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The suspension of operations by asset-backed lending and borrowing platform Vauld amid the crash in cryptocurrency market has raised questions about the credibility of finfluencers, or personal finance content creators, and if they should be giving advice on investments.

Earlier this week, Singapore-based Vauld announced that it is suspending its operations. In a blogpost, it said that the current market climate has led to significant customer withdrawals. 

As the startup halted users from trading and withdrawing their funds, the customers are facing uncertainty over how their money will be recovered.

Against this backdrop, equity investor Azhar Jafri questioned four top YouTubers – P.R. Sundar, Ankur Warikoo, Akshat Shrivastava, and Anish Singh Thakur –  for promoting Vauld, posing a question about what disclaimers they give. Besides Jafri, several other investors also raised questions on the finfluencers. 

SS of tweets

According to a Mint report, Thakur, who runs a channel named Booming Bulls on YouTube, claimed that he always mentions in his videos that he does not give any investment advice and asks investors to do their own research before making any financial decisions. 

Meanwhile, Warikoo acknowledged that creators like him need to be more careful about whom they are promoting and how they do promotions through their content. As per the report, Warikoo was paid a fee of INR 4.47 Lakh for the Vauld promotional video he posted on his YouTube channel on October 19, 2021. 

The rise in internet penetration and awareness about personal finance has led to a huge increase in the reach of creators who make content on the topic of personal finance. As a result, major crypto exchanges in India, such as CoinSwitch Kuber, CoinDCX, and WazirX, also used the services of influencers as part of their marketing campaigns.

Responding to Inc42’s queries about influencer marketing, WazirX Vice President Rajagopal Menon said, “Our entire focus throughout the last year was investor education. Influencer marketing was one of the channels that we used very effectively to create awareness and educate users on how to invest in crypto. The idea was to communicate with investors directly in a language they understood through people they look up to.” 

Considerably, the Advertising Standards Council of India (ASCI), in its annual complaints report 2021-2022, said that crypto and gaming emerged as the top categories to violate its guidelines. 

As per the report, crypto ads accounted for 8% of total ads processed by ASCI between April 2021-March 2022. The report also said that 95% of virtual digital assets (VDAs) ads about which it received complaints needed modifications.

Earlier this year, the self-regulatory body released guidelines for crypto entities and other VDAs such as non-fungible tokens (NFTs). ASCI asked the companies to put a disclaimer for all ads, “Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions.” 

More importantly, cryptocurrency was among the top three categories in terms of complaints received against influencers.

Menon claimed that WazirX has been compliant with ASCI’s guidelines since they were implemented early this year. Even before the guidelines were implemented, WazirX was self-regulated in maintaining investors’ safety, he added. 

“We are motivated by responsible marketing and advertising, and we have been at the forefront of aggressively encouraging our users to understand, educate and make an informed decision before investing. The entire notion is centred on the idea of teaching people about crypto as an asset class. As with any asset class investment, investors can put their trust in institutions only after doing their due diligence,” Menon added.

While crypto exchange CoinDCX didn’t respond to Inc42’s queries till the time of publishing this story, it has put a disclaimer in the risk disclosure section on its website.

Cautioning about overall crypto advertising, CoinDCX noted that advertisements via social media may be very short, with a focus on the potential gains but not the high risks involved.

“You should also beware of social media ‘influencers’ who typically have a financial incentive to market certain virtual/crypto-assets and related products and services and therefore may be biased in the communications they issue,” the disclosure read.