Johannesburg, 26 September 2023: Amid the 2021 crypto boom, prominent figures such as Kim Kardashian, Floyd Mayweather, and NBA hall-of-famer Paul Pierce enthusiastically endorsed a cryptocurrency known as EthereumMax to their vast following. The result? A frenzy of investors flocking to buy the coin, only to witness its value plummet dramatically, causing considerable financial losses. In a recent development, U.S. District Judge Michael Fitzgerald of Los Angeles has refused to dismiss a class action lawsuit against these celebrities, alleging their deceptive promotion and profiting from fake claims about the coin’s worth.
This case, beyond marking the finish of such schemes, serves as a stark indicator of the alarming surge in celebrity-backed online crypto and non-fungible token (NFT) scams. In response to this growing concern, CMTrading, an online trading company, is issuing a heartfelt warning to all potential investors, urging them to exercise utmost caution when encountering unsolicited cryptocurrency offers, regardless of the celebrity association.
Profuse Cautionary Tales
Consider the tale of Kim Kardashian, who initially touted EthereumMax on her Instagram platform, propelling the coin’s market cap to nearly US$250 million (R4.68 billion). Yet, by late 2022, its value had dwindled to near worthlessness, leaving investors with negligible returns. Larry David is facing legal repercussions for his involvement in a Super Bowl ad promoting a now-bankrupt crypto exchange called FTX. Matt Damon’s commercial for Crypto.com lured in an influx of investors, only to see them lose approximately 60% of their investments. Similarly, other celebrities who ventured into the NFT market and hyped it as the next huge investment opportunity found themselves in financial distress. YouTuber Logan Paul openly admitted to losing nearly all of his $623,000 (R11.67 million) investment in an NFT, which had dwindled to a mere $10 (R187) in value a year later. Justin Bieber also suffered a considerable setback, losing $1.24 million (R23.23 million) on a “Bored Ape” NFT purchase. Their experiences sparked a chain reaction, inspiring others to follow suit, often resulting in considerable financial losses.
An Unregulated Frontier
Fred Razak, Chief Trading Strategist at CMTrading, has consistently emphasised the risks of cryptocurrency’s unregulated nature for those seeking quick profits. “The vast disparity in coin values, ranging from mere cents to $60,000, can be unsettling for traders. It lacks the stability of clean money and feels more like hype,” he cautioned back in 2022. Subsequently, his warnings believe been repeatedly validated, as celebrity-driven hype continues to send recent cryptocurrencies soaring in value, only to crash in a simple pump-and-dump pattern due to the absence of genuine value to sustain prices.
Celebrity Involvement Raises Red Flags
The involvement of celebrities in promoting cryptocurrencies inherently raises suspicion. According to CMTrading, legitimate cryptocurrency creators typically pursue a conventional path: advertising, building a dedicated community, and demonstrating tangible pace toward real-world applications. However, celebrity endorsements suggest backers are primarily interested in artificially inflating short-term value.
The Rise of Fake Celebrities
The situation has taken a disconcerting turn, with cryptocurrency creators no longer relying on actual celebrities for endorsements. Why pay a star when you can replicate their likeness, create countless online advertisements, and promote the coin that way? Some individuals might even receive unsolicited online messages from impostors claiming to be celebrities, offering a chance to invest in their cryptocurrency by downloading an app or making a simple online payment.
Protect Yourself
Many celebrities excel in fields far removed from crypto and financial investments. Their knowledge in these areas should not be considered gospel, and their involvement in commercials is often driven by ignorance rather than expertise. CMTrading urges investors to diligently research any investment opportunity before committing their funds, irrespective of the celebrity endorsement. Any unsolicited investment offer should be met with scepticism, and individuals uncertain about its legitimacy should seek advice from a financial advisor.
In a landscape teeming with secure, reliable, and intelligent investment opportunities like the CMTrading online platform, wise investors should exercise vigilance, even when celebrities are involved.
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Bliss
All the president is, is a glorified Public Relations man who spends his time flattering, kissing, and kicking people to get them to do what they are supposed to do anyway. – Harry S. Truman
Fiend Oblivion
“I suspect in most companies, the Public Relations person is down at No. 20 in the pecking order. But here, he is fighting incredibly important battles. If a negative story starts running away with itself in the press and is not dealt with fast, it can badly damage the brand, and so we put enormous weight on our PR people.” – Richard Branson
Silver Cup
Even my novels offer passages in which the major character is imagined as a writer. In Joss and Gold, Li An is a business writer who edits her company\’s weekly Public Relations magazine. And in Sister Swing, Suyin writes human interest stories for a free, local community paper, The Asian Time. – Shirley Geok-lin Lim