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Ben McKenzie on Celebrity Crypto Recommendations from Kim Kardashian, Tom Brady, Lindsay Lohan: It’s a moral disaster.

By on October 13, 2021 0

It was the Instagram story heard on the internet. A British regulator called it is “the financial promotion with the largest audience in history”. A morning consultation investigation found that up to 21% of all American adults and almost half of all cryptocurrency owners had seen this advertisement for a risky financial instrument. By all accounts, the post – probably sponsored for hundreds of thousands of dollars – was a smash success.

Only one person has this kind of power over the doomscrolling Masses: Kim Kardashian, who during the summer posted a story promoting an almost completely unknown new cryptocurrency called Ethereum Max. “Do you like crypto? ? ? »The post read. “This is not about financial advice, but to share what my friends just told me about the Ethereum Max token! A few minutes ago, Ethereum Max burned 400 trillion tokens, literally 50% of their admin wallet, giving back to the entire e-max community Swipe up to join the e-max community At the very end a little hashtag #ad made it clear that the story was paid for.

Screenshot via Instagram

The message was an immediate sensation and a controversial touch. Ethereum Max was only a month old, few had heard of it, and it wasn’t even clear how the “token” was supposed to work. More than that, Kardashian was urging its 251 million Instagram followers to get involved in a highly volatile speculative market that is little different from playing in the world’s most fraudulent casino. The chairman of the UK’s Financial Conduct Authority noted that the token looked like a pump and dump system. In the weeks leading up to Kardashian’s Instagram story, Ethereum Max’s trading volume and price has increased. After Kardashian’s post, the value of Ethereum Max tumbled, potentially leaving many investors in the red. Its price has still not recovered, while the volume of trade is down significantly. At the time of this writing, Ethereum Max is priced at $ 0.00000000002257, according to Coinmarketcap.com. That’s a lot of zeros. If you bought Ethereum Max after Kardashian pushed it and didn’t sell it fast enough, you were left with a virtually worthless digital asset.

Kardashian is at the height of fame, but famous people from top to bottom of the influencer spectrum are invited, and often quite well paid, to gift crypto to legions of devotees looking for a quick path to wealth. . (Ethereum Max also attempted to seal partnerships with other celebrities, from former NBA star Paul Pierce to boxer Floyd Mayweather Jr. to – really – a group of South Florida restaurants.)

It’s not just about cryptocurrencies, but a larger world of untested financial technology. Celebrities lend their names and promotional skills to everything from TVN to crypto exchanges to their own personalized coin offerings. Together, they communicate something clear but terribly misleading: that cryptocurrencies and the many shady areas of this gray market economy offer a path to lasting wealth. The truth is almost always the opposite. Scams are pretty much rampant in the crypto world. A recent estimated report losses in DeFi (or decentralized finance, a booming crypto sub-industry) to $ 681 million in the first seven months of this year. This follows billions of dollars in crypto losses over the past few years due to criminal behavior – hacks, frauds, or “carpet draws,” in which crypto project managers simply run away with it. funds.

The Hollywoodization of crypto is a moral disaster. And for celebrity fans, who probably have a lot less money to spare, it’s potentially financial too. These rich and famous artists might as well offer payday loans or sit their audience at a rigged blackjack table. While the wild swings in crypto can be exciting for some, the rewards for many are delusional, especially once you get past the few cryptocurrencies like Bitcoin and Ethereum (which is a separate entity from Ethereum Max).

So look, I get it. Everyone has to make a living, even in showbiz. I’ve been in this for two decades now, and sometimes you find yourself doing weird things for money. I’m not a snob about this. There is honor in all honest work. For example, I joined the Actors Union by booking my very first voiceover audition. It was 2001, and I had just landed in New York. A friend from the summer theater was showing an ad for Diet Dr Pepper, something about the Holland Globe-trotters. (You understand? It’s very subtle.) After 30 seconds of awkward, non-athletic Dutch men playing basketball in wooden shoes, my character, OFFSCREEN FAN GUY, yells at one of the players, “YOU DA MAN, UTER! »The ad was good (you can judge the results for yourself on Youtube), and for some reason it went on for years, literally changing my life. I made thousands of dollars in desperately needed residue and landed an agent who was convinced I was some sort of voiceover scholar. (When I couldn’t book another voiceover gig, the agent fired me. It’s Hollywood breaks.)

