared it with his fans. He says he has personally invested his own money in the token and still holds onto it.

Mashable has not been able to confirm this claim, as individuals can hold multiple wallets.

FaZe Banks’ Side

Mashable attempted to reach FaZe Banks to inquire about his deal with BankSocial. After a brief back-and-forth with a FaZe Clan press representative over email, Mashable did not hear back. We have provided the contact with questions and will update this piece if we do.

FaZe Banks’ previously mentioned statement on BankSocial, which was released on Twitter, was posted as a reply to YouTuber Coffeezilla. The creator hosts a popular channel on the platform that looks into online scams. He recently uploaded a video looking into FaZe Clan’s promotions of cryptocurrencies.

After the video was posted, Banks reached out to Coffeezilla. The video did not include the BankSocial issue, but it did spark a broader online conversation about FaZe Clan and crypto.

According to a tweet from Banks, he had a private conversation with Coffeezilla to “clear his name” and “show him all the receipts.”

Coffeezilla did not share the details of the call with Banks out of respect for privacy, but he did provide some broader details in a brief phone discussion with Mashable.

According to Coffeezilla, the $10,000 giveaway that Banks ran as a promotion for BankSocial did happen. Banks showed Coffeezilla the wallet transaction. This shows just how much of the token was transferred to another wallet holder, in this case the winner of the giveaway.

However, being that the giveaway was in the form of the token, the dump substantially affected the value of the token. So, the giveaway amounted to substantially less than $10,000 because the coin immediately tanked.

Banks later publicly shared the Twitter handle of the winner. BankSocial CEO Wingate told me that he could not confirm who received it and the legitimacy of the giveaway. The only proof he had that the giveaway happened was Banks’ tweet and the reaction from the winner, which “seemed genuine.”

While Banks claims to still hold his BankSocial token investment, Coffeezilla said the wallet he was shown did not hold any of the tokens. It’s unclear however if Banks has a separate wallet holding BankSocial tokens, which is possible.

Banks has not provided any other details of the deal, such as the “substantial amount” he was paid in U.S. dollars by BankSocial.

With what we know and the since-deleted social media posts available to us, Banks’ promotion of BankSocial does not appear to comply with the Federal Trade Commissions’ (FTC) own guidelines for influencers posting paid advertisements to their social channels.

The fallout

FaZe Banks and BankSocial are far from the only people trying to clear the air regarding the pervasion of influencers pushing altcoins.

“I want you all to know that I had no ill intent promoting any crypto alt coins,” reads a June 27 tweet from FaZe Kay. “I honestly & naively thought we all had a chance to win which just isn’t the case.”

“It was so irresponsible of me to speak publicly about any coins without knowing more & knowing now that they can do more harm than good,” he continued.

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FaZe Kay was a prominent promoter of numerous altcoins. He, along with other members of FaZe Clan and YouTubers like RiceGum, pushed pump and dump cryptocurrencies to their fans. Perhaps the most egregious example was Save The Kids token, which prominently featured the social media stars on their website. The cryptocurrency lasted around two weeks before, according to the developer contracted for the project, the founders “disappeared” with the funding.

Sometime late last week, in the ongoing effort for influencers to back away from their altcoin promotions, Save The Kids removed these influencers from its website. But just because FaZe Clan is backing off altcoin marketing for now, that doesn’t mean the problem is gone.

Three days ago, YouTube superstar-turned-boxer Logan Paul announced he was “all in” on the “dumbest, most ridiculous shitcoin he’s ever seen,” called Dink Doink.

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Dink Doink did indeed pump on June 28, when Paul posted about the altcoin. The downward trajectory started not long after, later that same day. Just three days later it’s now lost more than half of its value. It’s unclear if Paul is still “all in.”

And, on the morning of July 1, right before this piece was published, the billionaire CEO of Tesla and a regular promoter of cryptocurrency, Elon Musk, tweeted about Doge.

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“Baby Doge, doo, doo, doo, doo, doo,” Musk tweeted in reference to the children’s song, “Baby Shark.”

However, Musk wasn’t talking about Dogecoin, the popular meme-based cryptocurrency that has acted as the main inspiration for the vast majority of altcoins. No, he was talking about a new altcoin trying to piggyback off of Dogecoin’s success, called Baby Doge.

Baby Doge immediately almost doubled in value and reached an all-time high for the token after Musk’s tweet.

It remains to be seen what happens with Baby Doge next, but it feels like we know how this story ends.