Some of the projects that Mr. Armstrong promoted were small-time, experimental crypto ventures that eventually encountered problems. In those cases, he said, he considered himself a victim, too.
“They’re preying on the novice crypto influencer who just got popular and is trying to figure out what they should and shouldn’t be doing,” he said. “It’s hard to go from 12,000 followers to a million in one year and make all the right decisions.”
Expand Your Cryptocurrency Vocabulary
Bitcoin. A Bitcoin is a digital token that can be sent electronically from one user to another, anywhere in the world. Bitcoin is also the name of the payment network on which this form of digital currency is stored and moved.
Blockchain. A blockchain is a database maintained communally and that reliably stores digital information. The original blockchain was the database on which all Bitcoin transactions were stored, but non-currency-based companies and governments are also trying to use blockchain technology to store their data.
Coinbase. The first major cryptocurrency company to list its shares on a U.S. stock exchange, Coinbase is a platform that allows people and companies to buy and sell various digital currencies, including Bitcoin, for a transaction fee.
DAOs. A decentralized autonomous organization, or DAO, is an organizational structure built with blockchain technology that is often described as a crypto co-op. DAOs form for a common purpose, like investing in start-ups, managing a stablecoin or buying NFTs.
Mr. Paul rose to fame as a video blogger and an occasional actor; YouTube once reprimanded him for publishing footage of a dead body he found in a Japanese forest. Over the years, he has parlayed his internet fame into an eclectic array of entrepreneurial pursuits, including a line of energy drinks.
Mr. Paul became interested in crypto last year as the market for NFTs started booming. In a recent interview, he acknowledged that he was still learning how to navigate the crypto market, even as he tried to profit from the technology. “I’m an extreme ideas person, not much of an executor,” he said.
Mr. Paul was involved in some of the initial brainstorming for the Dink Doink project. But the venture was ultimately spearheaded by one of his roommates, Jake Broido, who gave Mr. Paul 2.5 percent of the tokens that were initially issued.
In a tweet last June, Mr. Paul called it one of the “dumbest, most ridiculous” cryptocurrencies he had encountered, and circulated a video of a cartoon character singing sexually explicit lyrics. “That’s why I’m all in,” he added. He also appeared in a shaky-cam video on Telegram in which he hailed Dink Doink as possibly his favorite crypto investment.
The campaign was a flop, and Mr. Paul was pilloried by YouTube critics. The price of Dink Doink hovered well below a cent, before falling even further in value over the summer. Mr. Paul said he had never sold his tokens or profited from the project. But he said he regretted promoting the coin without disclosing his financial stake. “I definitely didn’t act as responsibly as I should have,” he said.