Why crypto has been a sticky spot for celebrity endorsements
By Andy Rosen
Why you should question the motives of any digital asset
This article is reprinted with permission from NerdWallet. The investment information provided on this page is for educational purposes only. NerdWallet does not provide advisory or brokerage services, nor does it recommend that investors buy or sell particular stocks, securities or other investments.
Cryptocurrencies’ journey this year from the moon back to Earth has put the brakes on a peculiar 21st-century phenomenon: the elusive celebrity crypto-endorsement.
Matt Damon, Larry David and Tom Brady have all gone silent on crypto as advertising dollars in the industry have evaporated along with investor interest, according to recent reports.
And Kim Kardashian couldn’t even talk about crypto if she wanted to, since the Securities and Exchange Commission has barred her from promoting crypto for three years
SEC takes notice
This latest move by the SEC serves as a reminder that Super Bowl commercials and celebrity social media accounts may not be the best source of investment advice. People who bought into the height of cryptomania may not recoup their investment for years – if ever – depending on the coin they bought. And some of the stars who signed up to market risky digital assets may now wish they had steered clear.
During Kardashian’s settlement with the SEC, the ubiquitous influencer also paid a million-dollar fine and forfeited $250,000 — which she was allegedly paid to talk up the obscure token EthereumMax through Instagram — plus interest. (Kardashian admitted no wrongdoing.)
Meanwhile, EthereumMax trades for less than a millionth of a cent. That’s down about 99% from its peak shortly before Kardashian started promoting it in June 2021.
Celebrity endorsements exist throughout society, from car advertising to medical devices and political campaigns. But when Joe Montana talks about Medicare plans, the SEC won’t come knocking. Crypto, on the other hand, has been a particularly troublesome place for paid spokespeople, in part because of the sector’s reliance on hype to drive its rapid growth — and the explicit rules the SEC has in place around this very thing.
Pump up that crypto spirit
Early-stage crypto projects often offer influencers and average citizens rewards for promoting the project through social media. These cryptocurrency “airdrops” can be legitimate ways to get a new asset circulating in the market and help people learn about it.
But there are sometimes darker motives in the discourse surrounding certain cryptocurrencies. Some developers have been accused of promoting their cryptocurrencies not out of a genuine belief in the product, but as a way to increase demand before they sell and go away. This is known in both SEC parlance and Reddit message boards as the dreaded “pump and dump.”
See: Was Cryptocurrency Kim Kardashian Promoted a Pump and Dump? Some investors think so
The SEC has been keeping an eye on celebrity crypto tips for half a decade. In 2017, the agency issued a statement urging investors to question the motives of any digital asset holdings.
“Celebrities and others use social media to encourage the public to buy stocks and other investments,” the SEC said at the time. “These endorsements may be illegal if they do not disclose the nature, source and amount of compensation paid, directly or indirectly, by the company in exchange for the endorsement.”
One year after the SEC ruling, boxer Floyd Mayweather Jr. and musician DJ Khaled agreed to SEC-imposed penalties after being accused of violating those rules with their own crypto projects. (They also admitted no wrongdoing.)
Watch: As Kim Kardashian Gets Fined by SEC, Law Professor Says It’s ‘Easy to Convince People’ to Buy Crypto
Fortune favors … who?
It wasn’t until cryptocurrency’s historic bull run in 2021 that the cryptocurrency/celebrity symbiosis really took off. As the asset class established itself closer to the mainstream, centralized crypto exchanges sought household names to help market their products.
Instead of pitching individual investments, this latest collection of celebrity endorsements from the likes of Tom Brady, Larry David and others took the more conservative approach of talking about crypto in general. Crypto was confusing but cool. It was a bold, forward-thinking choice for true leaders.
In a commercial for the crypto exchange FTX, Larry David makes light of his own lack of understanding of the new asset class. In another, Tom Brady and Gisele Bündchen call all their friends to announce that they’re “getting into crypto.”
And in a much-discussed (and often ridiculed) spot for Crypto.com, Matt Damon makes the biggest overtures as he encourages viewers to put their money into crypto.
“In these moments of truth,” says Damon, “these men and women—these mere mortals, just like you and me—as they peer over the edge, they calm their minds and steel their nerves with four simple words that have been whispered by the intrepid since Roman times: Fortune favors the brave.”
More: Here’s how losses for celebrity-endorsed digital assets stack up
As it turned out, it might have made more sense for crypto buyers to stand a little further from the edge. Even major cryptocurrencies like Bitcoin are trading at about a third of what they were worth last year.
In May 2022, as the crypto market tumbled like a chastened Wile E. Coyote, NBC News contacted 10 celebrity crypto figures including David and Damon. None of them made any comments.
No matter what a celebrity tells you, personal investing is usually a lot less exciting than it looks on TV. Most people are well served by a diversified portfolio that includes a mix of different asset classes. Risky games like crypto should generally make up only a small part of it.
Another of the unfortunately boring aspects of investing is that you want to think long term, and that means a bear market can be an opportunity. If you believed in the long-term value of Bitcoin when it was $60,000, you can certainly get more for your dollar now that it’s at $20,000.
After all, fortune favors the brave, right?
The author and editor both owned Bitcoin at the time of publication.
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Andy Rosen writes for NerdWallet. Email: [email protected]. Twitter: @
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10-25-22 0501ET
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