Australian Crypto Firm Faces Heat for Manipulating Social Media Accounts, Denies Allegations

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It seems like cryptocurrency firms are not shying away from controversies anytime soon. Sydney-based Power Ledger faced fire last week after investors and industry experts called out the firm’s dubious social media practices, reported Financial Review on December 26, 2018.

Social Media and Crypto-Marketing

Power Ledger is a peer-to-peer energy trading platform that raised $13.2 million in an ICO for its POWR tokens in September 2017. The firm was one of many ambitious entities to have sprung up after bitcoin charged towards a record $20,000 price level in December 2017.

While Power Ledger’s business practices remain better than competitors, it has a functional platform and projects running in India, Thailand, U.S., Australia, and Japan, the firm’s marketing activities mirrored those used by a majority of token-issuer.  

The practice of social media marketing is a billion-dollar industry in its own right. However, the widely-promoted products are tangible items which find everyday use. But tactics used for fast-moving consumer goods find no synergy in the cryptocurrency sector. This is partly due to the financial nature of products sold, and primarily due to the bad actors present in the space.

Fake Media Accounts

In this instance, Power Ledger ran a competition to reward social media users and profiles with its tokens based on the exposure that each unique account generated. The so-called “bounty hunters” were relied upon to drive up purchasing interest, and therefore prices, for its tokens.

But analysis showed most profiles turned out to be fake. A host of other inauthentic users were used to “like” and “comment” on every Power Ledger post, thus providing much-needed traction and popularity to entice unsuspecting users.

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To some extent, the activity can be considered as a last-gasp effort to reach POWR’s all-time high of $1.61, as per data on CoinMarketCap. The tokens currently trade at eights cents, up only a few pips from their ICO price of five cents.

Jemma Green, the founder of Power Ledger, partly defended the allegations. She stated that 1.5 million tokens were reserved for the activity and were specifically aimed at creating “grassroots” support for the brand. However, she agreed that certain misdoings had occurred while the competition was active.

Green noted:

“The means by which they did so were outside of our control, and we made it clear that our core supporters who believed in the project and the future of renewable energy were the main audience for this program.”

Critics Question Objectives

Despite her comments, investors criticized rumors flowing through the crypto-sphere about the future of Power Ledger’s platform. One of the exaggerated claims included the company’s ambitions reached Elon Musk, board member of renewable energy firms Tesla and SolarCity, who may align with Power Ledger and “revolutionize” the retail electricity industry.

Another critic, Peter Williams of Deloitte’s technology division, thinks all kinds of financial incentives to promote token usage and buying is unethical behavior, terming it a “classic market manipulation technique.”

Meanwhile, the Australian Securities and Investments Commission (ASIC) continues to scrutinize the cryptocurrency sector. In early-2018, the watchdog set up a special monitoring unit to oversee crypto-firms and token distribution in the region, and clearly stated individuals must declare all financial incentives rewarded by companies.

“Just because you call something an ICO, doesn’t mean you are unregulated,” said ASIC commissioner John Price. “We are very focused on disclosure in this area.”