NerdWallet has recently decided to revisit a very unusual occurrence in the advertising realm — celebrity crypto endorsements.
In a brief, but highly succinct rundown of the phenomenon and all the events that preceded and anteceded it, NerdWallet explains why celebrities are not the best sources of investment advice.
SEC Gets Involved...
According to NerdWallet, recent Securities and Exchange Commission (SEC) involvement suggests that something is rotten in the state of celebrity crypto endorsements.
Earlier this month, SEC charged Kim Kardashian for touting a crypto asset security “without disclosing the payment she received for the promotion.” Additionally, she now cannot promote crypto for a full three years.
“Celebrities and others are using social media networks to encourage the public to purchase stocks and other investments,” stated the SEC. “These endorsements may be unlawful if they do not disclose the nature, source and amount of any compensation paid, directly or indirectly, by the company in exchange for the endorsement.”
...Because Celebrities Were Involved In the First Place
For unlawfully promoting a little-known EthereumMAX, which now happens to be in a downward spiral, Kardashian has to pay $1.26 million in penalties. On top of that, SEC forfeited the $250,000 she failed to disclose.
However, she is not a lone case in the subversive world of celebrity crypto endorsements.
Among many other celebrities, Matt Damon, Larry David and Tom Brady all decided to climb aboard the crypto endorsement hype train.
In 2021, everything appeared to be going great for crypto, and inviting others to join the party seemed like a relatively harmless marketing ploy.
Only it was neither harmless, nor good investment advice, and it’s got a lot of people stuck with depreciating digital coins. More importantly, SEC doesn’t look too kindly on any scheme fueled by hype alone.
“Whatever comes next, it should be a system in which all investors have access to actionable, material data, and it should be a system that reduces the potential for manipulative conduct,” states the SEC on its website. “Such a system should lead capital to flow efficiently to the most promising projects, rather than being diverted by mere hype or false claims.”
From Crypto Boom to Crypto Gloom
A lot has happened since the golden crypto age of 2021.
Most importantly, May 2022 and the beginning of this year’s “crypto winter.”
Celebrities that used to endorse cryptocurrencies have gone silent, even when NBC News directly reached out to them for comments.
There might be good actors and there might be bad actors in the crypto-promoting business. If it looks too good to be true, it probably is.
Also, it’s frequent for these promoters to not understand what they’re touting in the first place, as was the case with Larry David who made light of his lack of understanding of the new technology in a commercial for FTX.
But, as NerdWallet concluded, “personal investing is usually a lot less exciting than it looks on TV.” Social media is not the place to go to for investment advice, no matter the person’s motives.