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Celebrity backing can make a big difference in the success of a crypto project, but that doesn’t mean the endorsement of a famous person makes it trustworthy.&nbsp;
<a data-ct-non-breakable="null" href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4380845" rel="noopener noreferrer nofollow" target="null" text="null" title="null">According</a> to a 2023 research paper by two former United States Securities and Exchange Commission economists, Joshua White and Sean Wilkoff, there is a link between a celebrity endorsement of a crypto project and the likelihood of its dubiousness.&nbsp;
During their research, White and Wilkoff found that in 2019, 26% of the initial coin offerings (ICO) they examined <a data-ct-non-breakable="null" href="https://cointelegraph.com/learn/initial-coin-offering" rel="noopener noreferrer nofollow" target="null" text="null" title="null">were likely scams</a>. That number increased to nearly 40% by 2023.&nbsp;
<figure><img alt="Celebrities boost crypto projects but don’t guarantee legitimacy" name="" src="https://s3.cointelegraph.com/uploads/2024-09/0191c76a-ccd2-75b6-943e-c40868c0d87a">
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 Source: <a data-ct-non-breakable="null" href="https://x.com/zachxbt/status/1831378023091990727" rel="noopener noreferrer nofollow" target="null" text="null" title="null">ZachXBT</a>
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Speaking to Cointelegraph, Amy-Rose Goodey, managing director of the Digital Economy Council of Australia (DECA) — formerly Blockchain Australia — said celebrity endorsements existed long before crypto.&nbsp;
While they can attract consumer attention, she said a <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/celebrity-tokens-impact-web3" rel="noopener noreferrer nofollow" target="null" text="null" title="null">famous person’s endorsement</a> shouldn’t be the sole factor in determining a project’s legitimacy. Thorough research and a critical eye are the key.&nbsp;
“It always comes down to due diligence and a keen eye for detail. A major red flag would be if all the essential elements are missing,” Goodey said.&nbsp;
<blockquote>
 “Transparency, a clear and realistic roadmap, an experienced and identifiable team, and detailed technical information, leaving only the celebrity endorsement to prop up the project.”
</blockquote>
A number of big names, including sports stars Shaquille O’Neal and Tom Brady, actresses Gwyneth Paltrow and Paris Hilton, and many more high-profile public figures have lent their names to crypto projects that have ended up going bust or disappearing altogether.
<figure><img alt="Celebrities boost crypto projects but don’t guarantee legitimacy" name="" src="https://s3.cointelegraph.com/uploads/2024-09/0191c770-3aaf-70eb-a13e-40dd1e0fdba1">
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 Source: Blockonomi
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According to Goodey, celebrity backing doesn’t always mean a project is untrustworthy and should be avoided as long as all the key elements for success are present and transparent.&nbsp;
“Celebrity endorsements have long been a staple in the marketer’s toolkit across every industry, dating back to the 1700s when ‘royal endorsements’ served as the precursor to modern celebrity branding,” she said.&nbsp;
A lack of transparency isn’t just a red flag for potential investors; it can also attract the attention of regulators.&nbsp;
In March of 2023, eight celebrities, including actress Lindsay Lohan and YouTuber Jake Paul, were among a group of people charged by the SEC for <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/sec-files-lawsuit-against-tron-s-justin-sun-and-celebrities-over-crypto-securities-offering" rel="noopener noreferrer nofollow" target="null" text="null" title="null">not disclosing they were paid</a> to shill a crypto project.&nbsp;&nbsp;
Around the same time, a class-action suit was <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/ftx-influencers-face-1-billion-class-action-lawsuit-over-alleged-crypto-fraud-promotion" rel="noopener noreferrer nofollow" target="null" text="null" title="null">filed against influencers</a> who helped promote the now-defunct crypto exchange FTX without disclosing the compensation they received.&nbsp;&nbsp;
<h2 id="context-is-king-for-judging-celebrity-backing">Context is king for judging celebrity backing</h2>
Robert Hoogendoorn, head of content at blockchain analytics platform DappRadar, told Cointelegraph that celebrity backing for a crypto project isn’t always a red flag.&nbsp;
It often depends on the project and the credentials of the famous person.&nbsp;
“Celebrity-backed crypto projects aren’t always a red flag. For example, various sports heroes have backed fantasy sports platforms,” he said.&nbsp;
<blockquote>
 “However, the moment we step into the area of memecoins and NFT collections, it becomes very dodgy. Those projects often turn out to be rug pulls or scams.”&nbsp;
</blockquote>
CoinGecko <a data-ct-non-breakable="null" href="https://www.coingecko.com/en/categories/meme-token?page=2&amp;items=300" rel="noopener noreferrer nofollow" target="null" text="null" title="null">lists</a> 1,673 memecoins, with a combined market cap of around $38 billion. However, that only scratches the surface.&nbsp;
Over 1.7 million tokens have been <a data-ct-non-breakable="null" href="https://dune.com/jhackworth/pumpfun" rel="noopener noreferrer nofollow" target="null" text="null" title="null">launched</a> via Pump.fun since its launch in January, with less than 1.5% of them ever reaching a total value of more than $63,000.
Related: <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/memecoin-retail-mania-could-go-way-ico-nft" rel="noopener noreferrer nofollow" target="null" text="null" title="null">Memecoin ‘retail mania’ could go the way of ICOs and NFTs, say execs</a>
Since May, several public figures, including Caitlyn Jenner and Jason Derulo, have launched and promoted crypto <a data-ct-non-breakable="null" href="https://cointelegraph.com/learn/fungible-vs-nonfungible-tokens-what-is-the-difference" rel="noopener noreferrer nofollow" target="null" text="null" title="null">tokens</a> using their likeness.&nbsp;
