Celebrities, influencers and other personalities indicating or supporting the purchase of a particular cryptocurrency is nothing new in the cryptocurrency market. However, influencer Jake Paul is being accused of not only profiting by referring projects, but of intentionally “pumping” cryptocurrencies that he knows will go bankrupt later and profiting from this movement called “pump and dump”.
According to a video released by the profile known as Coffeezilla on YouTube, youtuber and professional boxer Jake Paul made millions by promoting worthless tokens to his fans.
In the video, Coffeezilla shows that Paul was running paid promotions for various cryptocurrencies. This includes Safemoon, Yummy Coin, Milf token and more. Since he didn’t label the promotions as paid ads, it gave the impression that they were personal endorsements.
How Jake Paul Operated
Also according to the video, the boxer’s modus operandi is to set up a new wallet for each token he wants to promote. This wallet is then “filled” with the token, most likely by the developer.
Then, after that, he uses social media to praise the token. Shortly thereafter, the coins in the wallet are transferred to a new wallet and sold.
This wallet is even registered under the name “PRBLM CHILD”, at OpenSea PRBLM CHILD is the boxer’s nickname. In the past, the address has received several transactions signed by Jake Paul.
Through these pump and dump schemes, Jake Paul has earned over $2 million. On the other hand, all the projects he promoted lost more than 90% of their value or were abandoned.
The boxer already faces class action for promoting Safemoon from those who invested in the token. But the fact that he didn’t announce that the tweets were paid promotions could land him in more legal trouble.
Jake Paul is not the first nor the only celebrity to promote shady cryptocurrency projects without disclosing his affiliations.
Last year, Kim Kardashian promoted ETH Max to her 200+ million Instagram followers. At the time, UK regulators described the move as the biggest cryptocurrency promotion ever. She didn’t inform them that this was a paid promotion.
Popular Hollywood actor Steven Seagal, meanwhile, was fined more than $300,000 for failing to disclose that he was being paid to make an initial coin offering (ICO).