The head of U.K’s watchdog Financial Conduct Authority (FCA) Charles Randell recently singled out Kim Kardashian’s ad on Instagram where she promotes a new and untested crypto asset called Ethereum Max. This cryptocurrency has no connection with the well-known Ethereum digital currency, which is popular among both small, medium and large cryptocurrency buyers.
Randell said that Ms. Kardashian had “asked her 250 million followers” to invest on what he said was “a speculative digital token” that had been created only about a month ago and its developers were unknown.
Speaking to the Cambridge International Symposium on Economic Crime, on Monday, the FCA head said that influencers fueled “delusions of quick riches.” He acknowledged that Ms. Kardashian’s Instagram post had been correctly flagged as an ad but also noted that it might be a financial promotion that reached the largest number of people in history.
He also mentioned that although he couldn’t say that the particular currency Ethereum Max was a scam, it has been seen that social influencers were routinely paid by scammers so that they can “pump and dump” new tokens. He also mentioned that some influencers promoted coins that did not even exist.
It is well known that many followers are influenced by what is put on their influences pages and that has been the reason why financial watchdogs worry as there is relentless and often misleading advertising techniques that are carried out by some crypto businesses, using influencers.
He also said that there was a need to address consumers’ misconceptions and that if consumers bought them, they should be prepared to lose all their money. He also explained that even established cryptocurrency like Bitcoin had no assets or real-world cash flows, nor were they regulated by the FCA or the U.K. Financial Services Compensation Scheme.
He also spoke of how cryptocurrency taps into the fear of missing out (FOMO) hype and quoted British research which showed that 2.3 million Britons have invested in such digital tokens. He also said that 14 percent of these crypto investors used credit to buy these tokens
Several news agencies including BBC News and CNBC News contacted both Kim Kardashian and Ethereum Max for comment but have not received any response, as yet.
