Celebrity influencer endorsements continue to backfire
Each day, Coinrule will run through the state of the digital assets market for Blockbeat, your home for news, analysis, opinion and commentary on blockchain and digital assets.
The latest twist in the saga of celebrities endorsing low quality crypto projects to their followers happened last Sunday. Caitlyn Jenner, Olympic Gold winner and Fox news moderator, posted a link to memecoin launch site pump.fun to her 3.3 million followers on X. The post included a Solana contract address. The message was so out of character that many initially thought her account had been hacked. She later confirmed via a video that her support was real. In a 24 hour period, Caitlyn continued to post messages about her support for the token. In the meantime, the developer behind the project sold his holdings and proceeded to launch other influencer tokens.
While Jenner’s token is for now holding its Market Cap following the initial hype around the bizarre episode, it follows in the wake of major failed celebrity endorsement for cryptocurrencies. Floyd Mayweather, Soulja Boy and many others promoted projects that experienced price drops of 70-100% to their followers. Some of these projects turned out to be scams. Tom Brady and Gisele Bündchen were just some of the long list of famous celebrity endorsements for the exchange FTX. The exchange famously collapsed in November 2022 amid large-scale criminal conduct.
To many crypto natives “crypto” is short for cryptography, not memecoins. Their interest is in the technology and its applications. To such crypto natives it is obvious that some projects that seek celebrity endorsement are probably not going to be around for long. However, many retail participants are less savvy and suffer the consequences. The continuous damage to the industry’s reputation is large.
Regulators and law enforcement are slowly catching up. The football player Cristiano Ronaldo was named in a $1 billion class-action lawsuit in a US district court in Florida. According to the lawsuit, Ronaldo’s NFT campaign with Binance constituted illegal promotion. Other influencers have lost court cases against the US Securities and Exchanges Commission (SEC), but overall prosecution has been rare, for now. The sense in the industry is that regulators have been too busy pursuing legitimate projects instead of outright scams and false promotions. Maybe this market cycle will finally be different but by recent evidence we are not off to a good start…
(The views and opinions expressed in this article are those of the authors and do not represent those of Morning Wire, its affiliates, or employees.)