UK regulator mentions Kim Kardashian in new cryptocurrency warning
UK regulator mentions Kim Kardashian in new cryptocurrency warning By Hannah Perez

The FCA chairman called for more powers to regulate cryptocurrency promotions. He said many investors are getting into cryptocurrencies because of FOMO and because of adverts made by celebrities.

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The UK’s financial regulator, the Financial Conduct Authority (FCA), has issued a new warning about investing in digital currencies; although, this time, it’s mentioning famous celebrities

.

In a latest warning, the chairman of the UK watchdog, Charles Randell, urged investors to stay away from cryptocurrencies, particularly celebrity-backed tokens

that may end up being scams. The FCA leader’s speech seemed to target younger investors in particular.

Speaking at the Cambridge International Symposium on Economic Crime on Monday, Randell claimed that many users with little understanding of the risks are buying digital assets out of fear of missing out (FOMO). “The hype surrounding them creates a powerful fear of missing out [on something] for certain consumers who may have little understanding of their risks

,” he said, adding:

There is no shortage of stories of people who have lost savings by being lured into the cryptocurrency bubble with delusions of quick riches, sometimes after listening to their favorite influencers, ready to betray the trust of their fans for a fee.

FCA: Beware of celebrity ads

The regulator’s chairman cited Kim Kardashian as an example to illustrate how celebrity influencers can attract investors to crypto projects. Randell said that in many cases these projects that are advertised by celebrities are not regulated by the agency and could be fraudulent.

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The FCA executive’s comments specifically refer to an announcement Kardashian made in June about the Ethereum Max cryptocurrency on her Instagram account. At the time, the model advertised the token to her 250 million followers with the question, “Are you guys on crypto????

”.

UK regulator mentions Kim Kardashian in new cryptocurrency warningUK regulator mentions Kim Kardashian in new cryptocurrency warning

While that particular post was flagged as an advertisement, Randell noted Kardashian had not disclosed that the token

was created just a month earlier by unknown developers. The regulator stopped short of calling the project a fraud, but used the example to warn about instances of scams. <blockquote>

Of course, I can’t say whether this particular token is a scam. But social media influencers are routinely paid by scammers to help them pump and dump new tokens on the basis of pure speculation. Some influencers promote coins that turn out to be simply non-existent.

The popular model is not the only one. Paris Hilton and DJ Khaled are among the numerous other celebrities who have also recently promoted cryptocurrency projects.

More oversight to regulate cryptocurrency promotions.

In the same vein, Randell called for the necessary changes to be made to allow the FCA to crack down on misleading cryptocurrency advertisements. The body’s chairman reiterated that speculative cryptocurrencies are not regulated by the FCA and therefore consumers are not protected.

It is difficult for regulators around the world to stand by and watch people, sometimes very vulnerable people, put their financial future at risk,” Randell said, adding:

‘These tokens have only been around for a few years, so we haven’t seen what will happen over a full financial cycle. We just don’t know when or how this story will end, but, as with any new speculation, it may not end well.

Randell’s comments come amid an ongoing consultation by HM Treasury, the UK’s Ministry of Finance, on the case for tighter regulation of certain digital currency-related announcements.

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Meanwhile, this is far from the first time the watchdog has warned about such assets. In January, the FCA issued a consumer warning against investments advertising high returns based on cryptocurrencies. The regulator has also invested a significant sum of money in anti-crypto campaigns.

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Sources: The Guardian, The Block, Reddit, archive

Version by Hannah Estefania Perez / DiarioBitcoin

Image from Unsplash