However, the crypto space is notoriously fickle, and the collapse of once-established companies like Celsius and FTX are stark examples of how people can lose billions of dollars in crypto assets almost overnight.
For this reason, celebrity influencers should be thoroughly educated about a crypto product before promoting it. With so much at stake, this is a point that should not be overlooked by anyone in the industry.
Because of these huge risks, regulators are now asking questions about the ethics of celebrities using their considerable appeal to lure people into crypto. And they don’t stop there; more jurisdictions set strict conditions for celebrities to pledge crypto products to the masses.
1/ Let’s review all the direct scams that Bitboy has worked with in the past. Just in case you forgot here is the flyer with how much he is asking.
I received this a while back by posing as a project interested in a promotion.
— ZachXBT (@zachxbt) January 3, 2022
For example, in the European Union, a new set of regulations known as MiCA laws will require crypto-influencers to fully disclose the financial risks associated with the products they advertise.
Singapore is introducing even stricter measures. The city-state will only allow crypto companies to advertise their products on their own platforms, while completely barring influencers from promoting any crypto asset on social media.
What about tech entrepreneurs promoting crypto on social media?
While banning celebrities and social media influencers from pushing crypto may be laudable, another question remains unanswered. What should be done about billionaire entrepreneurs whose words have the power to influence the trajectory of crypto?
Twitter’s new owner, Elon Musk, is a well-known crypto advocate and a big Dogecoin (DOGE) fan. As an example of its massive influence in the crypto space, the memecoin’s price jumped nearly 23% to $0.1677 on Tuesday, April 25, just hours after its intention to buy Twitter became public. That price was the highest it had been since January 14, when it traded at $0.2032.
Related: It’s time for crypto fans to stop supporting cults of personality
And it wasn’t the only time: Several of Musk’s DOGE-related posts and comments from the past year have also caused the cryptocurrency’s price to either rise or fall, depending on the sentiment Musk shared.
Binance CEO Changpeng Zhao, better known as CZ, is another influential voice in crypto. A casual tweet from him announcing that his company is creating a business recovery fund to help ameliorate the ill effects of FTX’s collapse caused a surge in the price of Bitcoin (BTC) and the broader crypto market. While CZ did not specify the projects the fund would support, or when it would become active, the news still sent BTC prices soaring to nearly $17,000.
We must consider the power of such individuals in influencing what we buy or sell. Regulators can’t treat people like Musk and CZ like normal people. Their words carry too much weight, especially for an industry as volatile as crypto.
Some have suggested that a Twitter spat between CZ and former FTX CEO Sam Bankman-Fried may have been the spark that started the fire that burned FTX to the ground. These people cannot use their words so lightly, especially on social media.
And while CZ has since refuted the claims that he shorted the FTX token, can we trust that this is true? After all, Binance could benefit the most from FTX’s collapse, as it now becomes the largest crypto exchange in the world.
This may seem controversial, but there could be a case for the likes of Musk and CZ to have their activities regulated as well. After all, their votes have significant influence in the crypto space. A funny social media post from someone in their outspoken position can cause significant upheaval in the crypto market.
Unfortunately, such regulation can feel like an infringement on their freedoms. Therefore, the best solution, in my opinion, would be for them to show greater caution in their statements. With great power comes great responsibility, and people like them should lead by example by watching what they say. It would be a shame if it required regulation to do so.
Pros and cons of famous crypto promotions
We’ve seen Kim Kardashian and Floyd Mayweather face legal action for illegally promoting crypto tokens. New Yorker Ryan Huegerich sued Mayweather, accusing the boxer of misleading investors while promoting the EMax token. The Securities and Exchange Commission has since fined Kardashian.
The biggest problem with using celebrities to advertise crypto? Although they usually have large and avid fans, their audiences, more often than not, have little, if any, knowledge of crypto. Additionally, celebrities are often clueless about the risks associated with the products they promote.
Of course, the benefit of celebrity influencers endorsing crypto is the inevitable buzz they create and the vast network of influence they provide. For example, Kardashian has more than 250 million followers on Instagram. Moreover, these followers are usually determined to trust the opinions of celebrities, however uneducated they may sound.
Related: The SEC is bullying Kim Kardashian, and it could chill the influencer economy
But celebrities are also prisoners of the court of public opinion. Any PR mistake on their part can easily crash and burn a crypto project.
And did I mention how expensive celebrities can be? Reports suggest that a promotional post on Kim Kardashian’s Instagram page will set you back anywhere between $300,000 and $1 million.
Regulations will undoubtedly help protect us from bad crypto decisions, but our best defense is a clear eye and lots of research. Nothing beats digging up as much information as possible about a project before you put your money into it.
Crypto winter has wreaked unprecedented havoc on investments, and it has been compounded by the careless actions of some major players in the industry. The fall of companies such as FTX, Voyager, 3AC, Terra, Celsius and BlockFi only strengthens calls for the regulation of crypto.
Amid the drama, the role of celebrity endorsers should not be overlooked. As an industry, we need to find ways to ethically leverage celebrity popularity to promote our products.
In addition to working with the laws being introduced, I think it would be best if crypto projects thoroughly educated potential celebrity advertisers about the benefits and risks of their products. This way, influencers will be better placed to give a better image of what they are selling rather than just settling for a big paycheck. I believe that a little honesty will go a long way in restoring crypto’s tarnished reputation.
Anastasia Kor is the chief marketing officer and a board member of the crypto firm Choise.com. Prior to joining the company, she received degrees in economics and management from Gubkin State University of Oil and Gas, in addition to a master’s degree in marketing. She previously worked as a Marketing Manager for CINDX Platform.
The author, who disclosed their identity to Cointelegraph, used a pseudonym for this article. This article is for general informational purposes and is not intended to and should not be construed as legal or investment advice. The views, thoughts and opinions expressed here are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Famous people often have a tremendous influence on the attitudes we adopt and the decisions we make. For this reason, the crypto industry has increasingly employed such individuals to promote their products.