Crypto boosters such as Matt Damon, Reese Witherspoon, and Gwyneth Paltrow have been criticized for hyping virtual currency without highlighting the risks.
Enthusiasm for Crypto from Hollywood celebrities and top athletes reached a fever pitch over the past year. On social media, during interviews, and even in music videos, they portrayed virtual currency as a world with its own hip culture and philosophy — one that was more inclusive than traditional finance and involved the chance to make loads of money.
Punters inspired to invest in crypto assets on the back of celebrity endorsements must be prepared to ‘lose the entire amount, a market watchdog has warned, adding that there’s no chance for compensation.
Many Hollywood stars, including Matt Damon, Reese Witherspoon, and Gwyneth Paltrow, have promoted a host of cryptocurrencies over the past year.
But according to an analysis by The Times, those who took their advice would have seen the value of their investments plummet in the months since.
According to official figures from last year, there are now more than 2.3million crypto investors based in the U.K., but the actual number is likely much higher.
Nikhil Rathi, chief executive of the Financial Conduct Authority, the City regulator, told the Times: ‘The value of many crypto assets is exceptionally volatile. If you consider putting any of your money into these products, you need to be ready to lose the entire amount.
‘We need to be quite clear that compensation is not available for losses. It wouldn’t be reasonable for healthy financial firms and their consumers to pay for these assets’ losses.’
Matt Damon told his Twitter following in a video ad for Crypto.com that ‘Fortune favors the brave’ – but those who have invested would have seen a loss of 50 percent on their investment.
During the pandemic, interest in cryptocurrencies boomed, with the market growing from $780billion in 2021 to $1.23trillion in 2022.
But only last week, the world’s second-largest cryptocurrency, Ethereum, joined the ‘crypto winter,’ which saw digital currencies crash, losing investors billions and fuelling fears that it is the starting point of a more comprehensive stock market crash.
Cryptocurrencies are a form of digital money that uses mathematics to create a unique piece of code that customers invest in.
Reese Witherspoon told her Twitter following that ‘Crypto is here to stay – but the markets have fallen by 44 percent.
John Terry co-founded the collectible digital image collection Ape Kids Football Club NFTs, which has lost 86 percent on average.
Bitcoin was the original digital currency started in 2009 to bypass central banks. An increasing number of offshoot currencies have been founded in recent years, and digital art called non-fungible tokens.
They have all been sharply decreasing in value over the past week, including one currency that lost 98 percent of its value as fears for the global economy spread and investors started selling off risky assets.
Gwyneth Paltrow promoted Bitcoin on Twitter in December last year as part of a paid promotion for Cash App, a U.S. money transfer app. More than $200billion (£160million) was wiped off the cryptocurrency market on 12 May alone. Times analysis would suggest those who invested in Bitcoin would have seen their investment lose 35 percent.
The Financial Conduct Authority said that it was hard to curb the public’s enthusiasm for high-risk cryptocurrencies. ‘With celebrities as varied as Kim Kardashian and Larry David willing to take money to promote speculative crypto, how do we curb people’s enthusiasm to do something that may seriously harm their financial lives?’
Matt Damon told his Twitter following in a video ad for Crypto.com that ‘Fortune favors the brave’ – but those who have invested would have seen a loss of 50 percent on their investment.
Gwyneth Paltrow promoted Bitcoin on Twitter in December last year as part of a paid promotion for Cash App, a U.S. money transfer app. Times analysis would suggest those who invested in Bitcoin would have seen their investment lose 35 percent.
Reese Witherspoon told her Twitter following that ‘Crypto is here to stay – but the markets have fallen by 44 percent.
Kim Kardashian faces legal action from investors who have sued the celebrity for advertising the cryptocurrency EthereumMax, allegedly a scam. It has crashed by 97 percent since she promoted it to her Instagram following of over 250 million.
Other types of crypto assets, called Non Fungible Tokens (NFTs), which are digital certificates in the form of a piece of art, video, or music, have been flogged by celebrities, including footballer Paul Pogba who promoted Cryptodragon NFTs. They have declined by 87 percent on average.
Pogba told his Twitter following that the NFT Cryptodragon, which can be used in online gaming, had sold for nearly $160,000, but they are now selling for as little as $35.
In some cases, influential figures attaching their names — and finances — to the burgeoning form of currency carries implications beyond their padded wallets, physical or digital.
Marc Beckman is a marketing professor at New York University. Typically, when you see celebrities start to adopt and use something new, you reach the tipping point where it’s going to spill over to the masses,” he said.
One of the preeminent voices leveling criticism at these stars is the actor Ben McKenzie, best known for his lead role in T.V.’s “The O.C.” In a column written last year for Slate, he described Kardashian’s post as “urging her 251 million Instagram followers to get involved in a highly volatile, speculative market that’s little different than gambling in the world’s most fraudulent casino.” (Kardashian’s follower count is now at 284 million.)
McKenzie has since written more for Slate alongside journalist Jacob Silverman, with whom he is collaborating on a book about cryptocurrency. The thesis generally boils down to the title of that first column: “Celebrity crypto shilling is a moral disaster.” Even if Crypto and blockchain technology has great potential, McKenzie states, the executives, venture capitalists, and celebrities pushing them “haven’t earned your trust — or your money.”
- Celebrity endorsements of cryptocurrencies have increased over the past year
- The number of U.K. based crypto investors is up to more than a 2.3 million in 2022
- Punters investing after celebrity backing should be ‘prepared to lose entirety.’
Sources:
https://www.dailymail.co.uk/news/
https://www.washingtonpost.com/arts-entertainment/2022/02/04/celebrities-cryptocurrency-nfts/
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