- Paris Hilton endorsed Shiba Inu’s play last week.
- Influencers like Matt Damon, Reese Witherspoon, Kim Kardashian or Floyd Mayweather have been criticized for promoting virtual currencies without showing the risks.
- Other celebrities like Logan Paul or Paul Pierce might face legal troubles for promoting cryptos.
Paris Hilton’s support for Shiba Inu via her Twitter account didn’t stop the coin meme from continuing to plummet. Analysts believe that the downtrend in Shiba Inu prices may continue and the meme token may face further losses.
Also Read: Why Shiba Inu’s Price Is Back Where It Was Trading A Year Ago
Australian influencers face up to five years in prison
Influencers targeting financial investors, commonly referred to as “finfleuncers”, now face up to five years in prison for violating Australia’s financial advice laws. The Australian Securities and Investments Commission (ASIC) says influencers may need a license to provide investment advice.
A survey conducted by ASIC revealed that 33% of investors aged between 18 and 21 follow influencers. The survey found that 64% of young people in Australia have their behavior influenced by influencers and their endorsements.
ASIC Commissioner Cathie Armor reportedly said:
Influencers who discuss financial products and services online comply with financial services laws. If they don’t, they face significant penalties and put investors at risk.
ASIC has published an information sheet to guide influencers. The notice provides a number of examples of statements that may constitute financial advice and cautions against misleading or deceptive statements about financial products. A violation of the guidelines could be considered an event where the influencer broke the law.
Aleks Nikolic, a financial investment influencer on Instagram, TikTok, and Twitter, found the document helpful in creating content.
I think these are some of their clearest and best communications they have ever issued, possibly ever. Obviously everyone is going to be trying like crazy to comply now, but that was the point.
Interestingly, ASIC pointed out that sharing affiliate links that direct investors to online brokers could be considered financial advice and may require a license.
The British Financial Conduct Authority warns of caution with influencers
The Financial Conduct Authority (FCA) is the conduct regulator for around 51,000 financial services companies and markets in the UK. In February 2022, the authority called for caution when using influencers to market financial products and shared financial advice.
The watchdog was quoted as saying:
Leveraging social media influencers on various platforms to market investments through retail investing is becoming more and more important to us. Businesses should ensure they obtain appropriate legal advice to understand their responsibilities before using influencers.
FCA Chairman Charles Randell has slammed cryptocurrency-promoting influencers, accusing them of promoting a “get-rich-quick illusion.”
The UK Treasury addressed the threat of crypto asset promotions and misleading financial advice by proposing new legislation in January 2022. These laws subject “eligible crypto assets” to the same rules as other financial promotions that apply to stocks, shares, and insurance. some products.
Spain has announced new rules for advertising crypto assets
In January 2022, the Spanish National Securities Market Commission, also known as the CNMV, announced its intention to introduce new rules for cryptocurrency advertising. This includes the promotion of cryptocurrency assets on social media platforms by influencers.
Spain has therefore tasked its stock market observatory with approving mass campaigns and with responsibility for ensuring investors are aware of the risks involved.
The Spanish government had issued an official bulletin to advertisers asking them to notify the CNMV at least 10 days in advance and share the content of campaigns targeting more than 100,000 people.
The volatility of cryptocurrency assets has drawn the attention of regulators around the world, and financial authorities fear that the financial system could be at risk if crypto assets and their influencer marketing activities are not monitored.
Logan Paul and Dink Doink fall apart
Logan Paul is the influencer behind unblocking his followers’ investments in an asset called Dink Doink. Paul told his six million Twitter followers that all he cares about is a new cryptocurrency called Dink Doink.
Paul did not reveal that he was friends with the creator of the project. Dink Doink was actually their joint brainchild and received a large grant from the cryptocurrency upon its launch. As investors poured capital in hopes of earning shares in an animated character that would entitle them to a share of the profits if he appeared in a TV show or movie, Dink Doink’s price dropped to a fraction of a cent, wiping out almost everything from its market value. Paul faced backlash and criticism from his followers.
Matt Damon slammed for Crypto.com ad
Matt Damon, a popular Hollywood star, persuaded investors to buy Bitcoin or other cryptocurrencies through his Crypto.com ad, which read, “Fortune smiles on the brave.” Investors who bought bitcoin near its all-time high are currently under water and have far fewer funds than their original investment.
When Damon appeared in commercials that aired on TV and online, it was a turning point for the crypto community, a mass euphoria since Bitcoin’s price broke $58,000 in October 2021.
Matt Damon in a Crypto.com ad
Crypto influencers are digging for gold and looking for the next dogecoin
Kim Kardashian, Floyd Mayweather, and Paul Pierce are other influential celebrities known to have made millions of dollars endorsing shady cryptocurrencies. These celebrities have urged their followers to pour money into dark rooms that collapse overnight or collections of less popular NFTs.
There have been instances where personal and financial ties to projects promoted on their social media addresses have not been disclosed and this is considered a potential violation of state marketing regulations.
John Reed Stark, former head of the Internet Law Enforcement Branch at the Securities and Exchange Commission, has criticized such behavior by influencers, saying:
They have this shameless cashing in on celebrities and the like who aren’t at all disinterested or impartial. There is a lot of damage potential.
Reese Witherspoon recently confused her followers with a bizarre tweet about “crypto wallets”, “digital identities”.
The Hollywood star tweeted on January 11, 2022:
In the (near) future everyone will have a parallel digital identity. Avatars, cryptocurrency wallets and digital assets will be the norm.
In the (near) future everyone will have a parallel digital identity. Avatars, cryptocurrency wallets and digital assets will be the norm. Do you expect it?
— Reese Witherspoon (@ReeseW) January 11, 2022
Witherspoon asked her followers if they were planning to do this, and there was no specific reason for sending the tweet. However, Witherspoon was soon hit with “scam art,” which drew criticism for misleading cryptocurrency advertising and a lack of disclosure.
Claims for tortious advertising and financial advice
There have been instances where influential celebrities have been criticized through investor lawsuits. Kim Kardashian, Floyd Mayweather and Paul Pierce are currently on trial for marketing EthereumMax, an obscure cryptocurrency project.
Kim, Floyd and Paul are among seven celebrities targeted by the lawsuit. The popular ‘The Kardashians’ star had asked more than 200 million followers on her Instagram,
Do you like crypto???? This is not financial advice but sharing what my friends just told me about the Ethereum Max token!
Kim Kardashian’s EthereumMax action
EthereumMax has lost 97% of its value in seven months and the celebrities who promoted the token are now in hot water. Ryan Huegerich filed the class action lawsuit Jan. 7 in US District Court for the Central District of California, alleging these celebrities for doing so
making false or misleading statements to investors regarding EthereumMax through social media advertisements and other promotional activities.
An EthereumMax representative told The Wall Street Journal that Kim Kardashian’s post was purely to raise awareness of the project and its usefulness.