For as long as there has been money, there have been scam artists.
Take your information from TV and film and you would be forgiven for believing that all con artists are either crude Mr. Fagin (think Oliver Twist) types or the sort of suave and unassuming strangers you find watching players intently at a roulette table. Think exclusively of scam artists online and you find your mind recalling questionable emails from fake companies, usually with a link attached that can drain your bank account dry at a moment’s notice should you be naive enough to click it.
In 2021, however, the most prevalent scammers aren’t forced to hide in wait or obscure their identity at all – in fact, they’re usually surprisingly easy to access at the head of your Instagram news feed.
Celebrities and influencers have long been accused of scamming their fans and followers, whether it’s for pedalling them low-quality products at premium prices, misleading fans into purchasing sponsored products or for failing to declare paid sponsorships altogether. Being swindled out of any amount of money by a public figure you thought that you could trust can be incredibly frustrating, but the last year has seen the beginning of a sinister new trend.
Now there are some influencers whose fans aren’t simply dropping $25 on low-grade merch, but are making financial losses of thousands of dollars after being convinced to invest in cryptocurrency – all on the recommendation of their favourite influencers.
The rise of cryptocurrency in the last few years has been truly unprecedented.
It started, of course, with the release of Bitcoin in 2009. Having spent its first decade in relative obscurity (and used primarily in deep web and black market transactions), Bitcoin brought the idea of cryptocurrency to the mainstream in 2017 after the value of one Bitcoin rose to its then-highest price of $19,783. The Bitcoin boom, despite fluctuating prices in the years following, immediately switched the world’s keenest financial traders on to the fact that there was serious money to be made in the world of cryptocurrency.
Of course, like there is a multitude of world currencies of varying value, there was room for plenty of competition when it came to cryptocurrency, leading to several Bitcoin competitors cropping up over the next few years. These days, it’s difficult to keep track of just how many cryptocurrencies are out there – that is, if you’re paying little attention to Instagram.
Keen to capitalise on the rise of cryptocurrency – and encouraged by the boom in cryptocurrencies such as Dogecoin, initially introduced as a joke – crypto creators have been enlisting the help of influencers and celebrities in advertising their own internet economies. Of course, with such stiff competition, these new cryptocurrencies aren’t built for longevity. Those behind the companies are happy to shell out thousands (most likely in USD rather than crypto) to figures with the platforms to promote them to their fans, many of whom then invest, therefore creating and stimulating their very own ecosystem.
The movement of celebrities promoting crypto is nothing new, though it was truly put under a microscope in June of this year when an Instagram story by Kim Kardashian came under fire.
“ARE YOU GUYS INTO CRYPTO???”, she asked her 254m followers.
“THIS IS NOT FINANCIAL ADVICE BUT SHARING WHAT MY FRIENDS JUST TOLD ME ABOUT THE ETHEREUM MAX TOKEN”
“A FEW MINUTES AGO ETHEREUM MAX BURNED 400 TRILLION TOKENS- LITERALLY 50% OF THEIR ADMIN WALLET GIVING BACK TO THE ENTIRE E-MAX COMMUNITY”
Many recognised the Ethereum Max cryptosystem as one previously promoted by Floyd Mayweather at a crypto convention, leading to him being booed off the stage shortly after.
Whilst Kim’s post may mark the most people reached by a single Instagram crypto endorsement, it was by no means the first – she was the latest in a long line of internet celebrities to advertise crypto to their followers.
Internet and reality star Tana Mongeau is no stranger to courting controversy, so fans weren’t particularly surprised when she jumped onto the cryptocurrency bandwagon on Instagram by advertising Titscoin, a cryptocurrency allegedly set up with the target of raising awareness for breast cancer research. However, critics were quick to point out that there are much more legitimate ways to do this, highlighting that attaching a charitable cause to the currency was likely nothing more than a way to boost its popularity and to mask accusations of unethical practice. There was, to many, something rather sinister about cryptocurrencies exploiting the idea of charity in order to gain investors.
he was also criticised for the wording within her advertisement, in which she stated she was ‘earning money by the pool’, which many felt was misleading and simplified just how difficult it is to make money using a flash-in-the-pan crypto scheme like Titscoin.
Her former husband, Jake Paul, was no different. The vlogger-turned-boxer has previously spoken out on his investment in several different cryptocurrencies including Yummy Coin, whose leading company claims to have donated thousands to the hungry and homeless. He has since told followers, like Kim Kardashian did, that his crypto recommendations are ‘not financial advice’ – despite having openly talked himself about devising his own cryptocurrency for public purchase.
Both of the latter raise two of the public’s most prominent concerns regarding cryptocurrency. First, that an increasing number of crypto companies are using charity as a way to deflect from their own underhand behaviour and second, that the use of celebrities to advertise cryptocurrency is leading to an increase in people investing what they cannot afford due to a misunderstanding of crypto’s reliability.
More worrying still is that a lot of the celebrities promoting such currencies have famously young fanbases. Both Tana Mongeau and Jake Paul are popular figures amongst teens and those in their early twenties, the latter being a particularly common age amongst first-time crypto investors over the last few years.
This trend is further backed by promotions posted by the D’Amelio family from their shared Instagram account on behalf of the crypto company Gemini. Daughter Charli is, of course, just 17 years old – a year below the minimum age requirement set by Gemini themselves. Whilst there are currently no legal age regulations in place for crypto buyers, it’s difficult to imagine that a teenager has the financial sense to understand such an investment. Charli may have a team around her to take care of her money, but the majority of young people getting wrapped up in ill-fated crypto investments do not.
Many experienced investors fail to see the problems with the rise of celebrity crypto advertisements – but experienced investors, in most cases, are not the target audience. The reality is that very few new cryptocurrencies will ever grow in value to the levels of Bitcoin or Dogecoin, meaning many undereducated first-time crypto investors will likely lose money – money they may have been persuaded to invest because of celebrity endorsement.
There is certainly money to be made in crypto by those who know their way around the movement, but many of the celebrity endorsements give investors the impression that crypto can be used as a way to get rich overnight – that investing in crypto is so easy that anyone can do it and make money from it. In reality, the market has become oversaturated, meaning the currencies that are cheaper to invest in or that have only hit the market recently risk collapse in the near future. In the world of crypto, there are simply no longer enough free seats at the table for everybody to dine.
The increase in young people investing in crypto, especially following the endorsements of celebrities, has led to a rise in calls for crypto advertisements to be monitored more closely by the ASA and FTC, the UK and USA’s respective advertising standards authority. For now, however, the advice is that those targeted by celebrity crypto endorsements that simplify the experience of investing in crypto take the ads with a grain of salt – and pay close attention to that famous catchphrase, ‘This is NOT financial advice’.
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