In this blog, we’ve touched on crypto PR disasters: how to avoid them, how to navigate them, and so on. But with all of this, it’s worth looking at the types of crypto PR disasters that exist in the industry. After all, the crypto sector is very unique, and so it faces the sort of pr issues not as commonly seen in other industries. There is a specific type of PR scandal that only makes sense to someone within the crypto ecosystem, and understanding them helps business owners navigate the landscape.
From the PR scandals most common among newer projects to those that even the most established businesses can fall victim to, here are the types of crypto PR scandals you should avoid.
Rug Pull/Pump-and-Dump Allegations
One of the worst crypto PR disasters that can befall a new project is getting accused of being a rug pull or a pump-and-dump scheme. For those unaware, a rug pull refers to a project that promises certain tokens or assets to early investors only to take their money and run off while providing nothing.
A pump-and-dump, on the other hand, involves actually creating a token, artificially inflating the price to drive sales, and then leaving it to crash while running off with the proceeds. Many high-profile crypto projects have been accused of being pump-and-dumps or rug pulls, and if this is untrue, it can go on to affect the reputation of the project and its creators. Because crypto users have been burned in the past, they are especially sensitive to anything that looks like a scam. As a new project, do everything in your power to avoid such allegations, as they are hard to shake off even if they are proven untrue.
Platform Hacks
Just like a pump-and-dump or rug pull, a hack is a major ecosystem incident that crypto investors are sensitive to. The thing about hacks is that they rarely discriminate. Everything from newer projects to the biggest exchanges in the world has seen hacks. What makes them especially notable is the volume of loss.
Hundreds of millions of dollars have been lost in a single go from a platform hack, and depending on how it is handled, it can lead to a loss of investor trust that is impossible to win back. As a business, this ultimately boils down to having top-level security for your platform but also, as we mentioned in the previous blog post, having a contingency plan to engage with the public if a hack does occur.
Launch Failures
There are few stories juicier to crypto lovers and sceptics than a project failing upon launch. From influencer meme coins that crashed within a day to projects that were poorly designed and executed, it is the stuff of YouTube video essays, viral Twitter threads, and in-depth reports.
From a PR perspective, a launch failure is the sort of PR disaster that leaves a project dead in the water and is almost impossible to come back from. A launch failure can ultimately be avoided by proper planning, not launching projects based on hype, and being transparent with your customer base at every point.
Association With Controversial Figures
The cryptocurrency industry, because it is less heavily regulated, unfortunately, has a number of shady figures within it. These include non-crypto natives who are controversial in the mainstream and try to find solace in the industry, as well as crypto entrepreneurs and personalities who have always courted drama. A project being associated with any of these figures might bring visibility but offers a severe blow to credibility.
Think of the myriad of influencer-backed crypto tokens that, while they received a lot of attention and even some investment in the beginning, are generally seen as jokes by anyone who takes cryptocurrency seriously. Association with certain controversial figures can even brand a project as an outright scam, and this should be avoided at all costs.
Legal/Regulatory Drama
Some of the biggest crypto scandals of the last few years have to do with legal or regulatory issues. Think of the FTX collapse that saw multiple people sent to jail, millions of dollars lost, and a stain on the industry’s collective reputation. Any crypto business getting itself embroiled in legal drama can not only waste many of its resources in court but also alienate a huge portion of its potential customer base.
Avoiding legal drama can be done fairly easily simply by adhering to all existing regulations, doing everything above board, and having proper legal representation at every stage. Legal drama is unique in that it is not just a PR disaster but one that, in real time, eats away at tangible resources.
Ecosystem Collapse
Ecosystem collapse is the PR nightmare that comes along with a project going up in smoke. Think of the collapse of Terra and even smaller projects that have gone under due to mismanagement, hacks, fraud, and so on. Ecosystem collapse, from a PR perspective, essentially spells the end of the business usually and can only really be avoided by proper management of the project in the first place. For any crypto entrepreneur that wishes to start more projects, ecosystem collapse should be avoided as it casts doubt on your ability to run a worthwhile project.
Conclusion
The crypto industry has no shortage of PR disasters, and the damage they do not only to the reputation of the business but also to the bottom line should not be underestimated. From projects accused of being rug pulls from the beginning to hacks that lead to the loss of millions to regulatory drama that can stretch out for years, these challenges are hard to survive, especially for newer businesses. Luckily, many of these crypto PR disasters can be avoided with proper planning, adherence to regulation, transparency with the public, and learning from the mistakes of others.