Cryptocurrencies are becoming increasingly popular in pop culture. From there, it didn’t take long for social media sensation Kim Kardashian to post her first crypto ad on Instagram. Kardashian’s Instagram has an impressive 251 million followers. So naturally, the crypto company she advertised could reach any number of users. Ber since the post was published, UK regulator City Watchdog has reprimanded the star for advertising.
Fear of missing out
Social media influencers like Kim have an audience that includes millions of young adults and teenagers. UK regulator City Watchdog has issued a warning following the Instagram post: Buying crypto assets carries a huge risk. The regulator explained that such paid advertisements drive people to buy cryptocurrencies because of FOMO (fear of missing out). They often buy with little understanding of the risks associated with crypto trading.
The Financial Conduct Authority (FCA) has warned against following the “hype” around buying cryptocurrencies. Especially when it comes to new tokens that are backed by celebrities but may turn out to be counterfeit.
You can lose everything with cryptocurrencies
FCA chairman Charles Randell said in his speech for the Cambridge International Symposium on Economic Crime on Monday:
‘The hype around cryptocurrencies is creating a strong fear of missing out among some consumers who are unaware of the risks. There are many people who have lost their life savings because they were lured into the crypto bubble with the craze of getting rich quick. Sometimes after listening to their favorite influencers who were willing to betray the trust of their fans for a fee
The problem, in large part, is the misconception many consumers have that speculative cryptocurrencies are regulated. That’s why many willingly invest. Randell emphasized that consumers have no financial protection when investing in crypto. There is also no system of financial compensation if they lose their entire investment.
Those who buy cryptocurrencies must be prepared to lose all their money.
Kim Kardashian’s previous crypto advertisement was cited in Randell’s speech as an excellent example of how celebrity crypto advocates are not always reliable.
Kardashian promoted Etheruem Max on her Instagram stories earlier this year. Kardashian marked her posts as advertisements. However, she kept quiet about it to her 250 million Fans that the cryptocurrency was created by unknown developers just a month before they posted.
According to Randell, while there isn’t always proof that it’s a scam, scammers are still very active. They pay celebrities and influencers for their help in “pumping and dumping new tokens based on pure speculation.” Many of the coins promoted by influencers don’t exist at all.
Randell called for greater powers to regulate online cryptocurrency advertising. This would help combat problematic content where ignorant social media users fall for scams. Randell believes that stricter oversight of online crypto promotion will make it harder to use digital tokens for financial crimes.