The Financial Conduct Authority (FCA) of the United Kingdom has singled out Kim Kardashian for pumping a crypto token that could put investors at risk. Kardashian’s cryptocurrency promotion “may have been the financial promotion with the single largest audience reach in history,” according to the FCA chairman, who has 250 million Instagram followers.
According to a regulator, Kim Kardashian promotes a cryptocurrency token that could put investors at risk.
Charles Randell, the chairman of the United Kingdom’s Financial Conduct Authority (FCA) and Payment Systems Regulator (PSR), has singled out celebrity Kim Kardashian in a new warning about cryptocurrency scams. Kardashian is a media personality, socialite, model, and businesswoman from the United States. She married pro-bitcoin rapper Kanye West but divorced him earlier this year.
Randell discussed “the risks of token regulation” and “rules that protect people from investment fraud and scams” in his speech Monday at the Cambridge International Symposium on Economic Crime.
“We’ll work with online platforms who want to protect both consumers and their own brands – and we’ll call out those who aren’t playing their part and are destroying the trust of their users,” he said when explaining how online platforms can provide scam advice to help investors avoid making bad decisions. Randell went on to say:
Which leads me to Kim Kardashian. When she was recently paid to ask her 250 million Instagram followers to speculate on crypto tokens by ‘joining the Ethereum Max Community,’ it may have been the most successful financial promotion in history.
While admitting that Instagram’s rules required Kardashian to disclose that her post was an advertisement, Randell contended that “she didn’t have to disclose that Ethereum Max — not to be confused with Ethereum — was a speculative digital token created a month before by unknown developers – one of hundreds of such tokens that fill the crypto-exchanges.”
According to the FCA’s president:
Of course, I have no idea if this particular token is a scam. However, scammers frequently pay social media influencers to help them pump and dump new tokens based on pure speculation. Some influencers promote coins that turn out to be completely fictitious.
Despite the risks, Randell believes that “the hype surrounding them generates a powerful fear of missing out [FOMO] from some consumers who may have little understanding of their risks.”
Randell went on to talk about regulations, saying, “It will take a great deal of careful thought to craft a regulatory regime that will be effective in the decentralized world of digital tokens.”
He went on to say that “it is clear that legislators must consider three issues.” The first is about “how to make it more difficult for digital tokens to be used in financial crime.” The second is “how to encourage useful innovation,” and the third is “the extent to which consumers should be free to purchase unregulated, purely speculative tokens and accept responsibility for their decisions.”
The chairman of the FCA described:
Meanwhile, it appears to me that there are two cases where regulators should have the authority to take action to reduce the potential harm to consumers from purely speculative tokens, not least to ensure that bad actors in this space do not destroy trust in the overall technology.
The first is crypto promotions, he said, emphasizing that “a surprisingly large proportion of people buying these speculative tokens appear to believe they may already be regulated.” He went on to say, “The second issue is the risk of contagion of authorized firms’ regulated business by unregulated activities in digital tokens.”