A recent poll reveals negative findings on retail investors’ apparent propensity to heed digital asset advice from celebrities and influencers’ social media profiles.
Influenced By Celebrities
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 supported by a celebrity.
Three-quarters of crypto investors said they would invest based on a family member or friend’s recommendation. While 81% said they would support based on financial adviser advice.
Almost one-third of crypto-owners and nearly 20% of all users were aware of a post on Kim Kardashian’s Instagram account in early June. She was promoting the ERC-20 token Ethereum Max (EMAX). Although just 3.8% of those who viewed the Instagram post acknowledged investing in Ethereum Max subsequently. They made up a staggering 19% of the entire group.
Ethereum Max [EMAX]
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 fight on June 6 between unbeaten boxer Floyd Mayweather and YouTuber celebrity Logan Paul. The price of EMAX skyrocketed.
Before the announcement, EMAX was trading for as little as $0.00000000073 (nine zeros). However, the word of its association with the boxing event sent prices soaring to $0.00000085 (six zeros) by June 1. A gain of almost 116,000 per cent in only one week.
Ethereum Max lost more than 99 per cent of its value in less than two weeks. After that celebrity Kardashian announced to her 250 million Instagram followers on June 13 that 50 per cent of the EMAX tokens no more exists.
The token was selling as low as $0.0000000076 (seven zeros) before the Instagram post went live. However, by June 14, it had risen to $0.000000235 (six zeros), a 3,000% gain in less than two days.
Since mid-June, EMAX has been drifting downhill. The token last changing hands for $0.000000021(seven zeros). This is a 91% drop from local highs following Kim Kardashian’s Instagram endorsement.
Financial authorities noted the event, with Charles Randell, the chairman of the U.K.’s Financial Conduct Authority, calling the Kardashian’s Instagram post as potentially the single “financial promotion with the biggest 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 celebrities 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 pushing cryptocurrency to their social media following. Moreover, she is unlikely to be the last.
The U.S. Securities and Exchange Commission in 2018 accused Floyd Mayweather and artist DJ Khaled. The accusations were on the charges of illegally marketing the Centra initial coin offering (ICO) the previous year.
While the SEC has cautioned celebrities that sponsored ICO advertisements on social media must be disclosed, many celebrities are already promoting their own nonfungible tokens in the midst of the NFT boom.