Wild and volatile, 2022 has been a tough year for digital assets and the crypto industry. Bitcoin and “blue chip” cryptocurrencies have lost more than 50% of their value from their all-time highs. This led to devastation for crypto users and traders, many of whom have lost a significant amount of money due to the price crashes. This is a crucial time for leaders in the industry to stand up, speak out and calm investors’ fears with facts and tangible solutions rather than silence.
This week saw the astonishing collapse of the once-darling crypto exchange FTX, headed by Sam Bankman-Fried, who had been heralded by both Fortune and Forbes magazines for what he’d built. FTX, one of the top crypto exchanges, lost more than $2 billion in one day and is now on the radar of authorities investigating the firm for potential security violations and misuse of customer funds. Coming just months after the dumbfounding demise of LUNA (May 2022), FTX’s downfall leaves many wondering whom and what they can trust in the crypto space.
Bankman-Fried repeatedly said, “I’m sorry” in a series of Tweets, in which he said, “I also should have been communicating more very recently.”
1) I’m sorry. That’s the biggest thing.
I fucked up, and should have done better.
— SBF (@SBF_FTX) November 10, 2022
2) I also should have been communicating more very recently.
Transparently–my hands were tied during the duration of the possible Binance deal; I wasn’t particularly allowed to say much publicly. But of course it’s on me that we ended up there in the first place.
— SBF (@SBF_FTX) November 10, 2022
Before this week, the question on most folks’ minds was “When will this bear market end?” Now, it’s “Whom can I trust?”
Transparency in Crypto
Leaders like Coinbase CEO Brian Armstrong and Changpen “CZ” Zhao, Binance’s CEO, have been outspoken and transparent to calm weary investors. CZ spoke from a position intertwined with the FTX fiasco. The industry needs more of this.
Crypto is new. It’s ambitious. It’s full of promise. It’s also unregulated and vulnerable to bad actors who get in and get out while leaving investors and the industry devastated and hopeless that it will survive repeated devastating blows.
When LUNA crashed, it took its CEO, Do Kwan, more than three months to explain the situation in an interview. This time, it took FTX days, but it wasn’t transparent enough. It wasn’t honest enough. And this is where leadership communications matter.
In this freefall of trust, how can crypto executives make better communication decisions? How can they avoid making a bad situation worse? With different projects crashing almost every day, investors will leave bitterly if something doesn’t change.
Crypto and Web3 Projects Need Strategic Communications
A clear communication plan, including what to do in a crisis, is essential in building a trusted brand. Different leaders in Web3 companies can be company spokespersons—it doesn’t always have to be the CEO. The key is to plan ahead. What do we want to be known for? What’s our story? How do we want people to feel when they think of us? How do we make things right when we make mistakes?
There is no reason to go silent when investors’ hard-earned money is on the line. There is no reason more consumer education isn’t available from different projects that explain how investor funds are used if left on an exchange, for example.
Silence leaves room for speculation and fake news. It’s a breeding ground for spreading fear, uncertainty and doubt. Crypto companies can mostly prevent rumors and negative news by having a strategic communications plan and strong writers to help tell their story—the good, the bad and the ugly (hopefully, there isn’t too much bad and ugly). But it’s about being transparent and honest. It’s about doing the right things and saying the right words in every medium possible to get the word out.
WNAGMI—We’re Not All Gonna Make It
“WAGMI” used to be a fun thing crypto enthusiasts proclaimed—we’re all gonna make it! Unfortunately, we’re not all going to make it.
The Web3 space thrives on community participation, so it is unfair to leave community members in the dark in times of crisis. FTX’s communication was slightly better than that of LUNA, Celsius and others that have gone down in flames, but it could have been better.
Were it not for Brian Armstrong and CZ, there would be even more angst. Thankfully, these two quickly shed light on the situation in real time.
Unlike other scenarios where users get information from unconfirmed sources, this situation became different as industry leaders chimed in to calm fears and position themselves as trustworthy authorities. This isn’t always possible due to legal reasons, but it helps when there is a panic.
Web3 Is About Community
To restore and continue building trust, transparent communication strategies are necessary for Web3 projects. It’s not always possible to be transparent and candid when it could compromise investigations and legal positions. But it needs to be part of the strategy because—like it or not—these crises do happen, and they may happen frequently until more regulation is placed on crypto. “Whom can I trust?” is a question that should be answered by many leaders in the space—not just the CEOs at the top.
For help with strategic communications plans, video scripts, leadership blogs or any other communication and copywriting need in Web3, contact us today.