The head of the UK’s financial watchdog dog highlighted an Instagram ad posted by Kim Kardashian, which promoted Ethereum Max, in a speech warning of the risks of “speculative” cryptocurrency tokens.
Charles Randell, chairman of the UK Financial Conduct Authority, said in a speech on Monday that Kardashian had asked more than 250 million Instagram followers to “speculate on cryptocurrencies” by joining the Ethereum community Max “.
He added that the publication “may have been the financial promotion with the largest audience reach in history.”
CNBC contacted Kim Kardashian through one of her companies and Ethereum Max for comment, but received no response at the time of writing.
Randell acknowledged that Kardashian had indicated that the post was an ad, according to Instagram rules.
“But it didn’t have to reveal that Ethereum Max, not to be confused with Ethereum, was a speculative digital token created a month earlier by unknown developers, one of hundreds of these tokens that fill cryptographic exchanges,” he said. Randell at the Cambridge International Symposium on Economic Crime.
Randell said that while he couldn’t say if Ethereum Max was specifically a scam, he noted that “scammers routinely pay social media influencers to help them pump and throw new tokens out of pure speculation.” .
He added that some influencers had promoted tabs that looked like they didn’t even exist.
“Be prepared to lose all your money”
Randell stressed that there are no real-world assets or cash flows that support the value of cryptocurrencies, even in the case of more established tokens like bitcoin.
He explained that these tokens have only existed for “a few years”, so investors have not seen how they work through a full market cycle.
In addition, Randell noted that cryptocurrency tokens are not regulated by the FCA, nor are they covered by the UK Financial Services Compensation Program, which offers reimbursements for losses on certain investments or other financial products.
“If you buy them, you should be prepared to lose all your money,” Randell said.
Despite these risks, Randell said the hype surrounding cryptocurrency “generates a powerful fear of losing some consumers.”
“There is no shortage of stories of people who have lost savings by being lured into the cryptocurrency with fast-paced wealth delusions, sometimes after listening to their favorite influencers, willing to betray their fans’ trust for a payment, ”he said.
He cited the FCA survey, published in June, which estimated that 2.3 million Britons currently invest in cryptocurrency, 14% of whom used credit to buy these tokens.
Randell suggested that the FCA believed that social media platforms such as Instagram, Facebook, Twitter and TikTok should be required to adhere to legislation that prevents companies not authorized by the regulator from promoting ads for financial products. .
The Treasury of the United Kingdom and the Bank of England are currently studying the creation of an official digital witness, based on the value of the real currency, known as the “stable currency”.
El Salvador became the first country in the world to convert Bitcoin into legal tender on Tuesday, and President Nayib Bukele revealed that the country had bought the cryptocurrency worth nearly $ 21 million before the new law went into effect.
Take a look at: The original “Doge” meme was sold as NFT for $ 4 million; you can now own a piece for less than $ 1