Photo: Liv Oeian (Shutterstock)
Earlier this month, the US Securities and Exchange Commission (SEC) announced fees against Kim Kardashian for promoting crypto on social media without disclosing that she was paid to do so. Kardashian agreed to settle for $1.26 million, but she’s far from the only big celebrity Push Crypto Products without making it clear that their posts were sponsored. And that’s not to mention the fact that these crypto assets later lost value.
We recently explained it why you shouldn’t listen to “financial gurus” and we’ve touched on similar issues when it comes to the kind of advice you can get from “Experts” on TikTok. This is also why you should think twice before taking crypto (or financial) advice from your favorite celebrities.
Celebrities need to be crystal clear about paid advertising
The SEC explains that celebrity promotions for investments may be unlawful if they do not clearly state that they are paid promotions. This has historically applied to all types of investment advice, but the SEC’s warnings are increasingly focused on celebrities pushing assets in the highly volatile world of crypto. Unfortunately, the “#ad” in the corner of an Instagram video is often overlooked.
“This is a highly speculative asset class and when a celebrity or influencer is promoting it, is it important for the public to understand that relationship and are they getting paid? And how much are they getting paid on their Instagram page? That’s what this was about,” SEC Chairman Gary Gensler said CNBC in an interview about the agency’s allegations against Kim Kardashian.
Be skeptical of crypto advice
At the end of the day, celebrities will offer advice that’s better for them than it is for you. Here are some things to consider before following celebrity post advice, according to the SEC:
- Is this investment advice actually paid advertising? Investors should note that celebrity endorsements may appear unbiased but may instead be part of a paid promotion.
- Are there other reasons for this investment? Investment decisions should not be based solely on the recommendation of a promoter or any other person.
- What are their credentials? Celebrities who endorse an investment often do not have sufficient expertise to ensure that the investment is appropriate and complies with federal securities laws.
- Did you do your own research? If you rely on a specific endorsement or recommendation, learn about the relationship between the promoter and the business and consider whether the recommendation is truly independent or a paid advertisement.
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Money.com agrees “Listen to the experts who recommend doing your own research ‘instead of taking the word of your favorite celebrity,’ who is most likely getting paid to tell you what a company wants you to hear. And remember that compared to stocks and bonds Crypto is particularly risky. If you take this risk, make sure you are well informed and don’t let paid celebrities guide you.
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