A new survey reveals 45% of crypto owners are willing to adopt digital asset advice from celebrities and influencers’ social media accounts, and they would purchase a crypto asset based on an endorsement.
According to a Morning Consultant poll of 2,200 U.S. adults, 45% of crypto-holders said they would be more willing to invest in a digital asset if it was sponsored by a celebrity, compared to only 20% of all participants.
Three-quarters of crypto investors said they would invest based on a family member or friend’s recommendation, while 81 percent said they would invest based on financial professional advice.
Almost one-third of crypto owners and nearly 20% of all respondents were aware of a post on Kim Kardashian’s Instagram account in early June promoting the ERC-20 token Ethereum Max (EMAX).
Although only 3.8 percent of those who viewed the Instagram post admitted to investing in Ethereum Max subsequently, they made up a staggering 19% of the whole group.
Since then, the post and project have been dogged by criticism. After being announced on May 26 as “the exclusive cryptocurrency accepted for online ticket purchasing” for the cash-grab boxing bout on June 6 between unbeaten boxer Floyd Mayweather and YouTuber Logan Paul, the price of EMAX skyrocketed.
Prior to the announcement, EMAX was trading for as little as $0.00000000073 (nine zeros), but word of its affiliation with the boxing event sent prices soaring to $0.00000085 (six zeros) by June 1 – a gain of over 116,000 percent in only one week.
After Ethereum Max lost more than 99 percent of its value in less than two weeks, Kardashian announced to her 250 million Instagram followers on June 13 that 50 percent of the EMAX tokens held by the project’s admin wallet had been burnt.
According to CoinMarketCap, the token was trading as low as $0.0000000076 (seven zeros) before the Instagram post went live, but by June 14 it had risen to $0.000000235 (six zeros), a 3,000 percent gain in less than two days.
Since mid-June, EMAX has been trending downhill, with the token last changing hands for $0.000000021(seven zeros) – a 91 percent drop from local highs following Kim Kardashian’s Instagram endorsement.
Financial authorities took notice of the episode, with Charles Randell, the chairman of the UK’s Financial Conduct Authority, calling the Kardashian’s Instagram post as probably the single “financial promotion with the largest audience reach in history.” He continued, “
“I can’t say whether this particular token [Ethereum Max] is a scam. But social media influencers are routinely paid by scammers to help them pump and dump new tokens on the back of pure speculation. Some influencers promote coins that turn out simply not to exist at all.”
Kim Kardashian is far from the first celebrity to face backlash from financial regulators for advocating cryptocurrency to their social media followers, and she is unlikely to be the last.
Floyd Mayweather and artist DJ Khaled were charged by the US Securities and Exchange Commission in 2018 with illegally marketing the Centra initial coin offering (ICO) the previous year.
While the SEC has advised celebrities that paid ICO marketing on social media must be disclosed, many celebrities are now promoting their own nonfungible tokens in the midst of the NFT boom.