Why Paid Advertising Needs Transparency and Disclosure

Why “Influencers” like DataDash getting paid thousands of dollars without providing transparency to promote the Substratum ICO and project over the course of time is a major problem that will have legal ramifications.

Transparency is a crucial element to one’s public image and how they are received by their respective audiences. Especially, when we look into cryptocurrency, a relatively new asset class that has not been fully understood by the mass public. Several legal ramifications can be endured in the future, especially in the case when crypto influencers who are paid for promoting or “pumping” cryptocurrencies, neglect to disclose these details to unbeknownst audiences.

This issue of paid advertising and a lack of transparency is a major problem in the crypto space. We can bring this issue forward to light within popular Crypto YouTuber’s like DataDash.

Through the course of Substratum’s ICO and Post-ICO period, DataDash has been in the limelight as one of Substratum’s biggest supporters. In particular, he has been the largest figure and most widely known Substratum supporter. He has released a little over 19 videos discussing Substratum solely, promotionally, or talking about it in a positive light. For this, Data Dash has been given a lot of flack across social media.

So, I messed up….

On January 9th, 2018 in this video, DataDash told his viewers that he was compensated for promoting the Substratum and Condicator projects during ICO. DataDash goes on to explain around 3 minutes in the video why he promoted an unregistered security offering that has not filed a Form D Notice to the SEC for an exemption to Rule 504 or 506 of Regulation D of the Securities Act of 1933.

“Now, I want to first and foremost take it one step at a time and talk about Substratum. As you all know, I have talked about heavy on how optimistic I am on this. I have made a wide variety of content on the Substratum project on my channel and because of that, I know it might seem like that is a conflict of interest. But, I want to break it down. First and foremost, when I made the video that I got paid for in regards to Substratum, it was back during the summer, it was back when my channel was much smaller. Like I said, I was very excited about the Substratum project. I heard about this project when a variety of the community, at least 2 or 3 people had brought up to check out the whitepaper. At the time, 2 or 3 people mentioning the project was pretty exciting, so I know I had to look into it. I got really excited about what Substratum had to offer and this project and the idea of a decentralized web. I still am extremely excited about it….

This is very interesting and important to note following the bold sentence from the video. Nicholas Merten aka DataDash is only mentioning “the video” as if he was only compensated for one video. Similarly, Justin Tabb (CEO of Substratum) has stated the same thing to the Substratum Network Telegram community on January 10, 2018. Justin Tabb states, “we paid for 1 video from DataDash when he had 9k subscribers*, the VERY first video, Everything since then has been his own”.

This will be important to note later on as there are severe time discrepancies between both parties claims and several transactions that align with video release times.

“I don’t want you all to take this as if I’m negative on it. But, it turned out at the time when I was planning to do a review on it, I happened to get reached out by an intern at the company about doing an ICO review on it. I said sure, yeah I was excited to cover it. I ended up covering the project and at the end of it, I received a form of payment. Now again the payment was not the motivation, keeping transparent with that but I did accept the payment. And to be transparent with you all, from my understanding if I’m looking back on it again… I have quite a short term memory. I will provide all the resources down below so you can see them for yourselves. I was paid 6 ETH back during the summer as well as 100,000 Substratum tokens….

Now, earlier on Nick stated, “when I made the video that I got paid for in regards to Substratum” and Justin Tabb also stated in response to Substratum community members questioning Nick’s video on January 10, 2018, “we paid for 1 video from DataDash when he had 9k subscribers*, the VERY first video, Everything since then has been his own”. However, doing additional digging into Nick’s provided “transparency” wallet, I was able to notice a few severe time discrepancies and compensation for not “one video” but rather 2 videos.

On Aug 11, 2017 at 02:56 UTC, DataDash posted this video titled SUBSTRATUM (ICO) | Creating the decentralized web. About 2 hours later at approximately 04:58 UTC, this payment of 4 ETH was received from the Substratum Crowdsale Wallet. No other transfers or inbound tx’s occurred until August 30, 2017 so we can conclude with reasonable certainty this 4 ETH was his only payment for the video posted above.

Now, here’s where things get interesting. According to DataDash and Substratum CEO Justin Tabb, only “one video” received compensation from the Substratum team. However, that appears to not be the case here and there is a clear intentional effort to cover this up from both parties.

On Aug 30, 2017 at 04:19 UTC, DataDash posted this video titled SUBSTRATUM (ICO) INTERVIEW | Justin Tabb. About 37 minutes later at approximately 04:47 UTC, this payment of 2 ETH was received from the Substratum Crowdsale Wallet. Also, 1 minute later at approximately 04:48 UTC, this payment of 100,000 SUB was received from the Substratum Crowdsale wallet.

