Financial institutions have one goal: to sell. But marketing departments may go too far by hiring celebrities and influencers to promote financial products that they may not understand.
For this reason, the UK’s Financial Conduct Authority (FCA) issued a warning on Monday through its website about the dangers of buying crypto assets promoted by influencers like Kim Kardashian, via social networks.
The authority warned that people with little understanding of the risks are buying cryptocurrencies out of fear of missing out on some fad phenomenon.
In June, TV celebrity Kim Kardashian released an ad promoting cryptocurrency Ethereum Max to her audience of more than 250 million followers on Instagram.
According to the social network’s rules, the celebrity explained that it was an advertisement with the hashtag #AD, but did not make clear that Ethereum Max, which should not be confused with Ethereum, was a recently created virtual digital token and therefore unknown to the developers, FCA President Charles Randle explained in a letter released. At the Cambridge International Symposium on Economic Crime.
“Of course, I can’t tell if this token is a scam. But scammers often pay social media influencers to help them give away new tokens based on only guesswork.”
According to a statement issued in May and consulted by El Economista, the purported creators of Ethereum Max have categorized it as an “exclusive cryptocurrency” accepted for purchasing tickets to sporting events. The first of them, and the only one to date, was the boxing match between Floyd Mayweather and Logan Paul on June 6, 2021 in Miami, Florida.
Regulatory bodies around the world are already working hard to identify and regulate providers of virtual assets. Mexico already has a Fintech law by which it intends to regulate certain aspects of the use of cryptocurrencies and avoid risks such as money laundering.
The FCA monitors good financial services sales and promotion practices for around 51,000 service firms in the UK.
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