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The UK financial watchdog FCA has cautioned on the dangers of buying crypto-assets hyped by celebrities like Kim Kardashian. The head of the UK’s Financial Conduct Authority (FCA), Charles Randell, criticized Kim Kardashian for promoting an untested cryptocurrency on Instagram.
He noted that Ms. Kardashian advertised the little-known cryptocurrency Ethereum max to more than 200 million Instagram followers. Ms. Kardashian did not reveal the amount she got for the advert. However, a 2019 court filing revealed she could earn up to £361,000 for a single Instagram post.
Randell referred to Ethereum max as a speculative digital token formed just recently by unknown developers. He said that influencers are placing investors at risk by pushing obscure crypto tokens. Consumers with little understanding of the risks enter crypto with delusions of quick riches and the fear of missing out.
The FCA suggests tokens backed by influencers could be counterfeit. Consequently, the warning possibly targeted younger investors.
In a speech on the difficulties controlling crypto, the UK’s Financial Conduct Authority chair said Kardashian’s post was probably the financial promotion with the single most considerable audience reach in history.
Still, he noted it was a good instance of how celebrity influencers can entice investors into buying potentially fake tokens. Paris Hilton and DJ Khaled are among the several other celebrities to have hyped crypto projects.
The FCA Should Protect Investors
Charles Randell suggests regulators should carry more powers to secure consumers. He added that if people buy speculative crypto tokens, they should be ready to lose all their money.
The FCA has summoned online platforms like Facebook, Microsoft, TikTok, and Twitter to join Google by committing to stop promoting advertisements for financial products unless an FCA authorized firm has cleared them.
Kardashian’s spokesperson didn’t respond immediately to requests for feedback sent through email and LinkedIn. Furthermore, Randell did not accuse her of any crime.
The FCA doesn’t regulate the class of tokens mentioned by Randell. Still, it has published a log of unregistered crypto exchanges operating in the UK for the sake of investors’ safety.