So that’s the game: dancing for passers-by on the street, and if they like your moves, maybe they’ll leave a few dollars in the tip pot. But if you’re lucky and make a name for yourself, the game can change. People are now coming to you asking you to help promote their products.

Now, I’m not even close to the famous Kim Kardashian. She has 257 million followers on Instagram; I have 640,000, which makes her about 400 times more famous than me. Seems about right. But over the years I have been asked to promote a few products. And although I never directly fell for a business as a celebrity, it’s not because I wouldn’t, it’s that the companies that contacted me were terrible and I hadn’t need money. It was always a relatively easy call, and that doesn’t make me a fancy comedian. I still have to manage to make a living. I used to do all kinds of things to promote my own TV shows and movies. (Comic Con talk shows and panels aren’t quite considered backbreaking work, but it’s work, and often you get paid to be there.) Tends to be eye-catching, and it doesn’t is nowhere more evident than in crypto. That Morning Consult poll that I mentioned found that 45% of crypto owners were likely to buy a coin if it was endorsed by a celebrity.

While the idea of ​​famous people being role models may be odd now, our privileged lifestyles and conspicuous consumption may still seem ambitious to some. In short, what we talk about and what we post can move units. Well, maybe not me, a former teen soap opera star from the start and now a father of three. I have become terribly unhip. But what Kim Kardashian or Snoop Dogg is posting is real estate that every marketing executive in the world would love a piece of, and they’re willing to pay a hell of a lot for it. And that’s fine with me, as long as they don’t promote the financial equivalent of Russian Roulette.

To criticize crypto shilling celebrities is not to accuse them as people or to say that I am above taking an easy paycheck. (Call my agent, legitimate businesses with non-fraudulent products!) But I would suggest that we celebrities do some due diligence on what we support, especially when it comes to “investments” »Doubtful. Right now, crypto is a wildly anarchic and unregulated form of Wild West financial capitalism that is fueled by rampant speculation, uncertain coins, and the murky transactions of a few big whales and insiders whose influence on these markets can be larger than most traders realize. You don’t have to trust me: I’m paraphrasing Gary Gensler, the head of the Securities and Exchange Commission, who fears that crypto investors do not have enough specific information on which to base their bets. Or, like Minneapolis Federal Reserve Chairman Neel Kashkari noted, “Cryptocurrency is 95% made up of fraud, hype, noise and confusion. To suggest that people enter these markets as “retail investors” who could get rich is simply unfair and irresponsible.

Whether it’s Lindsay Lohan peddling Five-digit NFT, laser-eyed Tom Brady endorsing – approving The FTX exchange, or Akon promising to build a $ 6 billion crypto-inspired city in Senegal, there is a lot of capital swirling around this industry, and a lot of cause for concern. Celebrities are encouraging their fans to bet on speculative, unproven investments that could soon see a major regulatory crackdown or even outright implosion of the market. We’ve been here before: In 2017, a number of celebrities gave their support to the so-called initial coin offerings for various cryptocurrencies, many of which became worthless after the crypto market crash in 2018. The co-founder of one such coin, Centra, was sentenced this year to eight years in prison for stealing $ 25 million from investors. Centra was boosted by Floyd Mayweather and rapper DJ Khaled, who fines paid to the SEC for failing to disclose that they were paid to sell the coin.

Beyond the unrecognized financial entanglements, there are many issues with what is sometimes politely referred to as the “crypto community”. From its dire environmental cost to crypto exchanges encountering technical issues at seemingly convenient times to a flood of pump-and-empty patterns, the unregulated crypto market is exciting to some but dangerous for most people’s wallets. If celebrities care about the products they promote, they should think twice before supporting these companies. Crypto and blockchain technology may still have an important role to play, but industry executives, venture capitalists and, yes, the rich and famous who are pushing these products haven’t not earned your trust or your money.

Ben McKenzie and Jacob Silverman are working on a book on crypto and fraud.

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