The head of the United Kingdom’s financial watchdog criticized an Instagram ad posted in June by Kim Kardashian that promoted the cryptocurrency Ethereum Max and used it as an example of rampant speculation in the cryptocurrency market.
Charles Randell, chair of the UK‘s Financial Conduct Authority, said in a speech Monday that Kardashian was “paid to ask her 250 million Instagram followers to speculate on crypto tokens by ’joining the Ethereum Max Community.‘”
Randell added that “it may have been the financial promotion with the single biggest audience reach in history.”
He appeared to be referencing a June post in which Kardashian asked her followers: “Are you guys into crypto???” and a short clip of her speaking about ethereummax with “#ad” written at the bottom of the post.
Randell acknowledged that she disclosed the post was an ad, “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,” he said.
“Of course, I can’t say whether this particular token is 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,” he added.
“Some influencers promote coins that turn out simply not to exist at all.”
He noted that, unlike stocks issued by companies with real operations, cryptocurrencies have nothing underpinning the value of their tokens and warned that the recent surge in interest in cryptos “may not end well.”
Randell added that the FCA does not moderate cryptos, so they’re not covered by the UK’s Financial Services Compensation Scheme, which reimburses citizens for losses on certain investments.
“If you buy them, you should be prepared to lose all your money,” Randell said of speculative cryptos.
For months, celebrities have played a key role in hyping up various cryptocurrencies. Tesla CEO Elon Musk helped drive wild price swings in Bitcoin and Dogecoin earlier this year as he tweeted about his opinion of the cryptocurrencies.
Celebrities Snoop Dogg and Gene Simmons also helped drive the price of Dogecoin higher earlier this year when they weighed in on Twitter.