Why are celebrities still promoting scamcoins?

It’s January 2022, Gweneth Paltrow has tweeted out a picture of the Bored Ape that she’s just bought, Ozzy Osbourne has launched his collecting of 9,666 pixelated bat NFTs CryptoBatz and Shaq O’Neil is prompting his NFT/metaverse project Astrals.

It seems like the celebrities have caught the crypto bug and want it.

And since then we’ve had everyone from Lindsey Lohan and Paris Hilton with their NFT collections, Soulja Boi and DJ Khaled with their fan tokens and Oleksandr Usyk promoting various blockchain projects and Mike Tyson saying he’s “all in” on Solana.

But these celebrities haven’t been orange-pilled into the wonders of decentralisation. They aren’t all in on the importance of a censorship resistant form of money, and they definitely wouldn’t be able to tell you about the benefits of the smart contract powered decentralised worth computer that is Ethereum.

No, they are simply being paid huge bags of money to promote crypto projects they have never heard of in order to make themselves and the key members of the projects very rich.

Why would anyone be surprised by this though? Celebrities with any significant instagram and TikTok following and frequently doing #ad posts with little to zero interest or due diligence in the products they are promoting. If you need any more proof of how little attention these celebrities pay then take a read of this 2019 investigation by the BBC where influencers promoted a cyanide drink: https://www.bbc.co.uk/news/newsbeat-50837267 .

Recently this is back in the news after Caitlyn Jenner (of the Kardashian clan) launched the $JENNER memecoin, saw it rise to a $25m marketcap and then (whilst she was on the golf course), saw it all disappear as SHE was rugged by the project developer.

Usually it’s just the token holders who get rugged so this at least balances things out somewhat!

In typical crypto craziness, initially people thought her Twitter account had been hacked when she out of the blue promoted the token and asked followers to send her their favourite memecoins. However it’s since come to light that Caityln, as well as potentially 5 other celebrities just that week, had been working with a memecoin developer called Sahil who entice them to launch crypto projects with the promise of quick riches, lied to them about their token holdings and instead filled up liquidity pools with the tokens, only to then sell them off after the celebrity posted the token information.

This reddit thread has a great breakdown of Sahil’s MO and the other celebrities he’s duped: https://www.reddit.com/r/solana/comments/1d2724h/warning_be_careful_with_recent_celeb_coins/

This also isn’t the first time that one of the Kardashian’s has landed in hot water for promoting a crypto scam. Back in June 2021, Kim Kardashian, alongside Flloyd Mayweather and Paul Pierce, promoted Ethereum Max on her instagram and was later fined $1.26m by the SEC after it was found that she has been paid (and not disclosed) $250,000 for shilling the token.

Celebrities such as Lil Yachty, Soulja Boy, Ne-Yo and Akon have also been charged by the SEC and ordered to pay multi-hundreds thousand dollar fines. (Finally some SEC action we can all get behind!) but this recent Sahil-based situation shows that celebrities are being systematically taken advantage of by crypto scammers who are duping them into duping their own following.

Should celebrities be doing WAY more due diligence before promoting something to their millions of influenceable followers. Absolutely! Should celebrities who promote financial products (like NFTs and cryptocurrencies) be held accountable if these turn out to be scamcoins or rug pulls? Absolutely! Should the scammers taking advantage of these celebrities also be held accountable? Absolutely!

This is a situation where the crypto savvy are scamming newbies who are excited to get into the industry. Either lulled by a false promise of riches, or drawn in by the innovation of the industry. Either way, this puts a black mark against our industry, fills up BBC headlines about how unsafe the crypto space is and that all crypto is used for is scams.

We therefore need regulatory and enforcement bodies to go hard against scammy crypto promotions and promoters, and step up our industry efforts to educate those who are fresh to the space so that they know to stay clear of scamcoins like these.

Hopefully just this graphic alone should be evidence that celebrity endorses cryptocurrencies are one to AVOID!

And now Vitalik has weighed in on the topic with his thoughts that a celebrity token must either;

• Have some kind of public good rather than just being a fot-profit for the celebrity
• Have a fun mechanism that people can gather around e.g DAO token voting
• Focus on a long term goal and purpose rather than a bubble and pop

“The north star should be: to have a project where even if eventually all tokens involved go to zero, the average person who participated is happy to have done so.”

It’s safe to say that scant few of the celebrity endorsed and created tokens right now fulfill that higher purpose or the individual items Vitalik has raised.

Originally published at https://www.linkedin.com.