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Highlights
- More celebrities are talking about cryptocurrencies, especially on social media today.
- The market is fraught with risk in the absence of proper law to protect investor rights.
- SEC warns investors not to make investment decisions based on celebrity endorsements.
Cryptocurrency is one of the most discussed subjects today. These conversations are no longer limited to regulators or fanatical crypto fans but pervaded into the broader public sphere.
No wonder all sorts of opinions regarding cryptocurrency, from merits to demerits, are doing the rounds on the Internet. Even Hollywood celebrities and sports stars have joined the discussions. So, here comes the critical question. Should you invest in these risky assets solely based on the celebrity social media endorsements to a particular cryptocurrency?
The cryptocurrency market is highly volatile, yet its popularity has grown leaps and bounds. The larger-than-life reward that it promises continues to attract millions around the world.
Yet, the impact is more when celebrities like Kim Kardashian starts a crypto conversation. She has more than 250 million followers on Instagram. Imagine the reach it has. Indeed, her ardent fans would want to know from her about what she thinks, and her opinion will matter to them.
In June last year, she had asked her Instagram fans how many of them were into crypto. Later, she posted what her friends told her about the Ethereum Max token. However, thankfully she was careful enough to pose the rider as “not (a) financial advice”. But she also used the hashtag “#ad” in the message, suggesting it might have been a promotional activity. Fans may have grabbed the bid as the price of the EMAX token shot up sharply around that time.
EMAX was launched in May 2021. Its price jumped after celebrities like Kardashian, Paul Pierce, and Floyd Mayweather discussed the token on social media postings. Also, EMAX offered discounts to those who used it to buy flight tickets, revealed in an ensuing lawsuit. EthereumMax creators and the three celebrities were sued for abetting the California law.
However, the token fell around 97% since these developments in June.
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Others such as Hollywood actors Matt Demon and Reese Witherspoon also have waded into the social media crypto conversations. Matt Demon reportedly backed Crypto.com, while Witherspoon drew people’s attention to the topic through her tweets.
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Source - pixabay
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Celebrity endorsements
Several other celebs have also been the face of cryptocurrency adverts. Tik-Tok star Charlie D’Amelio advertises for crypto-exchange Gemini, and Tom Brady and Gisele Bündchen appeared in commercials for FTX, a crypto exchange where they have a stake.
Some celebrities, however, have been discreet. They haven’t promoted any specific cryptocurrency but talked about cryptos in general. Witherspoon tweeted about women’s participation in the fintech space, including cryptocurrency, NFTs, and Metaverse.
However, Warren Buffet, the famed investor and CEO of Berkshire Hathaway, has a different take. He detests cryptocurrencies. He described Bitcoin as a “delusion” and “gambling device” at one point. Buffet had once famously said in 2019 that “it just sits there” and “not an investment”. In a TV interview in 2020, he remained firm on his view. He said one could not do anything except sell them to other people. He said he would never own any cryptocurrency.
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What SEC says
SEC, which runs the Investor Education and Advocacy (OIEA) program, warns investors not to make investment decisions solely on celebrity endorsements.
It noted that celebrities on TV and social media endorse various products, but it does not mean it is appropriate for all. It is never a good idea to invest because a celebrity has endorsed a product as a good investment.
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In conclusion, celebrities may have a different purpose behind their endorsements. Hence, investors who may not be as rich should make decisions after proper research.