Substratum Gets Delisted from Binance — DataDash Responds

A few questions can be raised from the points prior. Firstly, why is there an error in reporting from DataDash and Justin Tabb on his compensation for “one video” and as both have stated for the August 11, 2017 video DataDash uploaded here. Again, I want to reiterate the clear intentional effort to not be entirely transparent. This is prevalent as we have found that there was indeed compensation for not “one” but rather two videos, making Justin Tabb’s claim “we paid for 1 video from DataDash when he had 9k subscribers*, the VERY first video, Everything since then has been his own” a clear and blatant lie.

Furthermore, the original 100,000 SUB and 2 ETH was not found to be payment for DataDash’s ICO review, rather an ICO interview with Justin Tabb in DataDash’s second video titled SUBSTRATUM (ICO) INTERVIEW | Justin Tabb.

DataDash’s respone to Substratum’s Binance delisting — February 17, 2019

“So there’s been a recent delisting of Substratum, SALT and Cloak. Those are the 3 delistings I remember when I heard the announcement off Binance. As you all know Binance is a very prominent exchange and some of these cryptocurrencies dropped very dramatically after the Binance delisting because it’s one of the major liquidity gates for these altcoins. Now, it’s very important whether you’ve invested in Substratum or not to not look at this in a black and white way. This has little to nothing to do with the actual fundamental value of Substratum or SALT project. The fundamentals are completely separate from Binance doing this, in my opinion…. If you look at Substratum as a team, they have a full office that I’ve been to multiple times that I’ve seen them actually coding and developing. Not to mention has broken through the firewall of 3 major nations that censor content from its citizens. These are some projects that have built actual and real utility in the crypto space…”

DataDash, the largest cryptocurrency youtuber is suggesting that the “fundamentals are completely separate from Binance doing this”. He further goes on to add that Substratum and others have “built actual and real utility”. Now, a few key points to address here. Substratum, a project who has countlessly made false promises on their V1 release delaying it twice, told the public they are going to be “actively trading” a portion of their ICO eth holdings to gamble investor funds and lied about ICO raise totals has built “actual and real utility” according to DataDash.

For a second, DataDash should perhaps consider these and the economic model of the project now following this recent delisting. SUB’s monetization relies on liquidity and strong volume, being that 99% of its liquidity has been effectively wiped out following the Binance delisting, it remains at large a question for how the team expects to obtain monetization for the SUB token.

In particular, how will users be incentivized to rent network bandwidth in exchange for a next to nothing illiquid token whose price cannot be discovered due to it’s listing on under par exchanges? Will the team just switch to ETH now? These are serious concerns that remain to take into account that DataDash does not seem to fully understand, considering he’s referred to SUB’s networking layer using blockchain technology when it’s only used for crowdfunding and micropayments and “lost his private keys”.

“Whereas I see alot of these other protocols still focusing on fixing certain issues and not delivering on anything and to see these projects get delisted, it kinda threw me back”.

Ha, no further comment needed.

“Here’s the thing that really throws me back…. the problem is, I think their delisting process is really unprofessional. It’s one to announce to the public that you are delisting a project, in this case it’s understandable. But, to not give the team any fair warning or reason as to why that’s happening as they do it or beforehand, is extremely unprofessional.”

DataDash is effectively stating here, he believes Substratum and other coins should be given a warning prior to delisting and that it's unprofessional they were not given one. This is completely absurd. Allow me to explain why this not only makes him look like a SUB shill, but also shows how absurd he sounds saying this.

• Info Leakage — Why would an exchange give a project a warning in advance to a delisting? So they can dump their tokens early and profit off the inevitable dump? Not how it works, sorry Nick.
• Binance Routine Review- Through the routine reviews on assets listed on Binance, there is a set guideline for how a project is perceived and if a project fails to live up to these guidelines, it's likely going to be delisted and taken out for better and more quality projects on the Binance exchange. SUB clearly has not stood up to the guidelines for Binance’s periodic review.

Considering these points, I think DataDash’s statement on Binance’s delisting process to be “unprofessional” is tinfoil, CZ is not a dummy.

In conclusion

Crypto “Influencers” like DataDash getting paid thousands of dollars to promote an unregistered security offering that failed to file a Form D Notice to the SEC for an exemption to Rule 504 or 506 of Regulation D of the Securities Act of 1933, will face legal ramifications for doing so. The SEC is not only interested in ICO’s but they are actively going after “influencers” as well.

Furthermore, Data Dash’s twisting of the story behind his SUB ICO promotion as well as Justin Tabb’s, raise critical questions to the veracity of his “transparency” claims. Also, his apparent justification for Binance’s delisting process as “unprofessional” is not well tuned with Binance’s periodic review guidelines of assets listed on their exchange.

Disclaimer: None of the information in this article is intended to be used for slandering, sleuthing or any purposes that could cause harm to any individual. If you think these opinions do cause harm, then you should consult a therapist. Also, this article is not an intent or means to buy or sell any crypto assets. I am not a financial advisor and you should do your own due dilligence and consult one before purchasing or selling any crypto assets. Lastly, I do not hold a position in any of the tokens recently delisted off Binance on February 15, 2019.