Vauld crisis turns up heat on finfluencers pitching crypto

Angry questions are being asked of financial content creators, or ‘finfluencers’, who promoted Vauld, the Singapore-based crypto firm that suspended all its transactions on 4 July, leaving investors stranded.

“A lot of people, including college students, reached out to me saying they had put money in Vauld—anywhere between ₹3,000 and ₹80,000—after some finfluencers pitched it as a ‘crypto FD’ (fixed deposit) in their promotional videos,” says equity investor Azhar Jafri. On Tuesday, in a tweet that now has over 1,000 retweets and 5,000 likes, Jafri called out four top YouTubers—P.R. Sundar, Ankur Warikoo, Akshat Shrivastava, and Anish Singh Thakur, who runs the channel Booming Bulls, for recklessly talking up Vauld. “Most of these creators put up a sales pitch for Vauld in the name of educational content. While some said crypto is a volatile market and should be a small part of your investment portfolio, they mentioned it in passing.” Some even told their audience how to bypass crypto taxes, he adds. “It all seemed shady and irresponsible to me,” says Jafri.

Fazal Ahamed agrees. The 34-year-old digital marketer in Toronto, who invested ₹1.5 lakh in Vauld’s ‘FDs’, said, “It is unfortunate that many were enticed by the confidence of financial influencers who even went live on YouTube to invest in Vauld.” Another 22-year-old freelancer from Mumbai, who started using Vauld last year, also said the finfluencers’ endorsements “created an image of it being a safer exchange.”

Some of the influencers facing increasing scrutiny have since released statements on their channel’s community section on YouTube, apologising to viewers who may have been affected. They also claimed that they, too, had invested money on the platform, which is stuck now.

In an email correspondence with Mint, YouTuber Ankur Warikoo said he agrees that creators, including him, need to be more careful about whom they promote through their content and how. “It is the responsibility of every creator to have skin in the game because talk is cheap,” said Warikoo. “My measure will always be: if a creator is endorsing someone, will they be personally affected if this endorsement goes rogue, for whatever reasons?” he added. Warikoo said he was paid ₹4.47 lakh in fee for the Vauld promotional video he posted on his YouTube channel on 19 October 2021.

Responding to Mint’s query via email, Anish Singh Thakur of the Booming Bulls channel said, “I have clearly mentioned that I do not give any investment advice and one must do their own research before making any financial decisions.” However, a minute into his promotional video for Vauld, uploaded on his channel on 12 October 2021, he can be heard saying, “I don’t know where you have kept your bitcoin but after today… keep everything in Vauld.” Mint did not receive a reply to its queries sent to Sundar and Shrivastava.

Finfluencers emerged as a key category of creators last year, gaining immensely from the rapid rise of startups in the fintech and crypto ecosystem. Today, a top finfluencer can charge up to ₹10 lakh for a promotional video, say influencer marketing professionals. To put it in perspective, one of the most popular influencers in the technology and gadgets segment—the highest-paying category—gets ₹30 lakh for a branded collaboration.

Several influencer marketing professionals told Mint on condition of anonymity that it was “unfair” to hold finfluencers responsible for a company’s decline, especially when the entire crypto market is down.

“These are top creators who do their due diligence before doing any paid promotion. They felt the company had potential as it was backed by the likes of Peter Thiel,” said the head of an influencer marketing company whose creators have collaborated with Vauld in the recent past. In 2021, Vauld had raised $25 million in a Series A funding round led by Thiel. “Will the public also hold TV channels or sports championships accountable for taking a crypto platform on board as a sponsor,” one of them asked.

Even Ahamed, the digital marketer, admits that he did not see the crisis coming. Usually cautious about investing in exchanges, he parked 20% of his crypto investments in Vauld. “I was confident because till they stopped withdrawals, the company has also constantly advertised that investor deposits are insured up to $100 million,” he said. Even two weeks ago, when the crypto market tanked worldwide, Vauld chief executive officer Darshan Bathija had sent an email to all customers, assuring that business was as usual.

Yet, industry experts point out that most financial content creators are not qualified to give advice and should act more responsibly as a lot of them are followed by college students and youngsters just starting out in financial investing. “The young generation is wary of celebs endorsing products, but they are open to buying a product or service if they see an average person like them endorsing it on social media,” said Apeksha H., a financial services professional from Mumbai. Endorsing financial products, where a person might lose their savings to the tune of lakhs, should be held to higher standards of accountability, she adds.

Vauld was founded by Bathija and Sanju Sony Kurian in 2018. The platform lets individuals buy, borrow, lend and trade in cryptocurrencies. The first signs of trouble came on 21 June, when Bathija tweeted that Vauld had to lay off up to 30% of the workforce.

In a statement on Monday, the company attributed its financial challenges to volatile market conditions and the financial difficulties of key business partners. Since 12 June, when the crypto market crash was triggered by the collapse of Terraform Lab’s UST stablecoin, the Celsius network pausing withdrawals, and Three Arrows Capital defaulting on their loans, Vauld customers have withdrawn in excess of $197.7 million.

Even so, the decision to suspend withdrawals came out of the blue. In an interview in May, Bathija said Vauld had $1 billion assets under management.

This incident may make a few top finfluencers wary of promoting crypto platforms as that market tends to be highly volatile, said Lakshmi Balasubramanian, co-founder of an influencer marketing firm, Greenroom. Some may suggest including stronger disclaimers for all their promotional content, like the ones we see at the end of mutual fund advertisements on TV. “But if the brands push back, they’ll just drop the creators who are wary and go with others who agree to promote them on their terms,” she said.