A new survey has revealed grim information about the apparent willingness of retail investors to take advice on digital assets from celebrity and influencer social media accounts.
According to a Morning Consultant survey of 2,200 American adults, 45% of respondents with cryptocurrencies said they would be likely to seek exposure to a digital asset if endorsed by a celebrity, compared to just 20. % of participants overall.
There were more promising results, with three-quarters of crypto investors indicating they were likely to invest based on a recommendation from a family member or friend, while 81% would invest in response to advice from a financial advisor.
Almost 20% of all respondents and almost a third of crypto owners said they were aware of an article posted on Kim Kardashian’s Instagram account regarding the ERC-20 Ethereum Max (EMAX) token early June. An astonishing 19% of respondents who saw the Instagram ad admitted to investing in Ethereum Max afterwards, but they made up only 3.8% of the overall sample.
The post and the project have been embroiled in controversy ever since. The price of EMAX has grown dramatically after it was announced on May 26 as “the exclusive accepted cryptocurrency for online ticket purchases” for the up-to-date boxing match between undefeated boxer Floyd Mayweather and the YouTuber Logan Paul on June 6.
As EMAX traded for as low as $ 0.0000000073 (nine zeros) before the announcement, news of its affiliation with the boxing event saw prices skyrocket above $ 0.00000085 (six zeros) on June 1 – a gain of over 116,000% in just one week.
After Ethereum Max then lost more than 99% of its value in less than two weeks, Kardashian released the announcement on June 13 to its 250 million followers which pointed out that 50% of EMAX tokens held by the wallet d administration of the project had been burnt.
While the token traded less than $ 0.000000000076 (seven zeros) before Instagram’s post according to CoinMarketCap, EMAX reached $ 0.000000235 (six zeros) on June 14 – a gain of 3000% under two days.
EMAX has consistently trended lower since mid-June, with the last token trading hands for $ 0.0000000021 (seven zeros) – a 91% drop from local highs following approval from Kim Kardashian’s Instagram.
The incident has not gone unnoticed by financial regulators, with UK Financial Conduct Authority chief Charles Randell describing Kardashian’s Instagram post as perhaps the only “financial promotion with the largest audience in the world. the story”. He added:
“I cannot say if this particular token [Ethereum Max] is a scam. But social media influencers are regularly paid by crooks to help them pump and dump new tokens on the back of pure speculation. Some influencers promote pieces that just turn out to be non-existent. “
Kim Kardashian isn’t the first celebrity to incur the wrath of financial watchdogs for promoting crypto assets to their social media followers, and she’s unlikely to be the last, too.
Related: Australian Watchdog issues warning on fake celebrity-endorsed crypto ads
In 2018, the United States Securities and Exchange Commission accused Floyd Mayweather and musician DJ Khaled of illegally promoting the initial Centra coin offering (ICO) the previous year.
While the SEC has warned celebrities to disclose paid promotions for ICOs on social media, many celebrities are now creating their own non-fungible tokens amid the NFT boom.