The UK Financial Conduct Authority (FCA) accuses Kim Kardashian of promoting a risky cryptoasset token that could be a scam. Is this a result of a lack of awareness or a drive for money?
Kardashian used her Instagram handle to promote a cryptoasset called Ethereum Max Token, and the financial ad reached an audience of over 250 million followers of hers. Kim was paid to encourage her followers to hype and speculate about cryptocurrency coins by becoming a member of Ethereum Max Community.
The FCA warned that the coin in question could put venture capitalists and users at risk as it could be a cryptoasset scam.
To prevent the large Kardashian audience from becoming victims, the FCA tried to explain to the public how the internet and other social media platforms can be used to inform the public about scams and frauds, which can help venture capitalists avoid unsafe judgments.
The head of the FCA Charles Randell revealed that influencers should always work hand in hand with online platforms that are willing to protect both customers and their own businesses. They should also denounce all those individuals or institutions that do nothing instead of undermining the trust of their customers.
Even though it is not clear whether Ethereum Max is a scam or not, scammers usually pay celebrities to promote their pump and get rid of their new coins based on hype or sometimes play the market with coins that do not exist or never existed. Due to FOMO, people end up investing in these fake coins and become victims and lose their savings.
While it is understandable that scammers try to involve celebrities to appear more credible, it remains questionable why celebrities are willing to participate in the scams. In fact, Kim Kardashian is not the first celebrity to be involved in such a scheme.
In 2020, Steven Seagal was caught promoting the Bitcoin2Gen project, which was also suspected of being a scam, according to CoinIdol, a world blockchain news outlet. At the time, regulators also became alarmed. The US Securities and Exchange Commission (SEC) fined Seagal $314,000 after realizing that his actions were illegal.
In Seagal's case, his involvement may be understandable. He lost much of his popularity after being a movie star in the 90s. So this behavior may have been triggered by both a desire for fame and some income. Some celebrities who lose popularity participate in commercials to make some profit and feel important.
But what drove Kim Kardashian to advertising when she lacks neither fame nor fortune? Another reason why celebrities may participate in suspicious projects is a lack of awareness. Although cryptocurrencies have indeed become a buzzword and a mainstream trend, some non-technical people find it difficult to distinguish a legitimate project from a scam.
Give the scammers credit, they sometimes do a really impressive job of masquerading as a legitimate project. However, there are several ways to tell if a project is fraudulent that will help users keep a watchful eye on projects they want to promote or invest in.
Meanwhile, interest in cryptocurrencies is growing unstoppably, even among celebrities. Celebrities who love cryptocurrencies include Ashton Kutcher, Mel B, Jamie Foxx (who promotes COBINHOOD), Nas, Lionel Messi (is the global brand ambassador for Sirin Labs), Mike Tyson, Gwyneth Paltrow, Rapper Ghostface Killah, Jay Z and Will Smith, Richard Sherman and many others.
Some of the celebrities who own Bitcoin are Elon Musk, Jack Dorsey, Mike Tyson, Maisie Williams, Mark Cuban, Snoop Dogg, Sean Ono Lennon, Kanye West, Floyd Mayweather Jr, Richard Branson and many others. Cuban used to be skeptical about Bitcoin, but later changed his mind in light of the progress the cryptocurrency industry was making.
Such a trend is really positive for the cryptocurrency industry. People tend to look up to celebrities and trust who they trust as well. So if celebrities turn to cryptocurrencies on a massive scale, other people are likely to follow their example.