By day, Paul Angus is an engineer. But by night, he’s Cryptonomatron: a producer of hot takes on the latest initial coin offerings who has more than 8,000 subscribers on YouTube. The 43-year-old Scot’s online alter-ego is mostly a labor of love, yet it sometimes comes with an added perk: payment in digital tokens.
That’s thanks to the thriving but murky world of cryptocurrency “bounty campaigns,” where social media influencers get paid to promote ICOs by the entrepreneurs (and in some cases scammers) behind the offerings. The practice isn’t new - crypto celebrity John McAfee has long been a promoter-for-hire, saying in March that he charged $105,000 per tweet. But the endorsements are playing an ever-bigger role in ICO marketing after internet firms including Google, Facebook and Twitter moved to ban cryptocurrency advertisements this year.
The proliferation of bounty campaigns is one reason why ICOs are raising money at a record pace, despite the ad bans and this year’s steep selloff in virtual currencies like Bitcoin. While defenders of the campaigns say they’re an inexpensive way to build a brand, critics see a breeding ground for hype and misinformation. In jurisdictions where ICOs are considered securities, promoters - also known as “bounty hunters” - may even risk running afoul of authorities by acting as unregistered broker-dealers.
“Once it becomes clear that financial outcomes can be manipulated not just by trading but creating perceptions through social media, regulators will take a very hard stance,” says Lex Sokolin, global director of fintech strategy at Autonomous Research in London.
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Some promoters are already feeling the heat. McAfee, the anti-virus software pioneer whose checkered past includes run-ins with police in Belize and a failed bid to become the US Libertarian Party presidential candidate in 2016, said in a tweet to his more than 820,000 followers on June 19 that he’s no longer working with ICOs or recommending them after receiving unspecified “threats” from the Securities and Exchange Commission.
The SEC fired a salvo against celebrity endorsers of ICOs in November, warning that such promoters often lack the expertise to ensure that investments are appropriate. SEC Chairman Jay Clayton has said that ICOs are improperly skirting registration requirements and that the market is probably full of fraud.
The Commodity Futures Trading Commission, another US markets regulator, has also urged customers to avoid buying tokens based on tips shared on social media. The SEC, CFTC, Facebook, Google and Reddit did not respond to requests for comment. Twitter referred to its policy banning ICO ads.
Based on the specifics of the offering, an ICO may be considered a security by the SEC, according to a primer posted on the regulator’s website. And anyone who promotes such an offering in exchange for compensation tied to the sale may be breaking the law if they don’t first register with the regulator, according to Richard Levin, the Denver-based chair of fintech and regulation practice at law firm Polsinelli PC.
McAfee notwithstanding, the legal risks have done little to slow bounty campaigns or the ICO boom. The offerings have raised more than $11.6 billion for blockchain-related startups so far this year, roughly triple last year’s record, according to CoinSchedule. About 18 per cent of cryptocurrency-related posts on Reddit, Twitter and online forum Bitcointalk.org now originate from bounty campaigns, according to Solume, which monitors social-media posts on digital tokens. That compares with about 6 per cent in January.
While the coins earned by bounty hunters are often worth little initially, the hope is that they’ll become much more valuable if the offering is a success. McAfee’s hefty per-tweet fee is an indication of how lucrative the gig can be for celebrities and other influential endorsers. About 1 per cent to 2 per cent of the money raised by ICOs is allocated to bounties, Autonomous Research’s Sokolin estimated.
The payouts are in some ways like stock options, giving promoters a stake in the issuer’s success, says Saransh Sharma, president of 4New, a startup with an ongoing bounty campaign. 4New, which wants to generate electricity from waste, restarted its campaign in April after the ad bans halted its marketing momentum.
“It’s really a very cost-effective mechanism for developing a brand,” Mr Sharma says. “Before you know it, there’s a snowball effect.” 4New has raised about $43 million, mostly from accredited investors.
But even for fans of bounty campaigns like Mr Sharma, quality can be an issue. Many bounty hunters do little more than retweet the ICO issuer, and reviews often simply regurgitate material from the ICO’s website. Bots, fake followers, and stolen identities are commonplace.
Mr Angus, or Cryptonomatron, comes across as analytical by the standards of the crypto world, breaking down the pros and cons of each ICO in his videos. He said he’s received bounties worth about $4,000 to $5,000, based on the tokens’ initial values, and that the money does not sway his reviews.
He also urged viewers to do their own due diligence.
“There might be people that go in solely based on watching my video - I hope that’s not the case,” he says. “You shouldn’t listen to YouTubers.”
Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
The advice provided in our columns does not constitute legal advice and is provided for information only. Readers are encouraged to seek independent legal advice.
