The popularity of cryptocurrency has more than tripled the interest of individuals looking to make a quick buck, searching for passive income avenues and long-term returns.
And, of course, celebrities are not left out of the fanfare. However, celebrity-endorsed cryptocurrencies are becoming the stuff of crypto scams and criminal activities.
Over £2 million has been scammed off investors in 2022, according to a post published by Santander UK. The report detailed increased scam losses of up to 61% from Q4 2021 to Q1 2022. And that is only in the United Kingdom.
Whether with the consent of these celebrities, taking to their platforms to endorse these currencies, or using their names for promotional articles, the rate at which these phony projects have lured “desperate and amateur” investors into losing money is alarming.
Based on this, here are four noteworthy times celebrities approved crypto scams and were fined by the SEC.
Kim Kardashian and The EthereumMax Scam
The American media personality, Kim Kardashian, paid over $1.2 million in penalties to the Securities and Exchange Commission for promoting a dubious cryptocurrency on her Instagram page.
This happened on the 3rd of October after it was revealed that the mega-influencer did not disclose the $250,000 paid by EthereumMax for the post she published.
The influencer agreed to settle out-of-court and cooperate with the ongoing investigation. She has also been banned from promoting crypto securities for three years.
EthereumMax (EMAX) token value has also plunged by 98%, leaving investors who believed in the influencer’s endorsement worse for wear.
Floyd Mayweather and Dj Khaled ICO promotions
In 2018, the music producer Dj Khaled and bóxer Floyd Mayweather were fined a total of $767,500 by the Securities and Exchange Commission for promoting ICOs of various crypto companies after getting paid to do so.
Before the promotions, a report had been announced, mandating anyone promoting ICOs to close their financial relationship with the company. The information explained that ICOs had been added to the classes of securities and that failure to do so would attract penalties.
Mayweather agreed to pay $614,775 to settle the SEC’s charges, and Khaled agreed to pay $150,275. In 2021, Centra Tech- the company Khaled promoted, saw its co-founder receive an eight-year sentence for conducting illegal coin offerings and scamming investors of $25 million.
T.I. And Ryan Felton over Fraudulent ICOs
The Grammy award-winning rapper from Atlanta reached a settlement with SEC for $75,000 on charges of promoting fraudulent ICOs for two companies, Flik and Coinspark.
Clifford Harris Jr., as is his legal name, was fined in September 2020. He participated in posting ads on his social media, selling FLiK tokens online, and posing as the company’s CEO.
Interestingly enough, the Flik company was owned by film producer Ryan Felton, who was also indicted for operating the crypto-based investment scheme. Felton promised investors that their money would be used to fund innovative ventures but was seen spending the funds obtained to furnish his lavish lifestyle.
Jake Paul, Lil Yachty, and Soulja Boy with Safemoon’s “Pump and Dump” Scheme
Jake Paul, Lil Yachty, and Soulja Boy, among other A-listers, faced a class-action lawsuit in February this year over misleading promotions of the Safemoon cryptocurrency.
The class-action lawsuit stated that the celebrities were recruited to participate in a “pump and dump” scheme to get investors into buying Safemoon tokens.
In exchange for their support, they were heavily compensated- making profits while the rug was slowly pulled from under the feet of investors.
Before, the digital token had taken a severe hit, tanking below 86%. Since the lawsuit, key employees have jumped ship, early investors have withdrawn, and the future of Safemoon looks like a perpetual decline from here on.
“If it’s too good to be true, then it isn’t,” should probably be replaced by, “if the celebrity doesn’t have a good history of crypto-related activities, you shouldn’t trust a word they say.”
A cryptocurrency being touted by a celebrity who has never once hopped on a discussion panel, and been credited as one of the builders of the crypto project, carries bright red flags.
As with every celebrity-endorsed crypto scam, the signs are there to see. But you might lose everything if you’re looking for a quick buck or trying to make 100x from a dollar.