"Influencers are routinely paid by scammers to help them pump and dump new tokens," a U.K. official says.
The UK’s Financial Conduct Authority has criticized celebrities — including Kim Kardashian West — for promoting “untested” cryptocurrencies.
Charles Randell, who chairs the City watchdog, made his remarks after the A-lister promoted Ethereum Max to her 250 million followers on Instagram.
Although she did note that her post was an advertisement, Randell expressed concerns that there might have been a lack of due diligence about the token.
Randell said Kardashian’s post “may have been the financial promotion with the single biggest audience reach in history.” He added:
“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. Some influencers promote coins that turn out simply not to exist at all.”
Although watchdogs like the FCA have been keen to caution investors against gaining exposure to cryptocurrencies, so far there has been little success to introduce regulations.
Randell noted that the FCA doesn’t have a remit to enforce regulations on tokens — and said their decentralized nature would mean that the projects themselves would need to seek registration or authorization. Such a scenario seems unlikely. He added:
“Action against businesses which choose not to bring themselves within the reach of an effective national regulator needs to be international, with regulators across the world working together to limit the harm.”
In the U.S., the Securities and Exchange Commission has charged a number of celebrities who backed initial coin offerings — with some receiving fines.