The popularity of cryptocurrency has exploded in recent years, and celebrities have joined the party. However, as criminal activities in the field grows, so does the risk that influencer endorsements will lead to costly losses for new and inexperienced digital asset investors.
Kim Kardashian, Floyd Mayweather and former NBA star Paul Pierce are among the latest celebrities to be accused of using their celebrity to “pump” little-known cryptocurrencies.
Celebrities promote cryptocurrencies amidst its risk
Celebrities must do their research before endorsing cryptocurrency companies as they could be held accountable for misleading claims.
During commercial breaks, Matt Damon appears to compare investing in cryptocurrencies to climbing Mount Everest or exploring space. Reese Witherspoon took a break from talking about her book club and production firm lately to deliver an unsettling forecast.
In January, Witherspoon tweeted from her personal account, “Every person will have a parallel digital identity in the (near) future.”
She continued: “Avatars, cryptocurrency wallets, and digital commodities will become commonplace. “Have you thought about it?”
According to a complaint filed in California, Kim Kardashian, former NBA star Paul Pierce and boxer Floyd Mayweather exploited their celebrity to promote a new cryptocurrency as part of a bigger plot to deceive investors while benefitting for themselves.
On January 7, lawyers filed a class-action lawsuit alleging that the trio served as celebrity endorsers of EthereumMax. EMAX was promoted to investors as a disruptive new cryptocurrency. However, the case claims that the celebrities and the developers were working together to deceive the investors in EthereumMax to boost the token’s price.
According to the lawsuit, Gentile and Perone “marketed the EMAX tokens to investors so that they could sell their piece of the float for a profit.”
According to reports, representatives for Kardashian, Mayweather and Pierce have not responded to requests for comment.
Several celebrities have endorsed cryptocurrency. Matt Damon, Paris Hilton, Jamie Foxx, Ashton Kutcher, Gwyneth Paltrow, and Dennis Cole are among the celebrities who have enthusiastically backed several digital coins.
Crypto can be a smart investment if you manage the risks
For speculators—not just regular investors—cryptocurrencies have become immensely popular investments. Institutional investors, such as hedge funds have invaded the crypto market in recent years.
Eshwar Venugopal, a finance professor at the University of Central Florida has said “crypto has more risks than anything in the stock market. He compared investing in bitcoin to being an angel investor in a seed stage firm, when your money could be lost. “The risk is from a lack of information, disinformation, and speculation,” he warned of crypto investors.
According to Venugopal, the most dangerous crypto products lack a white paper or have no real business purpose. Dogecoin and Shiba Inu coin, both meme coins, are now the 12th and 13th most valuable cryptos by market capitalization.