Global crypto exchange Binance is warning against celebrity crypto endorsements during the upcoming National Football League Super Bowl championship game, according to AdAge. In a social media teaser of a new Binance ad campaign, National Basketball Association player Jimmy Butler encourages viewers to steer clear of celebs and instead “trust yourself” and “do your own research.” At least two crypto commercials, from FTX and Crypto.com, are expected to run during the big game on Feb. 13.
There’s significant irony to using a celebrity influencer to warn against celebrity influence – but the message itself seems positive, right? Celebrities taking big checks to give fake investment advice should be tarred and feathered. “Do your own research” is hard to argue against as a principle.
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The problem, unfortunately, is that the “you” doing the research is a gigantic idiot.
I certainly don’t mean you individually – perish the thought. You’re reading CoinDesk so I’m sure you’re very sharp. But statistically, there’s a lot of idiocy floating around, and a lot of people willing to take advantage of it. Many grifters, fakes and other bad actors have been drawn to the crypto industry, and the “do your own research” ethos can leave their marks particularly vulnerable.
The average American, to pluck just one indicator out of a hat, reads at a seventh- to eighth-grade level. Telling that person to “do your own research” on crypto could lead them down some deep, dark rabbit holes.
That isn’t just a roll of the dice: The most disreputable crypto projects often spend a lot of money on marketing and public relations, so people who actively “do their own research” are probably more likely to be scammed than those who just bought some random PFP (“profile pic”) on OpenSea because Jay-Z told them to. Part of that is thanks to data harvesters like Facebook and Google. Using Google to search for something like “best crypto investments” is the equivalent of covering yourself in fish guts before diving into shark-infested waters.
For instance, all the people who invested in the OHM system did their own research (it’s down 95%). So did everyone who invested in Wonderland (whose chief financial officer was secretly a career financial con-man). Observing the Wonderland community in particular over the past few days, it seems clear many buyers were not just financially but emotionally invested in the project, creating a cult-like sense of uncritical support even after clear malfeasance had been admitted.
That drives home a disturbing parallel: “Do your own research,” in so many words, is also core to the ethos of the QAnon conspiracy theory movement. Much like QAnon, many corners of the crypto universe capitalize on people’s desire to have secret knowledge, to know something before the masses – to be able to see themselves as smart, whether or not they actually are. For QAnon, the supposed “secret” is a fabricated child-abduction ring (itself a tragic distraction from real child exploitation). In crypto, the secret is usually some supposed technical or incentive innovation that in many cases is just obfuscating a Ponzi scheme.
The key, in the end, is to “do your own research” the right way, and that’s, frankly, extremely difficult in crypto. First, there’s the significant intellectual challenge of grasping how blockchain works. It’s a long road and there are no shortcuts if you want to be able to genuinely evaluate whether a particular project can actually do what it’s promising. A lot of initial coin offerings circa 2017-2018, for instance, exploited knowledge gaps by pitching use cases where blockchain or cryptocurrency simply weren’t relevant. (CoinDesk’s Learn series is a good way to start honing your self-defense skills.)
That kind of blunt misrepresentation is slightly less common today – more often, bad DAO (decentralized autonomous organization) or decentralized exchange projects hide their real intent in hypercomplex tokenomics. Here again “do your own research” is problematic because it presumes either high-grade code analysis skills or a level of transparency that simply doesn’t exist in the crypto world.
If you’re investing in a publicly traded stock, you can easily download years’ worth of financial reports that can be at least somewhat trusted thanks to regulators like the U.S. Securities and Exchange Commission. With that backstop, you can indeed do your own research. It’s why r/WallStreetBets can occasionally spot things professional analysts miss. The data is available, and fairly trustworthy.
But there’s no equivalent in crypto, despite some transparency efforts. Everything a project writes about itself, from information about founders to the goals of the project and even some financial data, can be completely made up. The people behind the worst projects actively avoid jurisdictions where they might face consequences for any of this, or simply conceal their identity. And as the recent Wonderland fiasco makes clear, if you only know a project’s team by their cute pseudonyms, you haven’t really done your research at all.
Correction 2/2/2022: This article previously stated that Binance would run its ad during the Super Bowl. This was incorrect and has been amended. We regret the error.