Tuesday, November 29, 2022
Published 1 Year Ago on Saturday, Sep 11 2021 By Associated Press
A British financial regulator concerned about the lack of rules for online promotion of cryptocurrencies has called out celebrity influencer Kim Kardashian West’s use of her Instagram account to pitch Ethereum Max to her followers.
Charles Randell, chair of the Financial Conduct Authority, said Kardashian was recently paid to ask her 250 million Instagram followers to speculate on crypto tokens by “joining the Ethereum Max Community.”
He noted Kardashian disclosed that the post was an ad, as required by Instagram’s rules.
“But she didn’t have to disclose that Ethereum Max – not to be confused with Ethereum – was a speculative digital token created a month before by unknown developers – one of hundreds of such tokens that fill the crypto-exchanges,” Randell said in a speech Monday to the Cambridge International Symposium on Economic Crime, according to a transcript posted online.
Randell said he didn’t know whether Ethereum Max was a scam. “But social media influencers are routinely paid by scammers to help them pump and dump new tokens on the back of pure speculation,” Randell said. “Some influencers promote coins that turn out simply not to exist at all.”
Email requests for comment were sent to Kardashian West’s representative and Ethereum Max.
Until recently, digital currencies, like Bitcoin, have been left largely unregulated by major governments but recent comments by officials like Randell indicate they’re now paying more attention.
Last month, Gary Gensler, the new chairman of the Securities and Exchange Commission, said investors need more protection in the cryptocurrency market, which he said was “rife with fraud, scams and abuse.”
Randell said the Financial Conduct Authority had repeatedly warned about the risks of holding speculative tokens, which unlike mainstream investments aren’t covered against loss by U.K. government compensation programs.
To help people avoid scams, Rendell says the authority publishes a list of unregistered crypto exchanges that it suspects are operating in the U.K.
He also said paid advertising, which is the main source of online investment scams, isn’t covered by the U.K. government’s upcoming online safety legislation but should be.
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