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The Scam Market
When a project seems to lack any practical usefulness, and the business idea behind it is suspicious, it is often a scam. The newfound complexity and unfamiliarity of the cryptocurrency sector is a ripe area for all types of such scrupulous activities.
As one considers knowing about and investing in different projects in the cryptocurrency ecosystem, it is essential to be aware of the possibilities of losing one’s investments. Scamming is the elaborate process of taking advantage of uninformed individuals or organizations and using ignorance to get away with their money. Scamming has always been prevalent anywhere money or wealth is involved.
Compared with other ways of stealing money, the main feature of a crypto scam is that it usually takes advantage of people’s trust and negligence. Currently, the cryptocurrency market is not regulated enough to protect people from scams, so it is common among digital currencies.
Within the cryptocurrency community, the word scam is often applied to dubious startups and initial coin offerings (ICOs). To promote such startups and ICOs, the organizers go out of their way marketing and reaching as many people as possible. Sometimes, they even manage to get their product advertised by people with huge communities of followers.
Let us follow up on one of the biggest celebrity scam events in the cryptocurrency market history.
Not Everyone is Smart Enough
Scams are highly common in the crypto market. Through the years, there has been quite a long list of scamming techniques in the crypto market. As the area is nascent and unfortunately quite complex, it is easy for the few to overwhelm the many by making all sorts of false promises. Above that, when celebrities, which people follow dearly and blindly, start supporting such scams, it becomes difficult to differentiate scams from actual good projects.
All scamming techniques are unique in their way, trying to steal money from innocent investors looking to make a quick buck. The following is a list of some of the most famous and well-known celebrities getting stuck in the world of Crypto Scams.
Top 4 Celebrity Crypto Victims
Cryptocurrency scamming techniques vary in their degree and complexity. A new and enthusiastic investor is easily dejected by the overwhelming amount of information they need to consume to stay ahead in the space. Numerous celebrities have gotten caught up in promoting cryptocurrency, getting big money to endorse virtual currency companies on their social media accounts. Let us look at a few of them.
DJ Khaled and Floyd Mayweather
Both Floyd and Khaled were hired by a two crypto protest to promote their ICO. Floyd went as far as tweeting, “You can call me Floyd Crypto Mayweather from now on” when talking about the projects. With all the attention, it didn’t take long for the authorities to notice.
In late 2018, Floyd Mayweather and DJ Khaled failed to report their ICO endorsement earnings to the SEC. Because of this, they have the dubious honor of being the first cases of touting violations involving ICO’s with the SEC.
Without admitting or denying the findings, Mayweather and Khaled agreed to pay whatever was asked by the SEC. Mayweather agreed to pay $300,000 in disgorgement, a $300,000 penalty, and $14,775 in prejudgment interest. Also, Mayweather agreed not to promote any securities, digital or otherwise, for three years.
On the other hand, DJ Khaled agreed to pay $50,000 in disgorgement, a $100,000 penalty, and $2,725 in prejudgment interest. Khaled, too agreed to a similar ban, but only for two years.
Martial Artist, actor, and influencer Steven Seagal, also joined the growing list of celebrity crypto victims. On February 27, 2020, the U.S. Securities and Exchange Commission announced settled charges against Seagal for failing to disclose payments he received for promoting investment in an initial coin offering (ICO) conducted by Bitcoiin2Gen (B2G).
Seagal was promised $250,000 in cash and $750,000 worth of B2G tokens in exchange for his social media promotions and a press release in which he “wholeheartedly” endorsed the ICO. This, along with other activities, were direct violations of the anti-touting provisions of federal securities laws. Without admitting or denying the SEC’s findings, Seagal agreed to pay $157,000 in disgorgement, representing the actual payments he received for his promotions, plus prejudgment interest and a $157,000 penalty. Seagal also agreed not to promote any securities, digital or otherwise, for three years henceforth.
Paris Hilton is a model, ambassador, and businesswomen in America. She is touted to have about 100 million+ fan following across social media. Paris was approached by a sketchy project, asking to promote their ICO over her various social media accounts. She made several tweets and put up Instagram posts advertising the project. And with that, the hassle followed.
In September 2018, Hilton announced via Twitter that she would be participating in the initial coin offering. According to Business Insider, the project was LydianCoin, a platform that combines blockchain with AI-driven marketing.
Soon enough, after receiving several red flags and questions from the SEC, Hilton appeared to distance herself from the project. It was also reported that domestic violence charges had been filed against Gurbasksh Chahal, CEO of LydianCoin’s parent company Gravity4. Since then, Paris had been barred from advertising any such project.