Does anyone really take investment advice from Kim Kardashian? Even if not, the team behind Ethereum Max was interested enough in harnessing her star power that they paid the reality TV star and entrepreneur to hype their token on instagram to her 251 million followers back in May.
In an Instagram story that at least noted it was an “#ad” the socialite said: "Are you guys into crypto???? This is not financial advice but sharing what my friends just told me about the Ethereum Max token! A few minutes ago Ethereum Max burned 400 trillion tokens—literally 50% of their admin wallet giving back to the entire E-Max community."
The post immediately drew condemnation and questions about whether the new and relatively unknown project was legit, and the outrage continues to this day. Despite promotional efforts, the token never really took off and currently trades for around $0.000000017659, according to data from Coingecko.
Kardashian is hardly alone in pushing crypto on her fans and followers. Crypto may be revolutionary, but some backers are marketing it with the oldest trick in the book: the celebrity endorsement. With crypto moving from a niche investment to a more mainstream asset class, celebrities are increasingly looking to cash in. Many are even making bank with their own NFTs.
So, what’s the problem? Endorsing a potentially volatile financial product isn’t exactly the same thing as hawking sneakers or breakfast cereal. Famous faces can risk unwittingly becoming associated with a scam or even just becoming a target for the ire of those who consider crypto a bubble at best and a Ponzi scheme at worst.
The backlash has reached such a fever pitch that Ben MacKenzie, who played hunk from the wrong side of the tracks Ryan Atwood on the teen soap The OC, has penned an article urging his fellow thespians not to boost crypto in which he called “the Hollywoodization of crypto” a “moral disaster.”
With the market cap of cryptocurrencies surpassing $1 trillion, though, it’s unlikely that we’ve seen the last of celebrities promoting cryptoor that matter, the last of the scandals stemming from it. For now, we took a look at the celebrities that have already faced blowback for pumping crypto products.
Kim Kardashian, Floyd Mayweather and Paul Pierce
That EMAX tweet? It recently got Kardashian sued. And not just her but also other celebrities who hyped EMAX, including the professional boxer Floyd Mayweather and former NBA star Paul Pierce.
Mayweather had talked up the token at a Bitcoin conference he attended in June, with the boxer and his team wearing tee-shirts promoting the token, and further promoted it days later during his high-profile fight with YouTuber Logan Paul.
Pierce, meanwhile, inserted EMAX into the discussion of his public break with ESPN after the network fired him from a commentator position for publicly posting a video of himself at a gathering with strippers. “@espn I don’t need you, I got @ethereum_max I made more money with this crypto in the past month than I did with y’all in a year,” the ex-baller tweeted in May.
The lawsuit, filed Jan. 7 in California federal court by a New York investor hoping to represent a class of people who bought EMAX, claims the A-listers colluded with EMAX executives Steve Gentile, Giovanni Perone and Justin French to pump and dump the tokens, leaving investors who bought in because of the celebrities’ endorsements holding mostly worthless assets.
EMAX denied the allegations to CBS News, with a company spokesperson saying "the deceptive narrative associated with the recent allegations is riddled with misinformation about the EthereumMax project. This project has prided itself on being one of the most transparent and communicative projects in the cryptocurrency space.”
But the suit isn’t the only time there have been legal questions about the celebrity involvement with EMAX. Back in September, Kardashian’s instagram post faced scrutiny from UK financial regulators, who issued a warning cautioning the public against buying into crypto hyped by influencers.
For movie star Matt Damon, the backlash came for appearing in an ad spot for crypto exchange Crypto.comThe outcry seemed to focus less on concerns that he might be leading unsuspecting investors astray than from the ad’s undeniable cheesiness.
In the one-minute long commercial, the Oscar winner, dressed in all black, walks through a stark, white museum-like gallery while musing on human achievement, and the difference between those who almost get there and those who do, while figures like astronauts and mountain climbers appear around him. Reflecting on “moments of truth” he intones that in such moments “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 the time of the Romans: Fortune favors the brave.”
