The United Kingdom’s Financial Conduct Authority (FCA) has detailed the level of risks that are attached to celebrity promoted digital assets in its latest press statement, warning crypto enthusiasts to stay away from such types of “promoted cryptocurrency.”
According to the FCA, those crypto adverts especially from social media influencers and celebrities tend to lure unsuspecting individuals into buying them without much clarification. It continued that those assets usually are all “hype” with little to no substance.
Speaking at the Cambridge International Symposium on Economic Crime, FCA Chair Charles Randell alleges that “the hype around them generates a powerful fear of missing out from some consumers who may have little understanding of their risks. There is no shortage of stories of people who have lost savings by being lured into the crypto bubble with delusions of quick riches, sometimes after listening to their favourite influencers, ready to betray their fans’ trust for a fee.”
Randell expressed his shock at how naïve investors can be. He warned that many of these firms aren’t regulated thus, investors putting their faith in these firms won’t enjoy the Financial Services Compensation Scheme if things fall apart. “If you buy them, you should be prepared to lose all your money,” Randell said.
Citing Kim Kardashian West promotion of Ethereum Max as an example, the financial regulator top exec noted how the TV star had urged her over 250 million Instagram fans to purchase the token without her providing further information about the asset.
Per Randell’s comment, he highlighted that influencer celebrities usually “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.”
The FCA chairman then called on the government to give the agency the power to deal with false crypto promotions. This way, he believes they would be able to “to find the right balance between appropriate regulation to protect consumers and markets and encouraging useful new ideas in this space.”