Charles Randall, chairman of the British financial regulator, cited the example of an ad for the Ethereum Max token that Kim Kardashian posted on her Instagram and warned users against investing in such coins.
The Chairman of the UK Financial Conduct Authority (FCA) Charles Randall warned of the risks of buying cryptocurrencies that are being promoted by celebrities on social media.
Randall argues that users purchase such tokens out of fear of lost profits and do not understand the risks of potential losses.
“There are already quite a few stories about people who have been lured into the cryptocurrency bubble and have lost all their savings due to the get-rich-quick mania.
Sometimes this happens after people listen to their idols, who are ready to betray the trust of fans for a fee, ”said the FCA chairman during the Cambridge International Symposium on Economic Crime.
Randall emphasized that a significant proportion of consumers buy cryptocurrency are confident that they are regulated by the authorities.
The head of the financial regulator noted that investors in Crypto assets have no protection and will not be able to receive compensation under the FSCS scheme if they lose their money on it.
During his speech, Randall cited Kim Kardashian Instagram ad for the Ethereum MAX token as an example.
The post was marked as advertising, but Kardashian did not tell her 250 million subscribers that the altcoin was created only a month ago by anonymous developers, the chairman of FCA said.
“I’m not sure if this token is a fraud or not. Influencers, on the other hand, frequently get money from scammers and assist them in using social media to “pump” and “dump” new tokens based on sheer guesswork. Randall said, “Some influencers are advocating currencies that don’t exist at all.”
The Ethereum MAX token was also advertised by boxer Floyd Mayweather. He went to weigh-in before the fight against blogger Logan Paul in a T-shirt with the logo of the new cryptocurrency.
It was also used to sell tickets for the fight. Altcoin ads also appeared in New York’s Times Square as part of the fight’s promotion.
In October 2018, investors in the fraudulent ICO project Centra, promoted by Mayweather, filed a lawsuit against him .
The deceived clients accused the boxer and producer DJ Khaled of involvement in the company and demanded damages.
In November of the same year, the SEC forced Mayweather to return $ 300 thousand of misappropriated funds, pay a $ 300 thousand fine and $ 14.7 thousand as interest for the period before the decision was made.
DJ Khaled received a $ 100,000 fine, an obligation to return $ 50,000 of misappropriated funds and a $ 2.7K interest.