EMIRATES'S REVISED A350 DEPLOYMENT SCHEDULE
Edinburgh: November 4 (unchanged)
Bahrain: November 15 (from September 15); second daily service from January 1
Kuwait: November 15 (from September 16)
Mumbai: January 1 (from October 27)
Ahmedabad: January 1 (from October 27)
Colombo: January 2 (from January 1)
Muscat: March 1 (from December 1)
Lyon: March 1 (from December 1)
Bologna: March 1 (from December 1)
Source: Emirates
Brief scoreline:
Liverpool 5
Keita 1', Mane 23', 66', Salah 45'+1, 83'
Huddersfield 0
BAD BOYS: RIDE OR DIE
Director: Adil El Arbi and Bilall Fallah
Starring: Will Smith, Martin Lawrence, Joe Pantoliano
Rating: 3.5/5
UAE currency: the story behind the money in your pockets
The specs
Engine: 1.8-litre 4-cyl turbo
Power: 190hp at 5,200rpm
Torque: 320Nm from 1,800-5,000rpm
Transmission: Seven-speed dual-clutch auto
Fuel consumption: 6.7L/100km
Price: From Dh111,195
On sale: Now
Company profile
Company name: FinFlx
Started: January 2021
Founders: Amr Yussif (co-founder and CEO), Mattieu Capelle (co-founder and CTO)
Based in: Dubai
Industry: FinTech
Funding size: $1.5m pre-seed
Investors: Venture capital - Y Combinator, 500 Global, Dubai Future District Fund, Fox Ventures, Vector Fintech. Also a number of angel investors
COMPANY PROFILE
Name: Xpanceo
Started: 2018
Founders: Roman Axelrod, Valentyn Volkov
Based: Dubai, UAE
Industry: Smart contact lenses, augmented/virtual reality
Funding: $40 million
Investor: Opportunity Venture (Asia)
SPECS
Engine: 4-litre V8 twin-turbo
Power: 630hp
Torque: 850Nm
Transmission: 8-speed Tiptronic automatic
Price: From Dh599,000
On sale: Now
Day 2, Dubai Test: At a glance
Moment of the day Pakistan’s effort in the field had hints of shambles about it. The wheels were officially off when Wahab Riaz lost his run up and aborted the delivery four times in a row. He re-measured his run, jogged in for two practice goes. Then, when he was finally ready to go, he bailed out again. It was a total cringefest.
Stat of the day – 139.5 Yasir Shah has bowled 139.5 overs in three innings so far in this Test series. Judged by his returns, the workload has not withered him. He has 14 wickets so far, and became history’s first spinner to take five-wickets in an innings in five consecutive Tests. Not bad for someone whose fitness was in question before the series.
The verdict Stranger things have happened, but it is going to take something extraordinary for Pakistan to keep their undefeated record in Test series in the UAE in tact from this position. At least Shan Masood and Sami Aslam have made a positive start to the salvage effort.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Company profile
Company name: Fasset
Started: 2019
Founders: Mohammad Raafi Hossain, Daniel Ahmed
Based: Dubai
Sector: FinTech
Initial investment: $2.45 million
Current number of staff: 86
Investment stage: Pre-series B
Investors: Investcorp, Liberty City Ventures, Fatima Gobi Ventures, Primal Capital, Wealthwell Ventures, FHS Capital, VN2 Capital, local family offices
The Uefa Awards winners
Uefa Men's Player of the Year: Virgil van Dijk (Liverpool)
Uefa Women's Player of the Year: Lucy Bronze (Lyon)
Best players of the 2018/19 Uefa Champions League
Goalkeeper: Alisson (Liverpool)
Defender: Virgil van Dijk (Liverpool)
Midfielder: Frenkie de Jong (Ajax)
Forward: Lionel Messi (Barcelona)
Uefa President's Award: Eric Cantona
Bridgerton season three - part one
Directors: Various
Starring: Nicola Coughlan, Luke Newton, Jonathan Bailey
Rating: 3/5
Five expert hiking tips
- Always check the weather forecast before setting off
- Make sure you have plenty of water
- Set off early to avoid sudden weather changes in the afternoon
- Wear appropriate clothing and footwear
- Take your litter home with you
England squad
Moeen Ali, James Anderson, Jofra Archer, Jonny Bairstow, Dominic Bess, James Bracey, Stuart Broad, Rory Burns, Jos Buttler, Zak Crawley, Sam Curran, Joe Denly, Ben Foakes, Lewis Gregory, Keaton Jennings, Dan Lawrence, Jack Leach, Saqib Mahmood, Craig Overton, Jamie Overton, Matthew Parkinson, Ollie Pope, Ollie Robinson, Joe Root, Dom Sibley, Ben Stokes, Olly Stone, Amar Virdi, Chris Woakes, Mark Wood
COMPANY PROFILE
Company name: Klipit
Started: 2022
Founders: Venkat Reddy, Mohammed Al Bulooki, Bilal Merchant, Asif Ahmed, Ovais Merchant
Based: Dubai, UAE
Industry: Digital receipts, finance, blockchain
Funding: $4 million
Investors: Privately/self-funded
The Year Earth Changed
Directed by:Tom Beard
Narrated by: Sir David Attenborough
Stars: 4
Confirmed bouts (more to be added)
Cory Sandhagen v Umar Nurmagomedov
Nick Diaz v Vicente Luque
Michael Chiesa v Tony Ferguson
Deiveson Figueiredo v Marlon Vera
Mackenzie Dern v Loopy Godinez
Tickets for the August 3 Fight Night, held in partnership with the Department of Culture and Tourism Abu Dhabi, went on sale earlier this month, through www.etihadarena.ae and www.ticketmaster.ae.