- Paris Hilton endorsed the Shiba Inu piece last week.
- Influencers like Matt Damon, Reese Witherspoon, Kim Kardashian or Floyd Mayweather have been criticized for promoting virtual currencies without highlighting the risks.
- Other celebrities like Logan Paul or Paul Pierce might face legal issues for promoting cryptos.
Paris Hilton’s endorsement of Shiba Inu via her Twitter account didn’t stop the coin meme from dropping lower. Analysts believe that the downward trend in Shiba Inu prices may continue and the meme token may suffer further losses.
Also Read: Why Shiba Inu Price Is Back To Where It Traded A Year Ago
Australian influencers face up to five years in prison for this
Influencers who target financial investors, commonly known as “finfleuncers”, now face up to five years in prison if they breach financial advice laws in Australia. The Australian Securities and Investments Commission (ASIC) says influencers may need a license to give investment advice.
A survey conducted by ASIC revealed that 33% of investors between the ages of 18 and 21 follow finfluencers. The survey revealed that the behavior of 64% of young people in Australia is influenced by influencers and their recommendations.
ASIC Commissioner Cathie Armour reportedly said:
Influencers who discuss financial products and services online comply with financial services laws. If they don’t, they face substantial penalties and put investors at risk.
ASIC has released a fact sheet to guide influencers. The fact sheet gives a number of examples of statements that could qualify as financial advice and warns against misleading or deceptive remarks about financial products. A violation of the guidelines could be considered an event where the influencer broke the law.
Aleks Nikolic, a financial investment influencer on Instagram, TikTok and Twitter, found the document helpful in guiding content creation.
I think these are some of their clearest and best communications they have ever released, potentially ever. Obviously everyone will now scramble madly to comply, but that was the point.
Interestingly, ASIC pointed out that sharing affiliate links that send investors to online brokers could be considered financial advice and may require a license.
UK Financial Conduct Authority urges caution with influencers
The Financial Conduct Authority (FCA) is the conduct regulator for around 51,000 financial services businesses and markets in the UK. In February 2022, the authority called for caution in using influencers in the marketing of financial products, sharing financial advice.
The watchdog was quoted as saying,
Retail investments’ use of social media influencers on various platforms to market investments is becoming a concern for us. Businesses should ensure they have taken proper legal advice to understand their responsibilities before using influencers.
FCA Chairman Charles Randell slammed influencers who promote cryptocurrency by accusing them of fueling an “illusion of quick wealth.”
The UK Treasury addressed the threat of crypto-asset promotions and misleading financial advice by proposing new laws in January 2022. These laws subject “eligible crypto-assets” to the same rules as other financial promotions, applied to stocks, shares and insurance. some products.
Spain has revealed new rules for advertising crypto-assets
In January 2022, the Spanish National Commission for the Securities Market, also known as the CNMV, unveiled its intention to implement new rules for the advertising of cryptocurrencies. This includes the promotion of cryptocurrency assets on social media platforms by influencers.
Spain has therefore entrusted its stock market observatory with the authorization of mass campaigns and the responsibility of ensuring that investors are aware of the associated risks.
The Spanish government had issued an official bulletin to advertisers asking them to notify the CNMV at least 10 days in advance and share the content of campaigns targeting more than 100,000 people.
The volatility of cryptocurrency assets has drawn the attention of regulators around the world, and financial authorities fear that the financial system could be at risk if crypto assets and their influencer marketing activities are not monitored.
Logan Paul and Dink Doink fall apart
Logan Paul is the influencer behind clearing his followers’ investments in an asset called Dink Doink. Paul told his six million Twitter followers that he was all about a new cryptocurrency called Dink Doink.
Paul did not reveal that he was friends with the creator of the project. Dink Doink was actually their idea together and it received a large stipend from the cryptocurrency when it launched. As investors poured in capital in hopes of receiving shares of a cartoon character that would entitle them to a portion of the profits when he appeared in a TV show or movie, Dink Doink’s price dropped to a fraction of a dime, wiping out nearly all of its market value. Paul faced backlash and criticism from his followers.
Matt Damon slammed for Crypto.com ad
Matt Damon, a popular Hollywood star, convinced investors to buy Bitcoin or other cryptocurrencies through his Crypto.com ad which read, “Fortune smiles on the brave”. Investors who bought Bitcoin at its near-all-time high are currently underwater and have far less funds than their initial investment.
When Damon appeared in commercials broadcast on TV and online, it was a turning point for the crypto community, mass euphoria since the price of Bitcoin broke through $58,000 in October 2021.
Matt Damon in a Crypto.com ad
Crypto influencers are digging for gold, searching for the next Dogecoin
Kim Kardashian, Floyd Mayweather, and Paul Pierce are other influential celebrities known to have earned millions of dollars by endorsing dodgy cryptocurrencies. These celebrities have been urging their followers to pour money into dark rooms that are collapsing overnight or collections of less popular NFTs.
There have been instances of failure to disclose personal and financial ties to projects advertised on their social media handles, and this is considered a potential violation of federal marketing regulations.
John Reed Stark, former head of the Internet Law Enforcement Branch at the Securities and Exchange Commission, criticized such influencer behavior and said:
You have this shameless profiteering from celebrities and the like, who are not at all disinterested or impartial. There is a lot of potential for harm.
Reese Witherspoon recently confused her followers with a bizarre tweet regarding “crypto wallets”, “digital identities”.
The Hollywood star tweeted on January 11, 2022:
In the (near) future, everyone will have a parallel digital identity. Avatars, cryptocurrency wallets, digital assets will be the norm.
In the (near) future, everyone will have a parallel digital identity. Avatars, cryptocurrency wallets, digital assets will be the norm. Do you anticipate this?
— Reese Witherspoon (@ReeseW) January 11, 2022
Witherspoon asked her followers if they were planning this, and there was no specific reason for sending the tweet. However, soon Witherspoon was hit for “scam art” criticized for misleading cryptocurrency advertising, lack of disclosures.
Lawsuits for illicit advertising and financial advice
There have been instances where influential celebrities have been criticized by lawsuits from investors. Kim Kardashian, Floyd Mayweather and Paul Pierce are currently on trial for marketing EthereumMax, an obscure cryptocurrency project.
Kim, Floyd and Paul are among seven celebrities affected by the lawsuit. The popular ‘The Kardashians’ star had asked more than 200 million followers on her Instagram,
Are you guys into crypto???? This is not financial advice but a sharing of what my friends just told me about the Ethereum Max token!
Kim Kardashian’s EthereumMax Promotion
EthereumMax lost 97% of its value in seven months and the celebrities who promoted the token are now in hot water. Ryan Huegerich filed the class action lawsuit on January 7 in the U.S. District Court for the Central District of California and accuses these celebrities of doing
false or misleading statements to investors regarding EthereumMax through social media advertisements and other promotional activities.
A representative from EthereumMax told the Wall Street Journal that Kim Kardashian’s post was simply to raise awareness about the project and its usefulness.
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