The spot ends with The Martian star coming to the end of the gallery and gazing out a large window at a red planet before the words Crypto.com appear on the screen.
The ad was roundly mocked in the Twittersphere to the point where Damon’s name started trending. For example, journalist Adam Johnson tweeted “saddest thing about Matt Damon's macho-baiting crypto pitch where the viewer must ACT NOW or he's a weak pussy is that this is a top 3 classic pitch all financial schemes have used to goad men into forking over their paltry savings. Nothing has changed in 150 years.” The New York Times’ Mike Baker tweeted “that Matt Damon ad makes me fear that one day i will be forced to learn about crypto in the same way i was forced to learn about mortgage-backed securities.”
The tweetstorm led to a slew of headlines dissing Damon and his participation in the ad, and think pieces on what it means for celebrities to be doling out investment tips.
Damon might not be pleased by the attention, but Crypto.com, which has been on a publicity blitz that included shelling out $700 million (in what we can assume is fiat currency) to rename a Los Angeles sports arena after it, likely is. The ribbing of Damon made the ad go viral. So far, it’s been viewed more than 14 million times on YouTube.
While Damon has been subject to ridicule rather than legal repercussions, a pair of unrelated Crypto.com ads were banned by the U.K.’s advertising authority while the ad with him in it was still making news.
Another Oscar winner who has felt the wrath of Twitter for getting involved with crypto is Reese Witherspoon. The Legally Blonde star is known for her Southern charm, supporting women in the film industry and, now, apparently, her devotion to crypto and the metaverse.
While Witherspoon hasn’t come under fire for a paid promotional gig, her tweets in support of a crypto-led future have led to a lot of mockery.
A recent tweet in which the actress asked followers “In the (near) future, every person will have a parallel digital identity. Avatars, crypto wallets, digital goods will be the norm. Are you planning for this?”, was met with jokes and criticisms. Much like with Damon, the fallout morphed from Twitter posts into news items across the media.
But the much maligned tweet wasn’t even Witherspoon’s first foray into the digital asset world. She has tweeted about NFTs and crypto before, including encouraging women to get more involved in the space, without garnering the same level of attention and criticism.
It could be that some of the backlash against Damon also touched Witherspoon, as many seemed to lump them together into a celebrity crypto-shilling duo. “A weird thing about Reese Witherspoon and Matt Damon is realizing that no matter how much money and fame you have, you will always take another paycheck. Neither of them NEEDS to advertise Crypto. But they can't say no to the check,” tweeted writer and translator Zack Davisson.
Gwyneth Paltrow hasn’t faced the same level of vitriol as fellow actors Witherspoon and Damon for her crypto boosting – perhaps because the public is already used to her standing behind questionable merchandise like jade vagina eggs. But the Goop founder, better known for her wellness and beauty products, has still taken some heat for getting into the crypto space.
After tweeting out a link to a very friendly Q&A on Goop’s website with Bill Barhydt, founder and CEO of the cryptocurrency-exchange app Abra, Paltrow faced criticism for failing to point out that she herself serves as an advisor to Abra.
Paltrow has been open about her involvement with Abra elsewhere, though, and has also been public about other crypto ventures, including her equity investment in Bitcoin miner TeraWulf.
Like Witherspoon, Paltrow has been vocal about trying to get more women to take part in crypto. But being a big name attached to crypto investments hasn’t always yielded positive press for Paltrow. When shares of TeraWulf slumped after its public trading debut, headlines were quick to proclaim the connection to the high-profile star.
And when Paltrow teamed up with Cash App for a $500,000 Bitcoin giveaway, it prompted the usual grumbling that the actress and entrepreneur should already be rich enough not to need to engage in such obvious shilling.
Floyd Mayweather (yes, again) and DJ Khaled
Turns out the EMAX suit isn’t Mayweather’s first time getting dinged for flying the crypto flag. Back in 2018, the boxer and dj turned record executive DJ Khaled were both fined by the U.S. Securities and Exchange Commission for failing to let their followers know they were being paid to promote initial coin offerings they were hyping up.
