Media reports alleged that the founder of cryptocurrency exchange FTX, Sam Bankman-Fried had used funds from FTX customers inappropriately to make risky investments in Alameda Research, a hedge fund he also ran.
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The speculated commingling between the executives of both companies triggered customers of FTX to rush in withdrawing their deposits, which also led to the overnight collapse of the firm.
FTX being referred to with terms such as ‘bankrupt’ and ‘fraudulent’ on various broadcasting platforms will have a negative impact on the credibility of the cryptocurrency industry, where Bitcoin prices for example spent most periods of the previous month trading in a narrow range of between $19,000 and $20,000. This is because the company seemed to be one of the few that has seen stability in what has been a rough year in the crypto sphere.
In the heat of the catastrophe, it didn’t get better when Bankman-Fried exchanged words in the media with the founder of the leading cryptocurrency exchange, Binance, Changpeng Zhao, who had called the former names.
These media and Twitter wars by founders have a history of negativity, which doesn’t augur well for an already volatile market in this case.
And so how do marketers play a role in all this?
Ethical reportage vs being a watchdog for the crypto community
Marketers in this context refer to advocates within the crypto sphere who put out information on new and traditional media platforms; most of them being journalists and broadcasters – although we have in the past seen social media platform Reddit driving the stock market in the case of the Robinhood saga. Media platforms are meant to disseminate information in an ethical way, educate, and in some cases entertain. They are also a sort of ‘watchdog’ for the community as people use the information garnered to assist them in making critical decisions.
There is however a thin line between being a watchdog, and putting out speculated information that can crash a market. The harm cannot be easily undone, and it creates a lacuna between sanitizing the industry and helping it to thrive.
Real transparency is essential, but it also has to be backed by data.
The FTX collapse is a massive blow to the crypto community and represents a step back to the progress of the hard work that has been put in to build trust between regulators and users.
Therein lies the validity of calls for potential regulation of marketing messaging in highly volatile markets such as that of cryptocurrency. In the meantime, it is the right call for marketers to always crosscheck materials, and messages; not pushing out everything that comes their way. That responsibility also comes with the understanding that every piece of information they put out there has the potential of being a high risk; in terms of the money that can be lost, and being an overall lead to a whole market collapse.
The founder wars
Media back and forth, and lately the trend of so-called ‘Twitter Wars’ that founders of cryptocurrency firms engage in has shown to affect stocks and assets in investments within the ecosystem potentially. Marketers can help here too by being part of a controlled messaging system where founders would not use social media platforms, especially Twitter, as a warzone or to drive an ego-boosting agenda. It should instead be a platform to take very responsible stances in terms of what is going on in the ecosystem, and where it is headed. That will make room for a progressive trajectory, contrary to what looks to be the norm.
The FTX collapse has revealed the responsibility that marketers have to keep the industry honest, and in the process make sure that crypto firms have a clean and ethical strategy as well. They have to craft messaging around crypto coins and exchanges in general, making sure they provide accurate representation in the media.
As simplistic as it sounds, marketers can play a role in advising founders to take a step back from Twitter for instance; but rather aid in leading content to deliver responsible messaging around their businesses and the ecosystem of highly volatile markets.
Marketers should practice the evangelism of optimism, being mindful of their role in paying attention to reportage that does not harm the industry but rather sustains it to thrive even in times of uncertainty.