Promoting a crypto token that could put investors at risk does not fly with the FCA Chairman.
251 Million Followers
Being an A-list celebrity with a massive fanbase is not always a bed of roses and with as many as 251 million followers on Instagram, you need to be extra careful. A single post by media personality and businesswoman Kim Kardashian has brought the heat from the U.K.’s Financial Conduct Authority (FCA).
Investment Fraud and Scams
It was at the Cambridge International Symposium on Economic Crime that the FCA chairman Charles Randell voiced his strong opinion on the 40-year old socialite. While discussing “The risks of token regulations” and the “rules which protect people from investment fraud and scams,” the chairman referred to Kim Kardashian.
Online platforms do have the ability to offer advice about scams that can be useful for investors in order to stay clear of making bad decisions. However, it can also have a more dangerous opposite effect, which is what Randell is trying to battle.
Destroying the Trust of Their Users
While he wants to protect both consumers and their own brands, he does not hesitate to call out those who aren’t doing their part and thereby destroying the trust of their users.
“Which brings me on to Kim Kardashian. When she was recently paid to ask her 250 million Instagram followers to speculate on crypto tokens by ‘joining the Ethereum Max Community,’ it may have been the financial promotion with the single biggest audience reach in history.”
Considering her post was a sponsored ad, Kardashian had to obey the Instagram rule and disclose the fact it was paid for.
Speculative Digital Token
The problem with the post was not that it was a paid promotion, instead Randell brought up another issue:
“She didn’t have to disclose that Ethereum Max — not to be confused with Ethereum — was a speculative digital token created a month before by unknown developers – one of hundreds of such tokens that fill the crypto-exchanges.”
He continued: “ Of course, I can’t say whether this particular token is a scam. But social media influencers are routinely paid by scammers to help them pump and dump new tokens on the back of pure speculation. Some influencers promote coins that turn out simply not to exist at all.”
The Power of Social Media
We have seen celebrities like Elon Musk tweet or post things about cryptocurrencies before, creating a hype around certain investments and thereby specific coin value.
With that in mind, a sponsored post reaching more than 250 million people can lead to consumer investments that turn out to be even riskier than normal. Randell voicing his opinion on the matter will most likely not result in anything new but he does have a point.