The SEC claimed that both stars hadn’t made it clear that they received payments from Centra Tech – a project that later saw its founders sentenced to prison time for using its $25 million ICO to commit fraud. It further alleged that Mayweather didn’t disclose payments he got for advertising two other ICO’s, including one that had him tweeting "You can call me Floyd Crypto Mayweather from now on."
Though neither celebrity admitted or denied the agency’s accusations against them, they both agreed to pay fines and to lay off promoting any securities, digital or otherwise, for several years.
Mayweather agreed to pay $300,000 in disgorgement, a $300,000 penalty, and $14,775 in prejudgment interest. While DJ Khaled, whose legal name is Khaled Khaled, agreed to pay $50,000 in disgorgement, a $100,000 penalty, and $2,725 in prejudgment interest.
The fines against the athlete and the entertainer may not have been huge, but they were history making. They marked the first time the agency sought to bring cases related to touting ICOs.
The pair were later named in a lawsuit brought by investors in the Centra Tech ICO, but ultimately managed to dodge the case.
Mayweather and DJ Khaled may have been the first fined by the SEC over ICOs, but they weren’t the last. In September 2020, Atlanta-based rapper T.I., whose legal name is Clifford Harris Jr., reached a settlement with the agency over fraudulent cryptocurrency offerings.
The Grammy-winning artist agreed to cough up $75,000 for promoting ICOs from two companies, Flik and Coinspark, controlled by film producer Ryan Felton.
Felton claimed that FLiK would become an entertainment streaming platform and that CoinSpark would build a new cryptocurrency trading exchange. Instead, Felton allegedly used his investors’ cash to buy a Ferrari, a million-dollar home and diamond jewelry.
T.I.’s role in the doomed ventures included selling FLiK tokens on his social media accounts and falsely holding himself out to be FLiK’s co-owner while encouraging his followers to invest in the ICO, according to the SEC. The agency stated that he had also roped a “celebrity friend” into boosting the ICO on social media. That friend was likely Kevin Hart, who tweeted in 2017 that he was “super excited” for T.I. and his new venture FLiK.
T.I. neither admitted nor denied the agency’s claims, but he did seek to distance himself from Felton, who was indicted over the alleged fraud. The rapper “never received a dollar from Mr. Felton’s failed venture and immediately removed his name from it once he learned that the project was undeveloped,” T.I.’s attorney Henry E. Mazurek told Reuters when the news broke.
Elon Musk, the CEO and co-founder of Tesla and SpaceX, is both one of the world’s richest industrialists and a pop-culture celebrity with as much influencer power as Kardashian. (Both have roughly 70 million Twitter followers.) He’s also probably crypto’s most famous fan — millions of people around the world tuned in to his appearance as a host on Saturday Night Live last year and heard him mention crypto on several occasions
Musk does stand apart from most of the other celebrities on this list in one regard, though: he’s no paid spokesman. His enthusiasm for crypto stems from his own genuine interest (and, maybe sometimes, from his love of trolling). Like just about everything having to do with Musk, his crypto evangelism has been polarizing, especially when it comes to the meme coin Dogecoin.
Dogecoin, a cryptocurrency started as a joke that then took on a life of its own, counts Musk as a consistent supporter. Its first rally came after Musk tweeted that he owned three cryptocurrencies: Bitcoin, Ether and Dogecoin. Ever since the price of Dogecoin is often seen as rising on the back of Musk’s tweets whenever he mentions it.
As Musk’s May 8 SNL debut approached, prices for the coin started climbing. But once Musk was unleashed on the studio audience (and the much larger audience watching at home) he joked about Dogecoin both in his monologue, which featured his mother saying she hoped he wasn’t planning to gift it to her, and in a Weekend Update segment where played a financial expert who couldn’t answer the question “so what is Dogecoin?” and called it “a hustle.”
It’s unclear exactly why the jokes sent prices down, perhaps because it was hoped Musk might have said something more positive about Dogecoin as he so often had online, but Musk was blamed for the plunge and faced unflattering media coverage.