Crypto analytics firm Bubblemaps has <a data-ct-non-breakable="null" href="https://x.com/bubblemaps/status/1794863211721973944" rel="noopener noreferrer nofollow" target="null" text="null" title="null">claimed</a> to have witnessed onchain <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/iggy-azalea-anti-scam-plan" rel="noopener noreferrer nofollow" target="null" text="null" title="null">insider activity</a> <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/celebrity-crypto-tokens-absolutely-catch-sec-attention-say-lawyers" rel="noopener noreferrer nofollow" target="null" text="null" title="null">during several of these coin launches</a>, with some wallets profiting millions of dollars.
Overall, Hoogendoorn said it’s often safer to be skeptical of a project backed by a celebrity, especially “when they praise a certain token you’ve never heard of, you know the project paid $50,000 for the shoutout.”
However, he added that there are exceptions out there, depending on the context.&nbsp;
“In general, celebrities promoting crypto projects tends to be a major red flag, and we’ve seen that with various celebrities, tokens and NFT [non-fungible token] collections,” he said.&nbsp;
“However, celebrities genuinely backing a project through investment rounds should not necessarily be considered a red flag. There’s a difference there.”
<h2 id="celebrity-scam-ads-are-a-whole-different-beast">Celebrity scam ads are a whole different beast&nbsp;</h2>
Ken Gamble, executive director and chairman of international private intelligence and cyber investigations firm IFW Global, told Cointelegraph that a celebrity advertising a crypto project could be a red flag in certain cases.&nbsp;
Related: <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/ai-deepfake-crypto-scams-2024" rel="noopener noreferrer nofollow" target="null" text="null" title="https://cointelegraph.com/news/ai-deepfake-crypto-scams-2024">AI deepfake crypto scammers ramp up operations in Q2: Gen Digital</a>
In his experience, there are a staggering number of fake celebrity crypto ads shilling products online that are scams, stealing famous people’s likenesses and voices through <a data-ct-non-breakable="null" href="https://cointelegraph.com/learn/deepfakes-how-to-spot-fake-audio-and-video" rel="noopener noreferrer nofollow" target="null" text="null" title="null">deepfake technology</a> and artificial intelligence.&nbsp;
<figure><img alt="Celebrities boost crypto projects but don’t guarantee legitimacy" name="" src="https://s3.cointelegraph.com/uploads/2024-09/0191c771-ff6b-7c97-9dd1-d7f7069ad70a">
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 Cyber investigator Ken Gamble says he has been monitoring fake celebrity endorsement adverts on social media for some years now. Source: Ken Gamble&nbsp;
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In these cases, the celebrity might not even know they have endorsed a product. As was <a data-ct-non-breakable="null" href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4380845" rel="noopener noreferrer nofollow" target="null" text="null" title="null">the case with billionaire Australian mining tycoon</a> Andrew Forrest.&nbsp;
In July of 2022, he <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/meta-loses-section-230-defense-andrew-forrest-crypto-scam-ads-suit" rel="noopener noreferrer nofollow" target="null" text="null" title="null">launched legal proceedings against Meta</a> over Facebook ads that used deepfakes of his image to promote scam crypto schemes after discovering them online.&nbsp;
“As a subject matter expert in international cyber fraud, I have never seen a genuine endorsement of a crypto project by a real celebrity,” Gamble said.&nbsp;
<blockquote>
 “However, there are cases where lower-level sports stars have been lured into spruiking fake investment schemes.”&nbsp;
</blockquote>
Australia’s competition watchdog, the Australian Competition and Consumer Commission (ACCC), has also <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/australia-regulator-claims-58-percent-crypto-ads-facebook-scams" rel="noopener noreferrer nofollow" target="null" text="null" title="null">launched legal action against Meta</a> over the prevalence of fraudulent celebrity scam ads on the platform.&nbsp;
The ACCC says over half the ads on Facebook prompting crypto projects are scams. Meta <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/meta-denies-claim-more-half-facebook-crypto-ads-are-scams" rel="noopener noreferrer nofollow" target="null" text="null" title="null">refutes this number</a> and claims it has done quite a bit to curb the problem.&nbsp;
According to Gamble, “the bulk of the celebrity enforcement adverts on Facebook are generated and manufactured by organized crime groups,” who market them across the world in multiple languages.&nbsp;
<figure><img alt="Celebrities boost crypto projects but don’t guarantee legitimacy" name="" src="https://s3.cointelegraph.com/uploads/2024-09/0191c773-1dd5-7bdf-9f78-04e1879835d9">
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 Scammers have started stealing famous people’s likenesses through deepfake technology and AI to promote sham projects. Source: Ken Gamble
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He says most of the sham ads he has seen came from one source: Israel. Specifically, a company called Conversion Masters generated leads for the binary options industry but has since switched to crypto scam ads.&nbsp;&nbsp;
Magazine: <a data-ct-non-breakable="null" href="https://cointelegraph.com/magazine/whales-humpy-gaming-dao-votes-solutions/" rel="noopener noreferrer nofollow" target="null" text="null" title="null">Crypto whales like Humpy are gaming DAO votes — but there are solutions</a>
“The ads get the attention of the victims, and their objective is to get ‘First Time Deposits’ for criminal gangs operating the fraudulent trading websites,” he said.&nbsp;
“The criminal scammers then contact the victim directly, build a relationship online and pressure them into investing more and more, until they lose everything.”

Celebrities boost crypto projects but don’t guarantee legitimacy

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Cointelegraph

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