As cryptocurrency has become more mainstream this year, it has reached the world of influencers. Influencers, such as the D’Amelio family and Tana Mongeau, have started posting paid ads on their social media platforms for different digital coins and exchanges.
Even Kim Kardashian West posted an ad for ethereummax on her Instagram Story to her 228 million followers on Sunday.
Followed by a short clip of her speaking to her Ethereummax camera with “#ad” written at the bottom of the screen, Kardashian West posted a text: “Do you like crypto ???”
“This is not financial advice but a sharing of what my friends told me about the ethereum max token!” the post read. She added different hashtags again, including #ad, which is needed to reveal that her post is paid, as well as #emax and #disrupthistory.
Other celebrities, including Floyd Mayweather, have also endorsed ethereummax. Mayweather brought up altcoin at the Bitcoin 2021 conference earlier this month and was, in turn, booed off the stage. Ethereummax also sponsored Mayweather’s recent fight with YouTuber Jake Paul.
Ethereummax is an altcoin which redistributes a small percentage of transactions to its token holders. It launched in May with a total supply of 2 quadrillion.
However, despite its star-studded partnerships, ethereummax is considered a riskier cryptocurrency to some in the crypto world. Like Decrypt points out, it’s “mostly just a marketing campaign.” Ethereummax doesn’t have a whitepaper like other crypto projects do, and only a few details about its developers are known. (The ethereummax team did not immediately respond to CNBC’s Make It request for comment.)
While it is not known how much Kardashian West was paid for the advertising, a The 2019 court case unveiled that she could make between $ 300,000 and $ 500,000 for a single Instagram post. For long-term social media contracts, she can sometimes earn millions of dollars. (Kardashian West did not immediately respond to CNBC’s Make It request for comment.)
Younger influencers are also getting into crypto
Gen Z and the young millennial influencers – many of whom have mostly young followers – have also recently posted paid ads for cryptocurrencies and exchanges.
The family account of TikTok stars Charli, 17, and Dixie D’Amelio, 19, posted their partnership with cryptocurrency exchange Gemini on Instagram in May, Insider reported.
“We’re learning more about cryptocurrency as a family, thank you @gemini for Charli’s birthday present. #GeminiPartner,” the post read, though Gemini is a required age of 18 or over.
The family’s account has over 934,000 followers on Instagram, but Charli and Dixie have even more followers themselves. Charli has over 117 million followers on TikTok and over 42 million on Instagram. Dixie has over 52 million followers on TikTok and over 24 million on Instagram.
“We believe it is important to provide financial literacy and access to cryptocurrency educational resources through various channels,” a Gemini spokesperson told CNBC Make It. “Gemini also works with influencers … to help educate their followers about cryptocurrency and build awareness of the Gemini brand.”
With the D’Amelio family, the YouTubers like Paul and Loren Gray have posted recommendations for different cryptocurrencies and exchanges to their millions of subscribers. Even Matt James, known as the first black man in ABC’s “The Bachelor,” posted on his social media about his partnership with crypto financial services company BlockFi.
Why is this important
While any cryptocurrency is considered a risky and volatile investment, the altcoins pushed by these influencers, like ethereummax, require even more caution, warn experts. Especially when it is advertised to a younger audience.
This type of approval can be even more problematic when it isn’t made clear that the influencer was paid to post, James Ledbetter, editor of the FIN fintech newsletter and CNBC contributor, told CNBC Make It. .
“As with many other products and services these days, a cryptocurrency or a paid social media influencer exchange can be an effective way to get the word out,” he says.
However, “I am concerned that at least part of this audience is both financially unsophisticated and has limited access to funds, which is why this has been an area of regulatory action for years.”
Investors should always do their own research before deciding where to put their money. As the The SEC warned in 2017, “It’s never a good idea to make an investment decision just because a famous person says a product or service is a good investment.”
“These types of arrangements could potentially hurt investors and attract regulatory scrutiny for crypto companies,” Ledbetter said.
But after seeing the effect that Tesla and SpaceX CEO Elon Musk’s tweets have had on cryptocurrencies and stocks, it shouldn’t be surprising that space companies are trying to find more. players to do the same, says Ledbetter.
“Through crypto-memes and Elon Musk, I feel like a good deal of [young investors have] already been exposed to cryptocurrency, ”says Ledbetter. “But it’s conceivable that influencers will accelerate this trend. “
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