Someone who goes by Gary Cruz says he’s already earned about $10,000 by referring people to Binance, the world’s largest cryptocurrency exchange.

“And if you want to know how I got one Bitcoin from Binance for free, then watch this video,” he says, in his YouTube tutorial, which conveniently mentions his Binance referral ID number. It’s gotten more than 500 views.

Cruz, who didn’t respond to a request for comment, is one of an army of people using everything from Medium articles to YouTube videos to tweets and Reddit posts to push prospective investors to use specific exchanges in hopes of earning some extra money.

The efforts are similar to the multi-level marketing programs involving supplements, cosmetics and kitchen items, where you recruit others to earn income rather than actually selling the products. While the programs have long raised eyebrows, they’re playing a greater role in the crypto world with trading volume down about 50% on some major exchanges in the past month as Bitcoin lingers in a trading range of around $10,000, according to data tracker TokenAnalyst.

Binance, for instance, tuned up its referral program in August to allow for bonus allocations to people who sign up: Essentially, YouTubers like Cruz can now promise people they recruit a reduction in trading fees. The Malta-based exchange has also been aggressively promoting the program.

“How can you earn over 1,000 $BTC on #Binance without making a single trade?” Binance tweeted on Sept. 20. “Invite friends. Earn crypto together.” The two-year-old company even has a referral leader board, called Binance Referral Rich List, which shows that its top performer has already earned 1,146 Bitcoins -- or $11.3 million -- in commissions.

“It would not shock me to learn that referrers collectively earn $100 to $200 million per year, and exchanges earn $400 to $800 million from referral programs,” said Aaron Brown, an investor and a writer for Bloomberg Opinion.

Payouts vary widely: The U.S.-based Gemini exchange, ran by the Winklevoss twins, offers people $10 for referring a friend who trades $100 within 30 days of creating an account. Binance, on the other hand, is offering a commission equal to up to 40% of the trading fees paid by the people you refer -- effectively, passive income. Nearly every crypto exchange, including BitMex, Ethfinex and KuCoin, has a referral or affiliate program.

“BitMEX’s success has been driven by organic growth, through word of mouth and our affiliate program,” which has been running since late 2014, the exchange said in a statement.

Such programs likely are legal as long as the exchanges disclose everything correctly and do what they say they would, Richard Newman, an internet advertising and marketing compliance lawyer at Hinch Newman LLP, said in an email.

First « 1 2 » Next