Kim Kardashian Promotes Ethereum Max
Kim Kardashian recently found herself in that spot after advertising an unknown token called Ethereum Max on her Instagram page. The now-deleted Instagram story mentioned Ethereum max token to her followers after stating that it’s not financial advice.
With over 250 million followers on Instagram, her post reached many people and created enough interest in the relatively unknown coin. UK Financial Conduct Authority chairman described Kim’s post as probably the financial promotion with the biggest single audience-reach ever.
The Broader Problem with Influencers and Financial Products
This advertisement questions the actions of celebrities who have promoted coins to investors without adequate information on whether such crypto projects are legit or a scam. Kim will not be the first celebrity to promote an unlikely scam coin to investors. In the past, DJ Khalid, Paris Hilton, and many other celebrities have done this.
Since no rules guide such promotions, investors find themselves at risk if they take such advertisements seriously. The only thing Kim Kardashian had to do was disclose that her post was a paid ad. She didn’t need to disclose essential information about Ethereum max, such as the fact that it has no connection to Ethereum and was created just one month before her promotion by unknown developers.
When someone like Kim, a fashion and beauty icon, promotes a technical, financial product like Cryptocurrencies, there’s cause for concern. Even though the project may be the real deal, there are higher chances of it being another scam. Scammers regularly pay social media influencers and celebrities to pump and dump tokens. There are even cases where celebrities have promoted coins that don’t exist without knowing it doesn’t.
In the light of this event, The United Kingdom Financial Conduct Authority, through its chairman, Charles Randell, warned investors against buying celebrity-promoted Cryptocurrencies. The warning, which appears to be directed at the younger audience, cautioned people from buying Cryptocurrencies just because of the hype. Especially when they are new tokens since these kinds of tokens are most likely to be fake.
According to the FCA, such hype merely creates the fear of missing out for consumers who usually don’t understand the risks attached to such investment. The chairman of the FCA made this statement in a speech for the Cambridge International Symposium on Economic Crime. He pointed out that there are several stories of individuals who lose money because they invested in crypto. According to him, most times, people think these speculative Cryptocurrencies are regulated whereas they’re not. A major point he reiterated was the risk of losing money attached to any cryptocurrency investment. In his words,
“if you buy them, you should be prepared to lose your money.”
The Way Forward for Cryptocurrency Promotions
Generally, regulators in the top economies all over the world have a somewhat myopic view of Cryptocurrencies. Celebrities shilling coins have also not helped matters, especially since most stars have little to no information about the tokens they promote. Many of these celebrities and social media influencers have wrongly used their influence as many fans and followers take their words without any due diligence. Even in cases where these promotions clearly state that it’s not financial advice, many act on it like financial advice.
As the FCA Chairman pointed out, there’s a need for regulations on the online promotion of Cryptocurrencies. This will limit the amount of promotional content available to the consumers. Even if there are no regulations in place yet, there’s a need for stricter regulations or actual sanctions against misleading promotions to deter others.