However, the crypto space is notoriously unstable, and the collapse of once-established companies such as Celsius and FTX are stark examples of how people can lose billions of dollars in crypto assets almost overnight.
For this reason, influential celebrities should be fully informed about a crypto product before promoting it. With so much at stake, this is a point that should not be overlooked by anyone in the industry.
Due to these huge risks, regulators are now asking questions about the ethics of celebrities using their massive appeal to lure people into crypto. And they don’t stop there; more and more jurisdictions are imposing strict conditions on celebrities to pledge crypto products to the masses.
1/ Let’s review all the direct scams Bitboy has worked with in the past. Just in case you forgot, here’s the flyer with how much he charges.
I received this a while ago posing as a project interested in promotion.
— ZachXBT (@zachxbt) January 3, 2022
For example, in the European Union, a new set of regulations known as the MiCA laws will require crypto-influencers to fully disclose the financial risks associated with the products they advertise.
Singapore is putting in place even stricter measures. The city-state will only allow crypto companies to advertise their products on their own platforms while completely banning influencers from promoting any crypto assets on social media.
What about tech entrepreneurs boosting crypto on social media?
While restricting or banning celebrities and social media influencers from pushing crypto is laudable, another question remains unanswered. What to do with billionaire entrepreneurs whose words have the power to influence the trajectory of crypto?
Twitter’s new owner, Elon Musk, is a known crypto proponent and a big fan of Dogecoin (DOGE). As an example of his massive influence in the crypto space, on Tuesday, April 25, just hours after his intention to buy Twitter became public knowledge, the price of memecoin jumped almost 23% to 0.1677. $. This price was the highest since January 14, when it traded at $0.2032.
Related: It’s time for crypto fans to stop supporting personality cults
And that wasn’t the only time: Several of Musk’s DOGE-related posts and comments from last year also drove the price of the cryptocurrency up or down, depending on the sentiment Musk shared.
Another influential voice in crypto is Binance CEO Changpeng Zhao, better known as CZ. A casual tweet from him announcing that his company was creating an industry recovery fund to help mitigate the ill effects of FTX’s collapse caused the price of Bitcoin (BTC) and the broader Bitcoin market to surge. cryptography. Although CZ did not specify which projects the fund would support, or when it would become active, the news still sent BTC prices soaring to nearly $17,000.
We must consider the power of these individuals in terms of influencing what we buy or sell. Regulators can’t treat Musk and CZ like regular people. Their words carry too much weight, especially for an industry as volatile as crypto.
Some have suggested that a Twitter argument between CZ and former FTX CEO Sam Bankman-Fried may have been the spark that started the fire that burned FTX to the ground. These people can’t use their words so frivolously, especially not on social media.
And, while CZ has since refuted claims that he shorted the FTX token, can we believe this to be true? After all, Binance had the most to gain from FTX’s collapse as it now becomes the largest crypto exchange in the world.
It might sound controversial, but there could be a case for Musk and CZ to have their activities regulated as well. After all, their voices have significant influence in the crypto space. A fanciful social media post from someone in a rarefied position can create significant upheaval in the crypto market.
Unfortunately, such regulation might seem like an attack on their freedoms. Therefore, the best solution, in my opinion, would be for them to be more careful in what they say. With great power comes great responsibility, and people like them should lead by example by watching what they say. It would be a shame if regulations were needed for them to do so.
Advantages and Disadvantages of Celebrity Crypto Promotions
We saw how Kim Kardashian and Floyd Mayweather were sued for illegally promoting crypto tokens. New Yorker Ryan Huegerich sued Mayweather, accusing the boxer of misleading investors while promoting the EMax token. The Securities and Exchange Commission, meanwhile, fined Kardashian.
The biggest problem with using celebrities to advertise crypto? Although they usually have a huge and enthusiastic following, their audience, more often than not, has little to no knowledge of crypto. Additionally, celebrities often have no idea of the risks associated with the products they promote.
Of course, the advantage of famous influencers who endorse crypto is the inevitable buzz they create and the vast network of influence they command. Kardashian, for example, has over 250 million followers on Instagram. Plus, these followers are usually hard-wired to trust the opinions of celebrities, no matter how uneducated they may seem.
Related: The SEC is bullying Kim Kardashian, and it could chill the influencer economy
But, celebrities are also prisoners of the court of public opinion. Any PR blunder on their part could easily crash and burn a crypto project.
And did I mention how expensive celebrities can be? Reports say that a promotional post on Kim Kardashian’s Instagram page will set you back between $300,000 and $1 million.
Regulations will no doubt help protect us against bad crypto decisions, but our best defense is a clear eye and plenty of research. Nothing beats digging into as much information as you can about a project before investing your money in it.
The crypto winter has wreaked untold havoc on investments, and it has been exacerbated by the reckless actions of some major industry players. The downfall of companies such as FTX, Voyager, 3AC, Terra, Celsius, and BlockFi only strengthens calls for crypto regulation.
Amid the drama, the role of celebrity endorsers should not be overlooked. As an industry, we need to find ways to ethically leverage celebrity popularity to promote our products.
In addition to working with the laws in place, I think it would be best for crypto projects to thoroughly educate potential celebrity advertisers on the benefits and risks of their products. That way, influencers will be in a better position to paint a truer picture of what they’re selling rather than settling for a big paycheck. I believe a little honesty will go a long way in mending crypto’s tattered reputation.
Anastasia Cor is the chief marketing officer and board member of crypto firm Choise.com. Prior to joining the company, she earned degrees in economics and management from Gubkin State University of Oil and Gas, in addition to a master’s degree in marketing. She previously worked as a Marketing Manager for CINDX Platform.
The author, who revealed his identity to Cointelegraph, used a pseudonym for this article. This article is for general informational purposes and is not intended to be and should not be considered legal or investment advice. The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Famous people often have a huge influence on the attitudes we adopt and the decisions we make. For this reason, the crypto industry has increasingly taken advantage of these people to promote their products.
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